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?

Oh yes, those are good spots too. But definitely for a 2 bed not 1.

I would like to emphasize the possibility of a trust to buy the flat.
We are in the states now so different legal system but we're strongly advised to set up trusts for dc as a safer way of giving them assets.

I agree with others - 2 bed flat is the way to go. Easier to sell, and gives flexibility if she wants to rent the 2nd bedroom, or if she gets a partner then they may want some extra space.

If she's looking for lots of tennis courts, and good parks to run, not too far from UCL then Highgate / Archway would tick those boxes. Waterlow Park, Highgate Wood and Hampstead Heath are beautiful. And easy to get to happening areas on the northern line or bus (Angel / Kings Cross / Old Street / Camden, etc).

In that scenario, I'd happily let her get a flat in London for £650k. I think your brother needs to wind his neck in - you and your dd have suffered the tragic loss of your dh and having a flat bought outright is a good and permanent legacy for your dh to have been able to facilitate.

I wouldn't put it in pensions - presumably you have quite a big/expensive house that you might want to downsize in the future anyway.

I guess she just might need to be careful in the future if she got married and then divorced and lost half the flat in the process. My dh has a much older friend whose dd this did actually happen to. I have only seen pre-nups on TV, but it seems that in your case, it might be appropriate.

What about somewhere like this https://www.rightmove.co.uk/properties/143668433#/?channel=RES_BUY

We recently sold our 2 bed zone 1 London flat for around that price. It's not expensive for a good flat in a central location. Our flat was in a modern apartment block in a safe but busy central area. We lived there for 10 years and had no major maintenance issues and soundproofing was excellent. If we only needed one bedroom we could have rented out the second bedroom for a nice tax free profit. We were able to live within walking distance of work, and a fast (10 min) tube distance to nights out. I never experienced loneliness in central London at all. It will be full of other wealthy students who can afford to live centrally too. For UCL I'd consider Bloomsbury, Kings Cross, Fitzrovia. I wouldn't look further than a 20 min walk, it's nice to be a quick walk from work or study as that's where you have to get to during rush hour when public transport is at its worst.

Quite a few nice ones, I lived living in this area https://www.rightmove.co.uk/property-for-sale/SW8-3NR.html?radius=0.5&minPrice=500000&maxPrice=650000&minBedrooms=2

This - its not your parents, or your brothers place to interfere

Of all property, the ones I think will hold value best are central London flats. There will always be demand for them, including rental income if she wants to come home to you for a bit after university. I don’t think there is much point going and living in the suburbs just to have a bigger place when you are just out of uni. Much better to be near work and stuff to do and in easy travelling distance of your friends.

I lived in Central London for approx 10 years in my 20 and 30s. It was brilliant. Depending on the area, £650k is a lot of money but not unusual for zone 1 - in fact in some areas it’s really good. Just watch out for lease length and service charge. And cladding, of course.

Massive service charges. Which can rise and rise.

OP, the best flat is the one your Dd wants to live in, and can afford.

A share of freehold is great.

Avoid anything with cladding, lifts, service charges over which she would have no control.

And yes, Central London flats are expensive but she will be saving a huge lot each year in astronomical London rent.

Have been your daughter, and my advice would be:

• Stop asking family members for financial advice.

• Look for share of freehold flats in period houses now divided up into two or three flats. People think this is a maintenance headache so these flats are much cheaper than the new build equivalent, but in fact it means that the costs of essential repairs are just shared out between you - there’s no third party management company taking a profit while doing needless redecorating every year. Plus you know the freeholders personally so there’s less likelihood of delays or disputes.

• Look for two bedroom flats, or large one bedroom flats you could divide into two bedrooms later down the line.

I know only West London myself, but Shepherd’s Bush would give your DD what she wants within budget, and is only one tube spot outside Zone 1.

Sorry one more bit of advice I forgot before: if you buy in a period building set aside some money to invest in professional soundproofing as this is the only area they’re beaten by new builds. Sound proofing makes a massive difference to quality of life and therefore how long you can remain living in your flat.

She has a lifetime ahead of her to buy a house in the burbs near a good school and a Gails!
Buying a flat in central sounds like the best choice for her right now but I'm another voice suggesting looking a little further out for a two bed. Has she ever lived by herself? If it's what she really wants I'd suggest testing the waters by renting somewhere similar by herself first. I was a decade older than her when I first lived alone and despite being very well suited to it, and loving it now, it was deafeningly quiet to start with. If all her mates are in chaotic house shares there's a risk she could find it quite lonely in comparison. With a two bed she's got options - if it turns out she prefers to give alone then she's got space for a great home office/ walk in wardrobe/ library and if she might prefer having a mate around then there's space for them.

Bermondsey or Islington would both be a good bet for somewhere that's central, easy to get to UCL by public transport/bike/walking, but lively. Bloomsbury is beautiful but it's really very quiet at weekends and it can feel quite transitory. A 2 bed gives her options in terms of having a WFH room/getting a flatmate and will mean the flat suits her needs for longer.

Go for it, it sounds like a good way to set her up for life and it's really none of your brother's business.

Also think how much you'd be saving in not paying rent. My daughter and I bought a flat with her late father's money in 2013 in Acton for £390k sold for £425k in 2021. (Think would go for more as crossrail now open.

She then bought a 5 bed house just outside Edinburgh. Had she been paying rent for those 8 years it would have been about £60k in rent she would have spent.

It's your money not your family's.

The flat 110%. Make sure she protects that money from any future partners if she does meet someone, buy a house together, have a family etc. That money always need legally ringfencing.

She's a 19yo student, a 1 bed is fine for her needs, she's not going to be stuck there forever.

Re. flats - are getting a very bad rap at moment -. Michael Gove was supposed to be introducing leasehold reform through parliament - but this has largely been back peddled.
Some newer flats are badly affected by the cladding scandal causing problems for owners and their properties are unsellable until the problem of cladding is addressed.
. Many flats with shorter leases are difficult to re-sell - they are usually being refused mortgages and re-mortgages if their leases fall below 80 years - flats less than 80 years then need to have further investment to extend.
Service charges just go up and up - leaseholders are often ripped off by poor and unscrupulous managing agents of whom they have no control.
Ground Rent can be another big problem - it generally goes up every so many years and reform regarding flats' G R has not yet been introduced by this government although it has been for houses.
But Labour have said they will introduce leasehold reform if they get into power!
I think there are about 4 million leasehold properties in England and most property in London is leasehold.

I would buy the flat, but in your name, not DD. You will not lose money on it, and when DD is ready to settle yo7 can then get her a forever home

You would need to look at the implications for stamp duty and capital gains if you did this.

Bad idea. More stamp duty and then capital gains tax when it’s sold. It’s difficult to see any upside to this really.

Kentish Town is good. Very quick into town. A walk to King's X. Right beside Hampstead Heath. Great transport links.

Buy the £650k flat for her. She can work her way upwards and buy something bigger. However the security of a nice place, in a good location in London is fantastic. Safety is a big concern in London, no guarantees obviously but I would pay more to feel safer.

I lived living in London, couldn’t afford to buy a property there. You are giving her a great leg up in the property ladder. London is always sought after. Enjoy your visits to her

I’d go for a two bed flat somewhere like Brixton or Clapham. Lively and fun and still very central. These will definitely hold their value and would allow for a flatmate if she wants company or needs a revenue stream.

Similar situation here, my DC are buying together. They're paying less than £450k because of the lack of stamp duty for first time buyers.

I'd definitely get a two bedroom place in case she gets lonely or needs extra income.

Watch out for service charges....