Sell London flat, or no?

[CuteKinn]

Hi,

We moved out of London last year to Wales, and we have permenately decided to live here. We have a 2 bed flat in London (zone 3 - no mortgage) that we were planning to sell once we had settled down in Wales, and buy a much larger permanent property here. We are therefore currently renting.

DH is having second thoughts about selling the London flat, saying it will increase much more in value in the next few years, especially after brexit. I'm not on keen on taking a mortgage out for a new property here (we have been there, done that, and we are also on flexible contract work so it's easier not having a huge mortgage) but at the same time would also prefer to buy our own place here now that we have settled down. What would you advise us to do?

If I were them ancient and could stretch to a terrace on a rising salary scale, I'd do that. Unfortunately, 2-bed leasehold flats are first to drop in price, because there are so many of them, and they are built/bought/sold by investors for BTL, so there's an oversupply of them against other property types.

For a young professional couple who could stretch and in an uncertain market, I'd be advising the terrace, just for options in the future and holding its value better. I do understand though that it is hard to see this as FTB's living under someone else's roof when you've already waited a while...

Agree with both posters above - worries about hard earned cash being cut and the fact that FTBs living with mum and dad naturally want to get on with it.
current flat they are offering on is not new build and is near tube station and a good school, so future-proofed a bit....Oh for that crystal ball!

The market in London and SE is falling. Our house has lost 10% of its value in 3 months. As someone heavily involved in the property market my advise is do not sell now if you can hold out for longer.

Firstly this time of year is awful for selling in the best of times, this year its truly awful. Things usually pick up properly in Feb/March but with brexit looking to happen in March I’d say we won’t see the proper trends and people comfortable enough with the economy until Summer 2018 which is when the market usually slows in the UK anyway as people are on their holidays, best time to sell if the market stabilises is between Sept-nov 2018 before it slows down again for xmas.

So if you can hold out i’d Say realistically you’re looking at a Spring 2019 sale to get the best price, as long as brexit doesn’t completely screw up the market.

Also worth keeping an eye on the budget today, any changes with stamp duty should prop the market back up for a while.

Brexit transition - starts March 2019 not 2018.

I think that we are staring over a cliff but we cant see how far down it is or if there are any bumps on the way with respect to Brexit.

For what its worth we are in the same position and have decided to keep the house in the south east. We have taken some equity out of it and have got a mortgage in our new location.

Pre Brexit we were always planning to sell it and then buy cash. But I think it is now a bad time to sell. Our house , according to the estate agent, has now dropped by 10%.

We feel we want to wait and see what happens. We will probably sell in 10 years time.

I would get a BTL mortgage on the London flat and use that money to buy in Wales. Then rent out the flat and at least you can offset rental income against the mortgage interest. No way would I sell it.

We kept our London property and rent a house in the country. It works well for us. We're planning to move back to London when the DS's leave school, and could never afford to if we had swapped a London property for a country one. Over the nine years that we've been living in the country, our London property has more than doubled in value, whereas property prices around here haven't gone up more than ten percent. We also see it as a way of the DSs having a base in London for university/first jobs, which would be very very difficult for them otherwise.

"Then rent out the flat and at least you can offset rental income against the mortgage interest."

No you cant. It is being phased out from April 17 - April 20.

Don’t sell it rent it. If its not in great condition rent it to the council for a reduced rate but you will have guaranteed rent every month. Then use that money to save for a bigger house. London property will always increase in value even if it’s not a lot it’s great to have.

wa@ancientandmodern if they can wait it out at yours another 6 months and stretch slightly to get a freehold "2 up 2 down" there is so much more potential for the future e..g loft and side return.

Interesting re posters on this thread saying prices are coming down & the budget today reducing stamp duty.

I agree with the opinions of trying to avoid the 2 bed new build. They are just so many of them, Vauxhall is crazy & many of those developers are paying the stamp duty for customers already.

If you own two properties, the one you don’t live in will attract capital gains tax when you sell. Assuming you have a gain of course. The investment gain can be dented somewhat. You also need to get a tenant who does not mess up your flat and upkeep can be huge as are costs to the Agent. As you are in Wales are you up for maintenance of the flat yourself ? Property in Wales is pretty stagnant and never increase much. I think, as long as you recognise the pitfalls, renting out the London flat would be ok but Brexit is an unknown and if only we could see 10
Years into the future!

New build 2 beds anywhere around here - SW 15 and 17 are the ones I'm most familiar with - are IMO vastly overpriced compared to older properties, and will usually come with hefty ground rent/service charges, too.

If I were advising anyone around here who wanted a 2 bed flat, I'd say look at the Edwardian purpose built maisonettes - there are masses of them, with usually a lot more space than any newbuild at a similar price, usually pretty low or peppercorn charges, and often a small garden or patio thrown in.
When I was looking at several of these with a dd, a 2 bed of nearly 70 sq m, plus its own outside space, was the same price as a nearby 1 bed newbuild of barely 45 sq m.

When I was looking at several of these with a dd, a 2 bed of nearly 70 sq m, plus its own outside space, was the same price as a nearby 1 bed newbuild of barely 45 sq m

Exactly it surprises me that they can get away with it & I don't quite understand why you wouldn't go for the less common, larger period property with garden & in some case potential to extend vs a new build with a balcony.

Jumpy, I suspect the newbuilds sold because buyers were seduced by shiny 'lifestyle' show-flat decor - never mind that there was nowhere to put anything!

Exactly it surprises me that they can get away with it & I don't quite understand why you wouldn't go for the less common, larger period property with garden

I think this might partly be a matter of taste. We've done both and much prefer light, thoughtfully laid out, double glazed (etc) new builds when compared with some of the older properties that are about. Obviously it depends (there are some awful new builds and beautiful older buildings) but this has definitely been our preference overall. We are happier in newer buildings.

I agree John that new builds have their place & can be lovely but the price discrepancy does surprise me.

We recently paid to have our flat in London valued by a surveyor. He said from late 16 to summer 17, house price index showed a 10% increase. So certainly in our bit of inner city London, prices have going up, but slowly.

Surveyor also said that the flat in our block that sold a year ago has gone up in value around 30k in the last 12 months according to his research.

Antihop - that is really fascinating - if you look at the interactive map by borough on the link below - it shows that K&C went up 10% whilst City of London went down 13% from July 16 to July 17 ....seems mad when they are almost ajoining -- any idea why these micro markets exist and are so varied in London.

www.homesandproperty.co.uk/property-news/whats-happening-to-house-prices-a-year-after-the-brexit-vote-and-10-years-after-the-financial-crisis-a112866.html

@another20 I think K&C will have quite a low volume of transactions, and a couple of super high value transactions will skew results.

Hackney still going up crazy crazy amounts!

Maybe it is a lag-effect - maybe because there were loads of new builds where the price is agreed off plan years before and they have all just completed? Also maybe the 'prime luxury ' London market runs in its own bubble based on exchange rate and international money (laundering)

I find the discrepancy incredible.

The reason there can be a discrepancy between prices for new and old flats is that the developer will almost certainly have had to spend money cleaning up the site, especially if it is a brownfield site and was formerly light industrial for example. There are all sorts of costs in new build that are not present in an established property, not least the massive costs of getting planning permission and undertaking consultations in the first place. Developments also have to make a contribution to the infrastructure that older properties never had to make.

Do not think that people who buy new build are all stupid. Some of the flats are excellent, in good locations and will not require much maintenance for 10 years. No DIY bodges. No gruesome bathrooms or kitchens or overgrown gardens. Many people who buy new are very time poor and just want a crash pad with everything that works, looks good, and no effort is involved in living there. If you are working all hours there is merit in this.

We are now looking for DD in London and I would not rule out new. We are not seduced by shiny, but we do not want to have constant maintenance problems either. We have also found older properties are just as expensive where we are looking. Quaint Victorian costs a lot!

Kensington and Chelsea does not join the City! These areas are both mega expensive anyway.

Do not think that people who buy new build are all stupid. Some of the flats are excellent, in good locations and will not require much maintenance for 10 years. No DIY bodges. No gruesome bathrooms or kitchens or overgrown gardens. Many people who buy new are very time poor and just want a crash pad with everything that works, looks good, and no effort is involved in living there. If you are working all hours there is merit in this.

Agreed, some new builds are lovely. Especially the slightly more expensive ones that are bigger and better designed rather than the long and thing and quite dark 2 beds with 2.7m narrow bedrooms.

The flat I lived in for 5 years was amazing - so much light, superb sound proofing, kitchen and bathroom only as old as the building. Much prefer that over a period conversion - dark, bad layout, can hear every footstep above.