AIBU to think they should buy rather than rent a tiny flat?

They probably couldn’t afford to buy a flat similar to what they are renting, even with the deposit.

Where in London are they? Have you actually looked at the prices of two bed flats in safe areas?

Edited to add, they might not be planning on staying in London medium to long term either.

50k is hardly a 10% deposit for most places in London, unless they want to buy a flat (which isn't always the best idea). They may be saving for a bigger deposit and get a house, however mortgage repayments will be even bigger than their current monthly rent. I'm from NE but lived in London since inwas 19 and my family were shocked and appalled at how much rent I paid in 15 years, but it's hard to buy on their salary (my husband and I were on exact same household income of 65k), mortgage on a 390k tiny 2 bed house in our area (which was way out in zone 6/Surrey border so not even central) meant repayments of near 2k a month! It's a different world there.

I live in London and we earn a joint salary of just under £100k - can't afford to buy anywhere I would want to live.

As a Londoner they probably can’t afford a flat. With their deposit and salary they’d need one for around £300k. Not many nice safe places that are affordable in that range and commutable.

PIL thought this with DP and I. Properly nagged us.

They were actually emailing us 2 bed flats for circa £250k because they knew we had over £25k saved.

We had the earning capacity to be able to buy a 3 bed house so it just made more sense to spend another 2-3 years renting and save up another £20k to get a better deposit and other associated costs. Flat prices in our area have been stagnant for 15 odd years and are now selling for less than paid for.

With that deposit and salary they'll be able to afford to buy a house in the home counties. Maybe they just want a few more fun london years before making that type of move? Buying something in London with a mortgage of £1,700 pm is going to be tough.

Just because they're paying £1700 in rent doesn't mean that lenders will consider that an affordable mortgage for them either. Lenders can be pretty conservative with their affordability checks. When we bought, the actual mortgage we were offered was well below what we had been paying in rent, despite never missing payments. The lenders want to know you can afford the mortgage even if rates increase or your outgoings increase (because let's face it, both are pretty likely right now)

What is this obsession that some people have - in this country - with owning a property? Your PIL sound annoying!

This is tiny deppsot, after paying all fixed costs. They should first see if 1 bed is at all big enough for them. And the area as well.
My son and his bf just rented a 2bd maisonette for the same amount as yours but it took them 2 weeks to find one. I advised them to rent first, to sèe how much space do they need for both of them etc. And also to try the area of where to buy in the future. They earn much more between them and have bigger deposit, that doesn't mean they should buy before trying for those reasons I mentioned.

Have you looked at home much a property where they live would be?

Do they see themselves being there long term?

We rented at various points because we didn't know where we wanted to live longer term.

YABU

In London flats are cheaper to rent than buy.

Just because you can afford to buy something doesn’t make it a smart financial decision to do so.

Keep renting, saving for a bigger deposit, increasing salary and then buying a house in 5 years is the smart thing to do.

Flats can be difficult to sell. Depending on house prices in your area then losing their first time buyers status before they buy a house could be costly in terms of stamp duty. Also means they can continue to save in a LISA and get an additional £1,000 each every year.

All round sounds very sensible to me. The extra they pay in rent is probably less than what they would pay in maintained/upkeep, buying and selling fees, stamp duty, and interest/LISA bonus on deposit savings.

Most people have to compromise & a lot of areas end up getting better.

@IngaMingeryes it makes much sense to save longer & go straight for a house.

Generally speaking, flats have had their day, especially in London. They could part buy and part rent shared ownership flat on their income but that’s fraught with issues and they could end up trapped for years. Renting these days isn’t always about “dead money”. They’re doing the right thing.

(Now) DH and I didn’t buy together until we were engaged, because co ownership is a big commitment

With £50k to cover deposit, stamp duty, moving costs and not completely wipe out their savings (plus usually when you first buy there’s a whole host of furniture curtains etc you need to get - is their current flat furnished?) - they don’t have enough to buy anything even remotely decent in London.

Plus, buying a flat comes with all manner of potential issues as people have pointed out re being leasehold only, ground rent, service / maintenance charges, increasingly difficult to sell. They really are better off continuing to rent at this stage.

Yanbu but you can’t interfere

How do you know they are not looking to buy and not finding anything?

Also as others have said - flats are proving very difficult to sell in London. I wanted to buy a flat as it is what I can afford but seeing how people are struggling to sell makes me worried that if I come to sell in 3-4 years time I will be stuck. Maybe your daughter and her partner feel the same.

They can't buy with that income and that deposit.

Pull your head out of the old days and actually look at what's available, plus service charge, for the money they have.

I live in a tiny town in The North and my next door 2 bed terrace is renting for £1200pm.

Why do you think flats are cheaper to rent than buy in London?

Interest rates, stamp duty, service charges, lost returns on investing the deposit.

You can do the calculations here https://smartmoneytools.co.uk/tools/rent-vs-buy/

We considered buying a flat but it would take the best part of 10 years to break even, assuming prices don’t go down. Fine if you plan on staying for 10 years plus but we want children so want to be move at some point.

You still have to look long term and balance the risks though. Buying eventually becomes cheaper than renting but you have to be smart, buying for the sake of it is a way to lose money.

Are they saving to buy a house instead? This is what we did - my dad always warned me not to buy anything leasehold. Flats are a liability, especially nowadays with crazy service charges, and the London market is particularly poor at the moment. Plus rents are very high - I live in suburban Essex and there's a tiny two bed maisonette on my road up for £1400 pcm.

Their joint income isn't very high, so they probably can't afford to buy in London despite their deposit, and interest rates look like they're going up.

Many young people are priced out of London. They won’t get much with that deposit and income if anything. You sound a bit out of touch tbh

Maybe they are saving for a bigger deposit so they can buy a house in a few years.
My DS has a really big deposit but doesn’t want to buy a flat so he continues to save.