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?

You initially compared two different things

But you have now edited the post

If the trust you paid rent to is overseen by your dad, presumably your rent hasn’t disappeared? It will eventually go to you or another family member who is the beneficiary of the trust - ?

Anyway. You spent £312.5k inheritance on the house and lived in it for a low rent for 8 years. Because this rent was low, you could make certain life choices eg your partner returning to study. Because you owned the house, you could do things like put in a new bathroom.

Money isn’t a goal in itself - it gives you options, and you have used those options, which is great.

Bit you would not have that money as you would have spent it on rent if you didn't buy your own...

It is low wages. The houses are too expensive relative to average person income - well at least in London.

Wages were low when we had low interest rates but no one really noticed. Interest rates have had a big impact

it's also the increased utilities, bills etc

Flats have a bad reputation currently with management fees and cladding issues, hence have nose dived in popularity.
Just sell it and forget about it.

The lack of growth in values seems right for a flat in London.

The growth has been in houses

And yes you have lost money in real terms (i.e. adjusting for inflation)

Should you hold on ? Probably not as that would require either dramatic fall in interest rates to drive another boom or massive leap in productivity to drive real wage growth

Neither are likely

Oh come on, you do your research. Who do you think tells other people?
The reality is it’s easier to spend money you didn’t work for. You made a the choice to buy a costly flat and only own half. You could have bought a terraced house in most of Z 3 and half of zone 2 for 500k in 2017 which would have been a much better investment.

The fact that you didn’t do any research on the property market, the area you were buying in or expected growth shows you absolutely wouldn’t have somehow made £200k from misc investing.

Let me find my tiny 🎻

With an ungrateful attitude you will always find ways to feel disappointed by life. You’ve had unbelievable luck compared to billions of people. You should focus instead on increasing your income through your work

Flats are not all the same. Victorian conversion flats have definitely increased in value in the past few years, blocks with restrictive leases, high services charges and cladding issues obviously have not.

Victorian conversion flats have definitely increased in value in the past few years

It really depends on the area

@Hotpinkparade I know people who bought & after 5 yrs sold for less so it could be worse.

Yes, I think it's the triple whammy of lockdown, the cladding scandal and more remote working. Possibly also greater awareness of how leasehold and service charges can really fuck people over.

We very recently had a situation where lots of people were functionally excluded from outdoor space if they didn't exclusively occupy it, and many more had their access severely limited because of fear, policing and social shaming. It didn't matter how many amazing parks you were near, you were still worse off in that respect than someone with the smallest, scrubbiest bit of yard that was theirs alone. Even people in flats with access to decent shared space sometimes had their access to it curtailed, either through their own fear or the behaviour of those around them. The memory of that is going to be influential for some time.

www.rightmove.co.uk/house-prices/nw3.html?searchLocation=NW3&useLocationIdentifier=false&locationIdentifier=&propertyType=FLAT

if you look here you are definitely not alone.

The memory of that is going to be influential for some time.

it's also age of FTBs & the cost of moving. If you are buying a flat for 500k and spending 10k on stamp duty you really don't want to be trying to upsize to a house in a few years.

Not rtft but I agree with others – you would have had to live somewhere and that would have cost. I don't know about renting in London but I am thinking a flat that cost enough to make £25k a year in interest on the purchase price (so what? £2m plus?) would cost more than £2k a month to rent? So that would have been your money gone and nothing to show for it? At least you still have the flat/the money it would sell for?

Edit: I see you have clarified the purchase price - yes I am not sure £625k would have brought in £25k a year for the last eight years tbh. Still tho – even a flat of that price would surely have cost £1-2k pm to rent? so my point is valid.

Well you were given the whole purchase price of your house. We all get different types of luck I guess.

Did you not do any research before buying?

Yes definitely that too. People buy later, so the concept of the ladder doesn't work in the same way that it used to.

I bought a 2 bed flat in 2019 for 400k . In a nice part of nw london (my flat is v small).. hasn't gone up at all. Still 400k.

But it's my home since my 20s and for 5 years I paid a mortgage of 1k and service charge of 150 quid (residents management block) which enabled me to live independently while our household income was still quite low. Think when we bought nett household income was only £4100! Household income over £7k when I remortgaged and payments jumped to £1282 (service charge increased by £16) but I am grateful that we weren't financially stressed before our salaries increased. Now grateful as my dh was on sick leave (full pay for 6 months but we didn't know what was going to happen after the full pay period ran out but he managed to qualify for long term income protection through insurance which covers 67% of pay) and I am going on maternity. The years on low mortgage has helped us build our buffer fund

My experience with all this has caused me to be less interested to upsize (we are only having 1 child anyway) and more interested in paying off our mortgage in full and improving our home. I have all sorts of plans for custom made loft beds in future (son's room is a small double and can fit a single bed, desk, wardrobe and chest of drawers but we can always make it more efficient!)

Exactly this.
You had the luxury @Hotpinkparade of making choices like not working much /returning to study. That's a huge privilege

Service charge is high (around £4k a year) but not unusual for the area

Dear god

At least somebody's making a killing out of it I suppose, but sorry OP - it really depresses me when private buyers think of property as some sort of "investment" rather than regarding it primarily as a home. Each to ttheirr own of course, but it seems to me a recipe for disappointment

The first ten years of a typical mortgage is usually interest. You’re not building equity in that time because the interest is so high and the only way you get equity in that situation is if your property increases in value. The OP has already stated her house has barely increased in value and she had spent money on it - meaning she’s lost money.

Rent it out until it increases in value.

you say you have lived there happily, I would see that as a huge plus and then factor in you have not been paying out dead money to a landlord, two wins really .