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Situation:

Question:

Given I wish to buy a home in Berlin, are there any clear low-risk actions that I can take with my assets at this time? Or are there too many unknowns?

(Regarding the title: While Brexit has technically happened, the withdrawal agreement has effectively delayed it until the end of this year - I am just using "Brexit" as a shorthand for that).

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    "are there any sensible actions that I can take at this time?" is a particularly broad and opinionated question; could you narrow this down to specific concerns that you have, or options you are considering? Commented Feb 20, 2020 at 21:41
  • Ah, thanks. I'd missed how easily that could go wrong. Hopefully this is at least no longer going to suffer from Opinion, though I'm not sure if I've improved it enough with regard to narrowing it down…
    – BenRW
    Commented Feb 20, 2020 at 22:36
  • What's your argument for keeping the flat now? And do you have long-term plans to return to the UK at any point in your life? Commented Feb 20, 2020 at 22:42
  • @GS-ApologisetoMonica No plans to return to the UK for more than visits; The only argument I have for keeping it is "that's a nice side-income".
    – BenRW
    Commented Feb 22, 2020 at 8:15

1 Answer 1

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"Given I wish to buy a home in Berlin, are there any clear low-risk actions that I can take with my assets at this time?"

It is this phrasing which is critical to suggesting an action. If you are truly committing to buying a home in Berlin, then the lowest risk action you can take would be to buy a home in Berlin now, even if that means selling your current home. Brexit fears wearing off may cause the value of your home to rise after you sell it, and a worsening Berlin economy for whatever reason may cause your new home to decrease in price after you buy it, but the opposite is also true. By completing the purchase now, you would be fixing your costs, and hedging yourself against fluctuations in both property markets.

Where this may end up not decreasing your risk after all, is if you change your mind about (a) what city you want to live in, or (b) what type of home you want to buy, or (c) how soon you are able to move into this new home in Berlin. But assuming you 100% will be moving into a home you 100% will be buying in Berlin where you will be staying for the foreseeable future [ie: you won't change your mind and move in a few years, which is too short of a time period to be comfortable accepting the possibility volatility of home ownership], then you can reduce the risk of volatility in your housing costs by owning the property you rent.

Another way to look at this, is that owning a rental property in a country where you (a) don't live and; (b) don't plan to return to in the foreseeable future; is a fairly risky asset class. You bear the risk of management and repair costs that you cannot handle easily due to geography, and also bear the full risk of the UK housing market. If you were living in the UK, and lived in that house, at least you would have reduced your risk by locking in your housing costs; as it stands, by living in Berlin you are somewhat disconnected from the UK economy, and therefore volatility in your income from the UK will not necessarily be offset by volatility in your expenses in Berlin.

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