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

Thanks everyone. If I can be honest it’s thinking of the home owner status and saving £250 a month which is tempting me. It would probably mean I could have the full year off work - very very easily - without that to think about, when it comes to mat leave. We still could anyway, but we’d have to cut back more. Deciding on your home is a massive choice, isn’t it.

What it's valued at is irrelevant, it's worth what someone will actually pay for it. If no one wants to pay £120k or even close then it's not worth that.

I'd definitely stay where you are. Moving is a huge stress, as is trying to sell an undesirable flat. Doing either while pregnant/with a small baby is rubbish unless you really need to.

Please trust me on this, stay where you are. The fairly meager savings will not make up for moving to a horrible area. Don't do it. A lovely community is worth it's weight in gold.

Easy. Stay where you are. No contest.

Flats are tricky to sell in the current market and flats in a rough area even more so.

I suspect your parents think they can't sell it which is one reason it's being offered to you.

I'd be surprised if the market was significantly different in a years time, which means that you could potentially end up in the rough area for a lot longer than you think.

Now different people have different ideas of a rough area and maybe it's not really rough. Maybe it's worth the reduction in mortgage.

But don't count on selling it easily.

Home A!

Home A - it’s a better property and your parent’s flat is not worth £120k as no-one want to buy it at that price.

With all due respect OP, your parents' offer is far from generous given your current position. I.e. in secure housing, below market rent and the opportunity to buy.
Valuations are useless unless someone's willing to pay the price. Yes it's only been a few weeks and we're in a falling market but I'd expect more than one viewing, even if it didn't convert to an offer.

In 2023 social housing is extremely limited forcing people to own if they want any hope of having a stable roof over their head. You've struck gold not only with all of the above but in a desirable area! There's nothing inherently better about the 'homeowner' status.

Easy choice. Stay put.

I wouldn't dream of moving to a worse area. It doesn't make any sense at all.

Don’t do the flat. If your parents wanted they could sell it for market value and give you the extra/difference? 🤷‍♀️. I agree, flats can be hard to shift especially in not nice areas.

Another thing to consider. Is the flat leasehold? You may find that the lease fees, management and service fees for the flat may well gobble up the money you think you have free each month!

I would stay put. You won't necessarily have all that extra money with the flat because you need to factor in renovation and maintenance and I expect it's also leasehold with the fees that incurs.

And there is no guarantee you would shift it easily.

But you said it has a small kitchen and no space for a dining table. How would that work with a baby and having to wean them? Where would the highchair go? How would you do all the work that you need to do to the place with a baby? What happens if you struggle to sell it again and get stuck in a flat that’s too small with a young child? How would spending mat leave stuck in that flat day in day out feel? You’d probably be regretting taking a full year off having saved the money at the cost of your sanity!
Don’t underestimate being in a nice area with a nice community feel when you have a new baby. Leaving the house is hard enough as it is without not having nice spaces, baby groups, cafes etc. around you to even go to.
So stay put is what I’d advise.

I also think you should stay where you are, but I think posters who suggest that you ask your parents to sell the flat and give you the money are missing the point - basically they are offering you the chance to do the work of doing it up and selling it on to make money on it. They have nothing to gain by doing it themselves if they can afford to lose £30k. They could just put it on the market for £90 and sell it straight away.

You wont save 250 a month
You will easily pay half that or more in maintenance
And if you need to paint etc your $$are gone

The flat would need new carpets and new decorating, possibly a new kitchen.

2500 gone easily in first year
You can buy current house at good rate in three years

No wait for them to sell it and let them give you the money as a gift.

I would think they are being manipulative in your situation.

That’s just me though. Maybe I’m wrong. It’s only worth what someone will pay for it not what it’s valued at.

Don’t do it.

Buy a home you want to live in adjust your expectations but don’t let them off load this flat onto you in the guise of being generous. They are getting paid.

I think I'd stay in Home A. A hard-work flat in a rougher area doesn't sound ideal for you and your children.

Given the prices locally maybe stamp duty isn't a consideration, but you'd lose your 'stamp duty free' purchase for a flat you don't want. I'd sit tight and keep saving.

If your parents want to sell the flat and give you some money, I'd accept prettily.

Given the current condition of the flat and the money you'd have to put into it to resell later on, I wouldn't think it was worth the hassle! Your parents can't sell for what they want in its current condition, which is why they've offered it to you let's be honest. A flat in a not so great area that needs modernisation that you're going to struggle to move on, vs a secure and reasonably cheap tenancy with the garden for the children in a nice area that will allow you to keep the savings you already have and build on them - I know which I'd choose.

This! Are you sure it’s the bargain they say it is?

properties in rough areas are the first to lose value in a downturn.

If they want to give you the money, I don’t know why they wouldn’t just sell it and give you the money?

im usually the first to say save and buy your own place, but look what you’re getting- a home in a bad area and it may be difficult to sell.

I actually think you should just bite the bullet and buy the house you want. Yes - it’s more expensive but 30% of combined income isn’t that bad. And a house in a better area is actually a better investment.

Don’t get involved with family and money, It will hit a brick wall at some point with one side regretting it and the relationship will not be the same.
stay where you are, you’ve done brilliant to save £15k carry on what you’re doing!

Rates have slightly decreased but the UK's already in recession. People are going to be cautious. Nobody's going to pay much more for a nice flat in a deprived area (which will likely keep going downhill given the increased reliance of councils from local funding sources).

OP buying the flat is an easy solution for her parents no risk of buyers being spooked, pulling out after survey, being unable to get a mortgage etc.

There's no harm in asking, they are OP's parents, they can say no. If they genuinely wanted to help her out they'd maybe give her a few thousand, they don't have to. But if they get really angry IMO that will be because they didn't manage to offload the flat onto OP.

Or are just blinkered about the value of their property. Given that it's in such bad condition I presume they've lived there a long time and just haven't updated it?

Also... even on MSE the advice is to live in a property for 2 years. It's ridiculous that they're even proposing you could make large profits from selling it on so soon. It's not 2021 anymore...

A shift in a bar or restaurant a week will bring in £250 a month and will be better than living in a flat in a run down rough area. I bet you are only seeing half of the crap there too.

If you're planning kids soon, garden garden garden. We're in a large 3 bed flat, and what I wouldn't give for a garden! Stuck here for a few more years and then we'll downsize floorspace for a house with garden. Ds5 is like a jack in the box, a garden would be life changing for him.

That's ignoring the many other reasons why I would stay where you are now which others have raised...

Home A.
I actually agree with a few PPs that your parents offer is far from generous, more manipulative like…
It doesn’t sound like their flat is an exciting property which is easy to sell. That’s why they are offering it to you. And their lower price might be a top of what they can get for the flat.
Natural thing would be to sell their flat and give you some money so you could buy the property YOU WANT.
All buyers look up previous prices so people will think that something’s wrong with the flag and you managed to knock off price and now selling it to them after some minor redecoration.
People will also question that you’ve stayed only for short term.
So you’d have a big problem with selling this flat.
Plus mixing family and money issues never ends well.
Stay where you are