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?

I wonder why that is. Considering how expensive property is, you'd think flats would be in demand since they're often cheaper than houses.

The property abroad isn’t worth a lot - more than the different in stamp duty but not by loads. It covers its costs and we enjoy using it, as do our friends and family, so would be a heart wrench to sell! Has sentimental value too. But, yes, I know, diamond shoes etc etc.

what's your point @viques?

Property prices increasing and making money on it isn't agiven. Either you overpaid when you bought it or the market hasn't increased. Just be grateful it hasn't decreased and you ended up in negative equity or something. You still have a roof over your head and equity built up from paying off the mortgage.

All of the homes I have bought over the years the previous owners have lost money on. Great news for me, but also a great life lesson when I was first starting out. People always talk about property prices going up, it’s a shock when they go down…it is something you should always be mindful of.

I wonder why that is. Considering how expensive property is, you'd think flats would be in demand since they're often cheaper than houses.

Often the price of a flat in inner London is the same as a small house in outer London or unfashionable part of inner London. Lots of news about cladding, service charges & people want some outdoor space, etc.

You've saved 8 years of rent then.

And if you stay in the area then prices will be equally stagnant for the sort of property you want to move to. So the absolute difference between the price you sell for and the price of the new property will be less than if there had been huge property price inflation.

It’s not nuts. The London housing market is in decline.

Last year the capital registered zero increase overall in house prices, which have been sliding for the past three years.
House prices were £686,039 on average last year across the capital, 5pc lower than in 2022.

Prices in Westminster fell 3.5pc in 2024 to an average of just under £731,000, while those in the Borough of Ealing dropped by almost 5pc, to just under £560,000.

Declines of more than 3pc were also seen in Bromley, Kingston upon Thames, Enfield, Harrow and Southwark.

We’re in the same position OP. It’s a real issue if you want to relocate to other areas of the country that have continued to see house price rises. I used to think we would be able to buy a mansion anywhere else in the country after buying our London property in 2015. The reality is very different.

I agree with other posters... You haven't lost anything, you have just not made the massive profit you wanted to. Some people before lockdown were buying properties in London, and several years later selling it with a £200K to £400K profit.

You had such a massive wadge of money given to you that you could afford to buy a flat in a swanky part of London, OUTRIGHT, and it hasn't brought any profit 8 years later. I can't find a single shred of myself that has an ounce of sympathy for you @Hotpinkparade

My brain is struggling to follow your mental gymnastics here. You are saying if you had not bought a house, and invested your cash in….something else, you would have made £200k more than you have by buying a house? But then where would you have lived?

if you’d rented a similar sized London property, at around £2-2500 per month, since 2017 that would be around £190-240k spent on rent. So all your investment ‘wealth’ would be more than wiped out by rent. You would be poorer. We’ve not even begun to think about such brickbats as the stock market crash caused by Covid, and then the one last month by Trump, which both wiped out nearly all the previous few years gains. The possibilities are endless as to how you could have made or lost money.

This is a nuts way to think about it.

Anecdotally, I'm hearing of a lot of renters having to move because landlords are getting out of BTL because of changes in tenancy laws. If a lot of former BTL properties come onto the market in the next couple of years, that may well prevent growth in house prices.

On balance, I think significant growth in prices may be unlikely.

Not a surprise, given the age range of many who can afford to buy, and that finally for many jobs some level of working from home has stabilised.

What would your rent have been for the flat for 8 years, including rent rises to account for renovation?

Except the inheritance was free money so ..

You need to recognise that what you've had is 8 years of paying no rent. Based on what you say re 200k loss due to inflation i am guessing you are living in a flat that cost 600-650k. That is likely worth probably £24,000 a year in rent, for 8 years, that is almost 200k.

Before I was married my husband bought an apartment when he was in his mid 20s through co-owner ship as his starter home. He bought it for £210, 000 and when he sold it in 2016 (because we had our first child and wanted a garden) it went for £105,000 as it lost £100, 000 in value on the housing crash around 2007 and never went up. So a nightmare basically. He had been paying a mortgage for nearly 10 years(& rent to co-owner ship ) and we still had to pay thousands to the bank in negative equity. So basically I know it's disappointing OP & your feelings are valid but it could be alot worse.

If you paid 200k cash from an inheritance then it hasnt cost you anything. Even if you sell it for the same price you paid for it you've still gained financially, just not as much as you would have done if the housing market was different. You haven't lost money, you just haven't gained as much as you'd hoped.

but they have been paying rent at half value.

Flats don't hold their value like houses do. You have not lost you just haven't gained as you would have liked to. You must have known a flat often doesn't hold its value.

That is really odd especially since you say you are in London. Is the house really really old? That might be the reason it hasn’t appreciated much.

We bought a 17 year old house it 2019 at £490K and valued last month at £620K, not in London though. But can’t imagine how yours has not appreciated at all. Didn’t you notice each time you re-mortgaged that it is not appreciating in value?

I don’t think using an inflation calculator is a very helpful way of looking at it. My house was bought for £285k in 2006. According to the inflation calculator thst amount is now worth £485k but my house is valued at £400k. So by your rationale does this mean I have lost at least £85k? Well, that’s certainly one way of looking at it I suppose. The other is that my property is now worth £125k more than I paid for it.

So if you had rented for the eight years since 2017, you'd have paid at least £1500 pcm in rent. £18k per annum x 8 years: £145,000. Instead, you could and should have been saving that money and accruing compound interest. At 3% you would have £164,863 now. Your £200k might have lost 25% over the last 10 days with the stock market crash. If your rent would have been higher, you would have much more saved.

Property is a home first and foremost. The ludicrous increases of the last 40 years ha e been a blip. Looked at over time property has never been a spectacular investment. It's cyclical and you bought at the top.

That is really odd especially since you say you are in London. Is the house really really old? That might be the reason it hasn’t appreciated much.

Things have changed

What did you do with the money you saved by not paying rent? If you add that up it's worth heaps and could have been invested (or alternatively I guess was invested in having a better lifestyle, which is totally reasonable too)

Yeah I think it's harder to see huge increases in value with leasehold properties because of the "length of lease " issues and also the service charge issues. It does factor in people's decision making