To think buying a flat is the right idea

[Losttheattitude]

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?

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

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

Here you go. Just examples, there are plenty more.

https://www.rightmove.co.uk/properties/142762589 - not Paddington but very central

https://www.rightmove.co.uk/properties/86394189

https://www.rightmove.co.uk/properties/129882626

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.

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

Hmm maybe Caledonian Road, around that area?

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?

But do look closely at what @GrumpyPanda said

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.

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!

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

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.

I'd suggest Bloomsbury.

Absolutely the flat, she’s young and wants to enjoy her life. As you say it’s her money. She sounds sensible and doing well, let her do what she wants.

My only stipulation would be put it in a trust so no future boyfriends or partners get their hands on it.

Yes definitely go for a two bed, may have to be marginally further away, but it means that she can have a lodger (which would bring in quite a lot per month, and I think is very tax effective with the ‘rent a room’ scheme, but you’d need to check this. Also two beds are a lot more versatile - you can start a family and not have to move straight away. I would definitely broaden your search area though, to look for something slightly better value. But definitely check what the service charge is, some flats near us have service charges that have trebled over the last year (from £2k per year to £6k per year), and as a result quite a few of them are now for sale.

https://www.rightmove.co.uk/properties/145177271

https://www.rightmove.co.uk/properties/145055654

https://www.rightmove.co.uk/properties/143498624

I'd buy a 1 bed flat so that if she settles down into a relationship to have a baby, she will need to sell. It gives a clear break point to review finances and let her and a partner choose a home together.

Id also seek legal and/financial advice on protecting money and assets.

For example, a 50/50 joint tenancy together might mean that when you both sell the flat, she gets 50% which will be hers to put into a joint home with a partner as she sees fit and you can decide if or how to top it up. Perhaps you might want to then consider a three way tenancy to give you and DD a majority control with funds set aside to buy out her future partner if it went wrong. Lots to consider.

A London flat should hold its value. When she needs more space then she can sell and buy something new. I'm guessing the flat could well be perfectly OK until there are children in her life and she needs more space. Seeing as she's just starting Uni then that could well be quite a few years away.

Don't put it in a pension for her. I'm sure your DD doesn't want to wait 40 years to be able to have the money. Her financial need is going to be greater now, not when she's 60+.

No mortgage now means greater capacity for savings when she starts work so savings and pensions for the future could be sorted during her working life. There's limits on tax efficient pension savings so a big payment now might actually take her over the limits by the time it's been invested 40 years.

Why is your brother so involved? His advice really isn't great.

This is money for you and your DD. Do what you feel is right for your needs.

I'm sorry for the loss you and your DD suffered. I'm sure your DH would want to see you both financially secure and be pleased your DD can have somewhere she loves to live without the financial burden.

With flats, you really need to put the hours in viewing them, getting a feel for areas, styles of building, transport links, how it feels at night time. Fortunately as cash buyers the agents will be falling over themselves to show you things. Avoid Foxtons.

Oh also, worth digging deep into the archives of Kirstie & Phil shows to get a sense of what sort of compromises you might need to make and what sort of things are important to you when flat hunting. DH and I learned a lot about each other from watching and commenting on TV people’s house hunts, made it much easier when we came to do it ourselves.

I don't think I would like to have lived by myself, aged 19. Part of the Uni experience for me was living in a grotty massive house with friends (there was always a buddy to go out with).

Would it be a better idea to have the flat as a "future home" for a couple of years and use the rental income to fund her accommodation.

I've seen a couple of threads on here/Facebook about students who end up hating being "the landlord" when friendships go wrong or a boyfriend/girlfriend moves in.

I agree. I don't think a London flat is financially a bad idea but it is really easy to get very lonely in Central London. You also need to think about who will be looking after it if she wants to travel or just move elsewhere non-permanently when she graduates. A flat could tie her down most annoyingly.

I would look from Gower St, up into King's Cross and Angel. That's the buzziest, most special part of the city in my view.

If she just goes south of the river it gets cheaper and still nice areas like Shad Thames, London Bridge, Waterloo, Lambeth North, the cooler bits of Bermondsey near the river or even Battersea. I think getting a flat is a great idea but a one-bed for 650k is not so great and better to get a two bed (and potentially let the second room to a uni mate) for that price or a one-bed for less (should be able to get a decent one more like 450k).

2 bed flat in Camden or Kentish Town and she will be sorted. There are lots available for your budget