AIBU to be gutted my house has lost me money?

[Hotpinkparade]

I guess I’m really wondering if anyone else has been in this situation and what I can do… I bought a two bed flat in a nice area of London in 2017. Redecorated, replaced the kitchen and bathroom, and have lived here happily since.

We’re starting to outgrow it and decided to get the flat valued and see what’s out there. Two valuations, both for the same as we bought it - maybe 5% growth if we’re lucky. I’m just gutted. With inflation over that time, we’ve essentially lost £200,000. The estate agent said house prices in our area haven’t gone up over that time because it’s not ‘up and coming’, it came up a long time ago and has stayed desirable. What do we do? Just suck it up and sell, or wait and see if anything changes?

Thank you for sharing this. I’ve been putting off renewing as I’d struggle to even afford £10k 😔

But that was your choice. I own a leasehold flat but the residents own the freehold and dh is also a director of the residents management company. The other directors are animal lovers so they allow everyone to have dogs even the tenants.

Of course I don't live in nw3, I live in finchley, and my flat is worth 400k to 425k and it's not a mansion flat, just 1930s purpose built. My dh would love to live in a block which doesn't allow dogs and cats as he doesn't really like animals, he tolerated my caged pets as they lived in a cage.. I had a hamster and later gerbils so for me it was important though eventually I became allergic during pregnancy. All the flats I viewed allowed pets, some blocks didn't allow dogs but to be fair it's hard to toilet train a dog in a flat..

Thanks..he is on waiting list for nhs diagnosis but we are paying now so he can get his meds and get better

Flats have not generally gone up in London, just be thankful it wasn’t a new build (which are over priced when they come tot the market and lose the new build premium). People prefer outside space post-Covid and are willing to live further afield as they only come into the office 2-3 days a week.

Housing isn’t a one-way bet, and it’s only a problem if what you want to buy next has shot up in price, otherwise it’s just the difference in price you’re exposed to.

Yep I’ve lived in my house 17 years and it’s not worth anymore than I paid. In fact some on the street are selling at less than I paid. Until recently I was paying a mortgage which is now paid off due to inheritance. For over 10 years I couldn’t remortgage from our original deal when the fixed rate went to variable as there was no equity. I eventually did get a remortgage deal due to the fact I’d paid off some and had some equity due to that.

Due to circumstances now (divorced,
part time working, kids) I’d never be able to sell and use it as a deposit for something bigger. I couldn’t afford the repayments on even a similar mortgage amount to what I initially borrowed as the monthly payments were about to more than double when mortgage rates went up just as I was able to pay off the mortgage in full.

My house is worth less than £100k. And to be honest, any house offering more than my current house on the same area is about 3 times the price of mine. I’m in an older property, 1 bathroom, no driveway to park on, 3rd bedroom is a box. Needs a rewire. The rest of the town has boomed with new builds but those new builds come at a much higher price. The only people buying in my area seem to be landlords. I’m nearly the only one left on the street who is an owner occupier.

I'm really curious as to what borough this is... But yea, London and England in general are not in a good state in terms of investment, back in 2017 things were booming, interest rates were low and everyone was buying stuff so it was a good time to sell property. Now it's a good time to buy property so please don't sell it! If I were you I'd either rent it out or Airbnb and use the money to help pay a mortgage for a bigger, better property. Give it at least 5 years before you decide to sell, inflation is slowing down and investment is ramping up.

Yanbu. I get it. Our place hasn't risen in value at all, it's reduced over ten years. Whilst I'm grateful to have a roof over our heads and that's the main thing, it's limited our buying power if we wanted to move to another area.

I do focus on being grateful, but our area has had a huge increase in density and I'm starting to want to move somewhere more pedestrian. However, at the rate they're building, we've gone from a sedate, fairly posh suburb to somewhere more edgy and urban, whilst somehow avoiding gentrification. The newer population seem much poorer, the high street has started to be full of slummy looking shops, and so I guess our area is going downhill.

I'm a bit annoyed at the council for allowing so much development and therefore the relative prices have gone down. But I know young people need to have affordable development. Dunno - my socialist principles are being challenged by the speed of change and personal deficit. 🤣

Here's a crazy thought, what if OP did keep the cash in 2017 and put it in a savings account with 3.5% ROI, she'd have £262,000 now which could buy her same apartment plus a cool 62 grand... I know it's a stupid suggestion because she probably never had that much cash but it's showing one of the many flaws of property investment in turbulent or declining markets

Socialism in a country as populated as this requires a lot of high earners to the heavy lifting for the economy but those people are leaving in their droves. If loads of people pay tax, the bank of England can loan more easily, and people can get big mortgages more easily and so property values go up. Lately the bank of England hasn't been too happy with the nations finances so no low interest rate for us :(

With the amount of new flats the government and foreign investors are building lately, the price could very well go down.

If you stay in the same area, and bigger flats there also haven’t gone up in value, you shouldn’t be any worse off at all by buying a larger flat in the same area

That’s true but no point beating yourself up about it. Think about it differently. If you had invested you would have had to rent. In 8 years you would have sent more than £200k on rent ( with all the uncertaintity that comes from that).

you were lucky you inherited so could be a cash buyer IN LONDON. Bit unreasonable to come on and expect sympathy. Consider the alternative: I expect your friends have mortgages and I also expect that cost will largely equal any material gain.

You could try advertising it at the price that you want to sell it for and see whether anyone is interested at that price.

t! If I were you I'd either rent it out or Airbnb and use the money to help pay a mortgage for a bigger, better property. Give it at least 5 years before you decide to sell, inflation is slowing down and investment is ramping up.

Given a service charge of £300+ per month and windows that don’t shut properly and let draughts in, it doesn’t sound that attractive to rent or Airbnb either!

In reality it's not that long. Basically there's hardly been any growth since around 2020. And possibly you bought it overpriced.

My flat grew from 2015 - 2020 but hasn't changed much in value since 2020, maybe 5% if that.

Also I think you are really overestimating if you were expecting property growth to outstrip inflation. Inflation has been very high in last 5 years compared to last decade before that. At best I'd hope for it to slightly beat inflation, but then there will be times when it doesn't so on balance it just goes in leaps then stagnates.

It's one reason why property isn't actually always the best investment compared to say passive index stocks and shares. There's been financial studies that show this.

I think the thinking that a house/flat value should go up with inflation is flawed. Its a function of supply and demand, and as you know the rate of increase (or loss!) varies by area.
So just look to move to an area where the increase since 2017 has been the same as where you are currently and you will still have retained your place on the property ladder! Perceived problem solved.

I think it might be flats in general tbh OP. We bought a flat in 2016, sold it early 2020 and moved into a 4 bed detached. We sold the flat at exactly what we paid for it, which didn’t bother me tbh because we hadn’t been there long and hadn’t done anything to it. Our house value has subsequently gone up by over 200k according to zoopla and bank estimate (although we’ve not had it valued officially as not going to move). I checked our old flat out of interest and the zoopla value is basically the same as what we sold it for. For some reason flats seemed to have struggled post Covid, as when we bought the flat we paid a lot more than the previous owners did circa 2010, so there was definitely growth in that gap. On that basis, I think I’d just bite the bullet and sell if I was you as I can’t see the trend changing. We are south east, if that affects anything!

talking with a London solicitor yesterday, he said top end in London is still active but flats
have not been selling,
i personally would get 3 different estate agents to value, bear in mind what a Like for like rental would of cost you in the time you’re been there , as a room in London is costing 1000 to 1400 plus guessing you have made a huge saving there ,
more than you would of made if you invested the o original amount,
plus when you sell your primary residence, it’s capital gain free where any savings invest investments would’ve been taxed.
the property market is a bit precarious at the moment and I suspect we’ll go down a lot more with this current government and the wild economic situation,
I have to sell a property at the moment and in an ideal world would not do so in this market, but I can’t afford to wait it out so I’m gonna sell and rent. For a year Fingers crossed for you op

Same here.

We actually went into negative equity, couldn’t remortgage when our deal ran out and had to pay extortionate rates. It was devastating!

As soon as we recovered enough with the equity to have enough for a deposit we cut our losses and sold. For less than we originally paid.

it felt like we’d just poured money down the drain, though we had a roof over our heads of course.

Relying on property valuation increasing in order to gain money is equivalent to relying on an inheritance. It doesn't always go the way you want.
Trouble is, people don't read the small print. Prices are not guaranteed to increase.

How much would have costed you if you had put all the money into interest paying accounts and paid rent instead? Would you have been better off?

Chances are, you are better off this way, unless you had invested it successfully, which takes some knowledge and luck.

It is a personal thing, but, if I had the privilege of receiving an inheritance large enough to pay for a whole housein London, in cash, so to live there for 8 years rent and mortgage free, I would consider myself very fortunate indeed.
I could have saved a lot in the meanwhile, or paid a lot towards private pensions, not to mention the mental peace coming from owning my own house.

OP you sound quite naive - if you’re going to be involved in purchasing property, at the very least you need to be very aware that values do not always go up - as you are seeing, they can stagnate, and also they can go down, sometimes considerably. Many people have lost loads on money in the property market. Please do the necessary research before making any further purchases or investments (note: many (most/all?) other types of investments can also stagnate or lose money). If you think something is guaranteed to increase in value, most likely that is not true.

I'm quite confused about the rent paying situation. You own this house yet you pay rent. Is that not why you don't feel richer? You have not kept your cash, its gone to someone else.

OP owns half the house, a trust owns the other half. So she pays rent to the trust (presumably half what would be market rate).

Tbh when I owned with ex the value didn't go up very much. It can be the way it goes?

Yes annoying though if you thought it would appreciate more @Hotpinkparade