Impossible choice - Home A or Home B??

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Name changed but regular user. Details very outing to anyone who might know me!

DH and I currently rent a 2 bedroom new build house, through a housing association. It’s a rent to buy scheme so designed to give first time buyers a discounted rate so they can save more money towards a mortgage, and after five years you can buy the home if you wish. We’ve been here for two years exactly so far. Amazing area, real community feel and nice schools in the catchment area. Low crime rate and convenient for work. It costs us £600 a month in rent.

We have £15k saved as a deposit to buy a house, but currently waiting for a better time - interest rates are so high, that on another two bed flat or house in the same kind of area we’d be paying £1200 a month at least which at 30% of our combined income doesn’t leave much wiggle room for an emergency fund, savings or holidays.

My parents own a ground floor flat that they are looking to sell. It’s a two bed, in the next town along but on quite a rough estate. They have offered for us to buy it significantly under the market value. We’ve done a few sums and we’d be paying £350 a month on that mortgage. They agree it’s a poor area but believe we could live there for a year or so, redecorate, build equity and then move along. We’d probably have about 40k in equity if we did this. The flat would need new carpets and new decorating, possibly a new kitchen.

It’s an extremely generous offer, it really is. We just cannot figure out what to do for the best. We would be moving from a nice, safe area to an undesirable area.

By moving, we would lose:

Garden space
Separate kitchen and lounge (in the flat, it’s just a kitchenette with no real space for a dining table)
Driveway
Peace of mind in terms of trusting the area
First time buyer status…. (likely paying stamp duty on the next move, not being able to apply for any first time buyer mortgages or schemes when it came to buying our house)

But, we would gain:
£250 a month
All the equity when we come to move on

I don’t know if the two points above are enough to mean it is worth it - they are pretty big ones!

If it makes any difference, DH is a shift worker so there will be plenty of nights I’d be home alone so feeling safe is a big deal. We are also trying for a baby, and appreciate having lower monthly payments might be ideal in mat leave

Any thoughts appreciated, thank you so much.

*Rented house is Home A
*Mortgaged flat, Home B

How much equity do you think you'll build in a year, on a not so great flat in a crappy area?

We’d immediately have some in theory, because it’s been valued at 120k and my parents have offered it to us at 30k under

Oh, ok. How easy would it be to sell on, do you think?

It’s been on the market now for a few weeks, one person interested then backed out as it’s not very modern tbh. I think that’s why my parents are wondering if we’d like it instead.

What about if they sold it for the full asking price and give you the £30k towards your current house?

Wouldn't it be better for your parents to sell it at market value and gift you the "discount' when you are ready to buy?

I'd stay where I was, whilst a generous offer I'd want my folks to get as much for the home as possible. How often do properties around them go up for sale?

Home B is a bit of a risk and gives you the stress of moving again with a young child/ or being unable to move and having school issues. Do you have any
idea of the valuation the housing association would put on home A? In my experience they value quite high, but would you get a discount? Can you afford to buy in your current area if not home A?

Great minds think a like

There's no guarantee you'd be able to sell it in a year. Plus people would see what you paid and would query the big jump in price over a short period of time. Would you be happy to spend your mat leave there?

I don’t know how I’d ask without sounding cheeky

For now... A

True, never thought of that one. There’s a nice big park walking distance away and it’s only 15 min away from where I currently live, but I would prefer having a garden for baby and somewhere to hang my washing out.

Stay where you are.
Safety, community feel, low crime and good schools.

I'd stay where you are

We could afford it, it would be £200 a month more than we pay in rent probably. We’d rather have a three bed next which is also within budget - just obviously be a lot more than we’d pay for the flat

I think id stay where you are in that case, I think you will be happier overall

I would stay where you are as you have a secure tenancy and option to buy, and a very discounted rent. I wouldn't move into a smaller less desirable flat in a bad location, and it might be harder to shift than you think, as your parents are not finding it easy to shift right now, so a year or two might change nothing. Plus having a kitchen put in is money, new carpets are a thousand or more, I think your likely capital increase is far less than you think.

Location is really important so I wouldn’t move to a less desirable area, even if it meant having approx 40k equity in a couple of years. I like the suggestion of your parents selling at market value and then gifting you the 30k.

You have a secure rental
Move to crappy area and soon spend the "saving" on maintenance etc
Stay put
keep saving

Get them to sell it and give you the 30k - you don't want a flat in a poor area!

I'd definitely stay in the rental if I were you.

Kirstie & Phil say location, location, location for a good reason. Stay where you are and keep saving.

But, we would gain:
£250 a month
All the equity when we come to move on

Mmm. Assuming of course you could sell it. People aren't usually falling over themselves to buy a flat in a rough area no matter how nice it is inside.

I think you'd be mad to go for the flat. Yes, you'd have more spare money each month - for what? An extra holiday?

That extra week in the sun it will buy you will seem a distant memory the other 51 weeks of the year when you're sitting in your tiny flat in an area you'll (probably) hate.

Stay where you are. You don't actually want to live in your parent's flat but I see why it's tempting.

You could ask your parents if they'd be willing to offer something towards your deposit instead.