Active discussions

Meet the Other Phone. Flexible and made to last.

Meet the Other Phone.
Flexible and made to last.

Buy now

Please or to access all these features

Talk
AIBU?

Share your dilemmas and get honest opinions from other Mumsnetters.

Original poster

to tell my friend I think she's making a huge mistake buying an ex council studio flat for 200k on the outskirts of London at 35 when she doesn't earn much

183 replies

entiledornot · 14/02/2015 20:54

My friend is an estate agent in London. She's currently living in shared houses but wants to buy something. She's had her offer accepted for 200k on a small ex council studio. She has only ever seen house prices rise in her few years as an ea so she thinks this flat will be her way to a millionaire rather than somewhere to live. She only earns 20k and is making virtually no commission as the housing market is dead. Shes looking at it as an investment not a home and can only afford it as parents have given her 60k. If interest rates rise even a bit she will be screwed and she will be paying back for this tiny studio until she is in her mid 60s.it isn't in a great area, zone 3 20 min walk from any tube. Prices are already in a bubble and this could pop at anytime.

Should I just stay quiet or tell her my concerns?

OP posts:
LaurieFairyCake · 14/02/2015 21:41

Eh? The housing market is very lively in London - everything I like goes within a week.

How on earth can she not be earning commission?

Eltonjohnsflorist · 14/02/2015 21:47

She earns £20k at 35? That really is spectacularly shite and not really a single homeowner salary. But maybe her mortgage and bills will be less than her current rent?

PurpleDaisies · 14/02/2015 22:18

What do you actually expect her to do with your "concerns" if you share them op? I very much doubt she will turn around and say "oh my goodness thank you so much I never thought of that myself even though I help people buy houses for a living. I must pull out of the sale!" Be prepared for her to think you patronising and interfering...which you would be.

milkpudding · 14/02/2015 22:19

Actually I think it is ok to voice your concerns to your friend before she has bought this studio. An estate agent sells houses, they are not experts in the overall housing market. Some experts say prices will continue rising, some say we are heading for a crash, an estate agent may not be aware of the more pessimistic forecasters.

Shes looking at it as an investment not a home does she actually want to live in this place? A friend bought a place in Dublin when prices were soaring shortly before they crashed and is trapped in negative equity, especially as the house is unsuitable for her to live in, she bought it as an investment.
Studios may be harder to rent out and sell as they are so limiting. Another friend said his London studio flat hadn't risen in price whilst larger flats soared with Help To Buy as couples stretched to afford a one bed instead.

If interest rates rise even a bit she will be screwed they will rise!

Obviously she may be fortunate and make lots of money on it. She may have done lots of research and have concluded that prices are probably going up up up, and that if there is a crash she will manage. Or she might be naive and not have considered this. I met someone else who is stuck in negative equity in Ireland, phoned the mortgage company to say 'let's forget the mortgage, I'll post you the keys and we'll call it quits', and she was very surprised that the bank wouldn't accept this and wanted the money they had leant her! Despite being an intelligent professional woman it had never occurred to her that prices might fall.

So if you think that your friend has not thought out different scenarios I would suggest a bit of reflection. That's all you can do really, if she wants to press ahead she is an adult.

OfficerVanHalen · 14/02/2015 22:29

This reply has been deleted

Message withdrawn at poster's request.

Laquitar · 14/02/2015 22:34

Toby is right about ground rent and service charges.

Zone 3 is the new central London. Out of reach for many of us. I thought you will say zone 6!

ragged · 14/02/2015 22:39

I'll buck the trend. I think it'd be fine to say something about your concerns but back off instantly if she's not interested. I think that's what friends do, let you know when you're doing something daft.

Be open-minded, maybe she's thought it thru or there are aspects you don't know about that make it a better deal than you know.

WhereIsMyFurryHat · 14/02/2015 22:45

I'm impressed you can get anything for £200k in zone 3!

Eltonjohnsflorist · 14/02/2015 22:51

I think it's quite pricey. A friend has just had a 2 bed flat valued at £210k in z2, but maybe the studio is in a nicer area. Who cares about zones?

Devora · 14/02/2015 23:01

I can't believe there is any area of London where the housing market is stagnant, so her income is a mystery/worry. Plus, I agree with the others that Zone 3 is not London outskirts (I should know - I live in Zone 6) and London rents usually make buying sensible, if you can.

Having said that, interest rates are a worry and it is probably only a good idea if she is actually happy to live there. But only you can judge how your friend will react to you telling her that.

olgaga · 14/02/2015 23:19

With £60k help, getting her own property for £140k in Zone 3 is an absolute bargain!

She's wasting money every month paying to share housing with strangers - at 35!

Warn her by all means, if you think you know better. She will ignore you if she has any sense.

TeddyBee · 14/02/2015 23:23

Even during the dip, our zone 4 house continued to rise in value. I don't think she'll lose out if she buys it. And if she's sensible (and sounds like she is) she'll take out a fixed rate mortgage so won't have to worry about rising interest rates for some time.

expatinscotland · 14/02/2015 23:25

YABU.

MajesticWhine · 14/02/2015 23:29

I think she is doing the right thing. I think it is fair enough for you to very gently express your concerns about interest rates or house prices moving unfavourably. But really no more than politely mention. Otherwise YWBU.

maninawomansworld · 14/02/2015 23:49

YABU. She's an estate agent so of all people should know what she's doing!

Also, the bank of England are actually currently toying with reducing interest rates further, possibly to 0.25% if inflation figures go as expected over the next 6 months. No one expects rates to go up for a couple of years at least.

Property in London (or the SE in general) is the BEST investment going at the moment bar none!

fassbendersmistress · 15/02/2015 00:01

YABU.

Zone 3...20 mins walk to a station...it sounds ok to me and I live in zone 4. She's an estate FGS...what are your qualifications? The media and several episodes of Location, Location, Location....?

I bought a tiny flat above commercial premises several years ago at a pretty rubbish time in the market but I had some cash and was desperate to get on the ladder. Most of my friends thought I was crazy....advised me that I'd never sell it on. . I sold it and made £70k last year.

By all means voice your concerns, but gently, and then leave her alone to get on with her investment.

RessyMedHair · 15/02/2015 00:04

I don't understand why you'd say that to her.

Property is so so so ludicrously expensive in london that 200k for a flat sounds very reasonable.

A lot of x council homes are very well build and well-designed and have no problems with anti-social behaviour if they're sold on so the 'x council' bit wouldn't scare me, if it was what I was looking for.

She's only 35. She could be working for another 30 years, and even if she weren't working she'd still need to pay rent.

So............... yabu

MelonBallersAreStrange · 15/02/2015 00:13

Should I just stay quiet or tell her my concerns?

Oh god, the patronising pomposity of you.

She's an intelligent woman who has made a financial decision based on her own appetite for risk, the funds available to her and her perception of the market.

In the same position you would have made a different decision. That doesn't mean she has failed to understand the risks. It just means she has come to a different conclusion.

If you were a man, this would definitely fall under "mansplaining" but you appear to be a woman so I'll have to stick with patronising pomposity.

RessyMedHair · 15/02/2015 00:17

In 2008 my friend bought an apartment in Bulgaria and I kept my gob shut. €40k it cost her. I was dying to suggest she just pay it off her mortgage on her actual home, but no, I said nothing and it's an albatross around her neck now and for that reason more than any other I'm so relieved I said nothing. I hope she's not reading this.

Andrewofgg · 15/02/2015 00:22

MYOB.

ManOfSpiel · 15/02/2015 00:37

Are lenders really approving 7x salaries nowadays Shock

I'd be worried about the ability to pay the mortgage on that salary but would be fine if she got a lodger.

The property sounds like a good idea though and great if her parents have chipped in £60k. That won't help if rates go up but will definitely act as a buffer if prices drop.

Ultimately it's a gamble but we all hope it pays off. Hopefully it will for your friend.

DonnaTheKamikaze · 15/02/2015 00:55

This reply has been deleted

Message withdrawn at poster's request.

Amammi · 15/02/2015 01:00

Presume as she is in the business she has looked at the state of the estate not just the flat she is buying. She should have a wander around the block itself and try to judge the state of the general areas - windows, roof, lifts etc and get hold of a copy of the accounts for the property management co. Councils are getting rid of these as they have no cash reserves to fix big ticket cost items that fall under the property mgt co responsibility. Overall it looks like she has a good idea of what she is doing and it makes sense for a working woman to own their own property

Pipbin · 15/02/2015 01:04

If she asks your opinion then give it. Otherwise she is a grown up who can do what the hell she pleases.

oliveinthemartini · 15/02/2015 01:36

Earning £20k as a 35 yrold estate agent in london?

Bullshit.