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AIBU?

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Original poster

To think buying a flat is the right idea

87 replies

Losttheattitude · 07/05/2024 11:45

Morning,
I have one DD, her dad passed away just after her 8th birthday, at the time we were living close to London in a big frankly disgustingly expensive house. My late DH did have life insurance which covered the remaining mortgage and left a little.
A year after he passed I got offered a job in rural North Yorkshire that I couldn’t pass, sold up the house and bought an equally lovely one for less than half the price!
All the remaining money was put into various investments for my DD. DD is now 19, she’s in her first year of uni in London. The money left from the house sale has gone to various things, a car, a gap year, uni fees etc.
DD wanted to stay in uni accommodation for her first year, easier to make friends. She loves it and loves London.
The money has been gathering interest the whole time so we now have over £750,000 (taking off the uni fees which are in our mind already “spent”).
Obviously it’s London so depending on where you look that could get anything from a 3 bed terrace with a garden to a studio flat!
DD has fallen in love with a one bedroom flat in a lovely area, close to central, its share of freehold, has a little balcony, but it’s £650,000. I decided to talk to my family about it.
My parents think the money should be going to a house, yes it won’t be central but it will have longevity.
My brother thinks I should put the money in a pension (half for me and half for DD). He doesn’t agree with “hand outs” and thinks DD should work for a house etc. like everyone else will have to.
Now I think I disagree with my brother, the only reason she is able to have this money is because her dad passed when she was young! I’m sure she would trade it all for her dad, and if he were still here we’d probably still be living near London with the mortgage just about paid off. She has dealt with anxiety, depression, an abusive ex. She got AAA in her A-levels and has worked her but off!! I also don’t view the money as mine, I took money out the pot for holidays etc. I’m mortgage free, have extra money to put into my pension every month and don’t stress about money at all.
I do see my parents point but I worry that a house further out would be more maintenance than DD would like and be a bit of dampener on the social life. I’m sure DD could just sell in a few years if she wanted that.
Does anyone have any insight that might make us change our mind before we go full steam ahead with this flat? AIBU to think the flat is the right idea? Should we be considering something else?

OP posts:
Thread gallery
5
CheapThrillsMeanNothing · 07/05/2024 12:59

GettingStuffed · 07/05/2024 12:18

With a flat remember there are usually maintenance fees and it seems some owners ( of the block) are using this as a license to print money

Make sure the lease is not short because it's very expensive and time consuming to extend a lease. Lenders won't give mortgages on short leases.
Watch out for huge increases in services charges too.

Itloggedmeoutagain · 07/05/2024 12:58

Look out for the service charges. Find out how much they are. Find out how much they were a year or two ago. I've inherited a flat. It opened my eyes. I would never buy a flat simply because of the service charge. They can simply charge what they like and there's very little you can do about it without a costly court case as far as i know

Original poster
Losttheattitude · 07/05/2024 12:57

AndiOliversGlasses · 07/05/2024 12:54

OK so I am taking Gower St as where she needs to be for UCL. How long does she want to be travelling max to get to lectures?

Will she be happy on a bus , or tube only?

Modern flat or period flat? Purpose built or conversion? Communal garden of interest?

Ohh lots of good questions.
Id think a half hour max for travel to lectures and she would definitely prefer a period property.
Not sure on the bus vs tube - I think she’d be open to buses.
She loves the converted terraces but gosh they are expensive!

OP posts:
UltimateFoole · 07/05/2024 12:56

Get the flat. BUT I would be very careful about buying ex-Local Authority if they are still the freeholder - it leaves you open to major works fees at any time. But the share of freehold sounds promising.

And be wary of any building with a lift as they are expensive to replace.

And I agree that 2 bedroom would be the best option. If she ever needs extra income she can let out the 2nd bed.

aridiculousargument · 07/05/2024 12:55

But do look closely at what @GrumpyPanda said

AndiOliversGlasses · 07/05/2024 12:54

OK so I am taking Gower St as where she needs to be for UCL. How long does she want to be travelling max to get to lectures?

Will she be happy on a bus , or tube only?

Modern flat or period flat? Purpose built or conversion? Communal garden of interest?

aridiculousargument · 07/05/2024 12:53

Losttheattitude · 07/05/2024 12:41

Thanks everyone.

For those saying a two bed, does anyone know anywhere in central-ish London that could tick DDs boxes without being more than 650-700k.

She is studying at UCL - so ideally not a pain to get there, she plays tennis too, so some public tennis courts reasonably close and not too difficult to get to either Islington tennis centre or the west way sports centre for winter tennis. She also likes to run so a park nearby is a must (but it’s London so this shouldn’t be hard!)
DD likes Pimlico a lot, bit worries it will be too quiet, she’d love the Paddington/Bayswater area but is definitely out of budget!
I agree a two bed would be better but I think DD would rather prioritise it having the right feel!

Hmm maybe Caledonian Road, around that area?

Youcannotbeseriousreally · 07/05/2024 12:52

I would absolutely buy her a flat, as there will be no mortgage I would start by charging her small rent ( as soon as she has income) then I would invest that for her as her ‘pension’

I would absolutely stop asking your family their opinion as they sound a bit jealous tbh, why shouldn’t your daughter have a place to live especially with all that you both have lost.

best of luck OP, it sounds like you’ve made great money choices to now so I’m sure you’ll do the right thing going forwards

TheoriginalMrsDarcy · 07/05/2024 12:51

Like others, I would recommend a 2 bed flat/apartment. A young girl would not want the hassle of house maintenance, roof repairs etc... when she graduates, she may want to get a job in London and continue living there. My neice rents a 1 bed apartment in central London (near houses of parliament) and the rent is extortionate. I think about going to visit but there isnt much room to stay. I'm secretly trying to persuade her to upgrade to a 2 bed next time when her lease is up.

BIossomtoes · 07/05/2024 12:45

I just did a Rightmove search and there are several two beds in Paddington for around £650k.

UneasyMe · 07/05/2024 12:44

Stoke Newington? Not central central, but fun and cool. Or she could buy an ex LA two bedder in Bloomsbury for that budget, super close to uni

bettingpencil · 07/05/2024 12:43

Personally I’d look for at least a two bed - whilst I agree if it’s central enough it likely won’t depreciate, everyone I know whose bought a one bedroom flat in London has had a nightmare reselling them especially post covid

UneasyMe · 07/05/2024 12:42

Central London flat all the way. Just watch out for places with service charges, which can get very high, very quickly. Avoid if poss

Original poster
Losttheattitude · 07/05/2024 12:41

Thanks everyone.

For those saying a two bed, does anyone know anywhere in central-ish London that could tick DDs boxes without being more than 650-700k.

She is studying at UCL - so ideally not a pain to get there, she plays tennis too, so some public tennis courts reasonably close and not too difficult to get to either Islington tennis centre or the west way sports centre for winter tennis. She also likes to run so a park nearby is a must (but it’s London so this shouldn’t be hard!)
DD likes Pimlico a lot, bit worries it will be too quiet, she’d love the Paddington/Bayswater area but is definitely out of budget!
I agree a two bed would be better but I think DD would rather prioritise it having the right feel!

OP posts:
GrumpyPanda · 07/05/2024 12:40

It's am investment decision first and foremost, and that means looking at how buying compares to renting in the area. What you want to figure out is the price-to-rent ratio: that is, the price of a property calculated in multiples of the annual rent for an equivalent property. Internationally, mostly a ratio of below 15 annual rents would be considered good value; over 20, don't do it unless you want to live in it and rental apartments are near to impossible to secure. That's because at these ratios, you'd be much better off continuing to rent and investing your money in broad-based funds instead which will carry much less of a cluster risk. I don't see this discussed much on MN - I assume because nationwide house prices are much more affordable than renting, but it seems the opposite is true of London. Yes, real estate will appreciate - but so do other asset classes. (As an aside, I really hope you haven't had this gigantic sum gather dust for years in an interest account?! )

https://www.investopedia.com/terms/p/price-to-rent-ratio.asp

Price-to-Rent Ratio: Determining if It's Better To Buy or Rent

The price-to-rent ratio is the ratio of home prices to annualized rent in a given location and is used as a benchmark for estimating whether it is cheaper to rent or own property.

https://www.investopedia.com/terms/p/price-to-rent-ratio.asp

CuteOrangeElephant · 07/05/2024 12:29

I would let her, and wouldn't care about what my family had to say.

At 19 it would be such a fabulous opportunity to live in Central London, she can always go to suburbia when she is older.

MiniCooperLover · 07/05/2024 12:29

I'd probably look for a 2 bed, but if she wants a flat in Central London then let her. What area is she looking in? Please don't encourage her to get a house further out, so boring for a 19 year old.

FloofyBear · 07/05/2024 12:29

Investment in property is always a good thing.
I'd be inclined however to get a property that has 2 bedrooms though, she doesn't want to be walking f around / going out and coming home at night on her own, if there's 2 students living together they'll keep safety in numbers.
Also, she should settle in and check where her friends / others at the uni are living as she'll want to be relatively close to them too

Luckycloverz · 07/05/2024 12:25

I'd try encouraging her to find a 2 bed flat at least this would give her future options for if she had a child or sharing/renting it out.
Obviously be careful with service charge small print, cladding etc.

But lovely idea for your daughter to be central, I hope it works out well for her.

PBandJ111 · 07/05/2024 12:24

Cheaper flat with second bedroom to rent to student.

jay55 · 07/05/2024 12:24

I'd get a two bed, I live in a one bed and having a second bedroom for working from home would make life so much better.
For the same money she'd still have plenty of nice areas to choose from and get a second bedroom.

Which also gives the flexibility of having a lodger if she finds living alone lonely.

Lily193 · 07/05/2024 12:23

I would buy the flat in London. I lost my mother very young and inherited a large amount of money. I bought a property in central London with part of my inheritance when I got my first job. It's worth an eye watering sum now so turned out to be a very good investment.

AndiOliversGlasses · 07/05/2024 12:23

So sorry for both of your losses. Your DD has done amazingly to grow into such a sensible young woman after such a shock in her childhood.

Your brother has, as you say, completely lost a sight of the fact that your DD’s circumstances are special. You absolutely should be doing whatever you can with that money to make her life a bit easier compared to that of her peers who still have the emotional support of both parents, as they work to fund their own first home.

You asked your parents. Are your DH’s parents still in the picture? If they are, and they get on well with you and DD, might they have some thoughts to offer on what your DH might have wanted? (It’s ultimately your decision of course but I am just thinking that if you have involved one set of grandparents you might also involve the other for balance).

Turning to the flat, this sounds like it might be a period property? Those can be a bit more of a pain re upkeep but it will probably hold its value better than a new build. On the other hand there are some lovely new builds in London at the moment with nice communities growing up around them, think Stratford are (I own a rental property in E3 bought off plan and it has held its value well over the last 10 years). It really suits the mature student and young professional tenants that I have had over the years.

Would DD like to live alone or with a flatmate? if the latter, a property with 2 bathrooms would be nicer. I’d probably advise shared living as it was a real formative experience for me, and her mates will bite her hand off if she has a nice place. Could be lonely living alone even if in a nice flat.

Does she think she might want to work in London after University?

user4762348796531 · 07/05/2024 12:22

Your bother is wrong, quite apart from the fact it’s none of his business. Loosing a parent young is so hard, let her have at least some monetary gain from sad circumstance.

Property is always a good investment, as long as you can keep it long enough to weather any storms in the market. And if it’s central London she wants, then thats the price tag. Let her have a fun few years, as you're well aware we’re not all destined to make old bones, life is for enjoying. Suggest she put any money saving in rent/mortgage into a pension/ISA.