Buy small 2 bed flat in London Zone 2 or 2-3 bed house in Hertfordshire? Please help me decide

[ldnflatbuyer2021]

Hi,

My DH and I are at a point where we need to decide ASAP on what property to purchase due to rental extension...

We are wondering whether to:

1. buy a 2 bed flat in Zone 2 for £450k (this is a small 2 bed flat with 2nd room being a office/guest room PROs )

• we love the location, transport links and the flat is perfect
• flat comes with a nice long lease, good service charges...
• I can commute via train to both Hertfordshire and Berkshire, DH can cycle to work
• Flat prices are stagnant in the last 6 years so falling in real terms

CONs

• flat is small around 50 square meters (550 sq. ft.)
• I don't see the value going up anytime soon - who is the potential buyer marker? Any professionals are now likely to look outside of London.
• rents in this area dropped 20% or so due to COVID-19 - I wonder when there is even going to be a recovery in demand?

2. 2-3 bed house in Hertfordshire for £425k PROs

• freehold house
• spacious though we wouldn't need a 3rd bedroom, so maybe we go for a 2 bed house
• closer to my work at the moment - likely could walk to work, but there aren't any another major employers in walking distance
• will probably be easier to sell in a couple of years

CONs

• these houses are flying of the shelves at the moment
• the town is small and not as lively as London, but I guess we could go to London over weekends (my DH will go there for work on some weekdays)
• if I move to another position I'd need to get a car and I don't like a car commute (compared to a tube/train commute where I can chill on my phone)

3. keep renting (least favourite but potentially best financially) - rent in Hertfordshire (cheaper than London Zone 2) and if I move to Berkshire, rent there. PROs

• renting is cheaper by £200/month then buying once all transaction costs, maintenance costs... are taken into account

CONs

• we'd prefer to have control of our living place, property prices are likely to rise

About us:

I work in manufacturing in Hertfordshire, while my DH works in Central London. His workplace is flexible with return to work (eg. 2-3 days a week in the office).
I am likely to move jobs - so it would make my commute impossible if I found something eg. around Slough, Maidenhead...

Currently we are renting in Zone 2, London with good train links.
I commute to Hertfordshire but might have to commute to Berkshire for a new role.

In 4-5 years we are likely to start a family and move to my DH homeland in the EU where there are more maternity and childcare benefits along with good career options for both of us.

I’d stay renting if you will probably need to move job soon. It gives more flexibility.

With you working outside London and DH only needing to commute a couple of days a week, it seems to make more sense for you to buy in Hertfordshire. Whilst you might change jobs, it doesn’t make much sense for you to pay a London property premium only to be commuting out of London every day.

That’s assuming you don’t love living in London, which it doesn’t sound from your post as though you do. If you do, that’s different - I’d not consider leaving London so am more than happy to take the property negatives for the joy of living here.

What will you do in 4/5 years if you move out of the country? Will you sell the property or rent it out? I don't know if it is really worth buying anywhere right now that you would sell in less than 5 years as the market is very unstable. It also sounds like you might be moving around with work in this time so renting would be more flexible.

Take the London flat. I don't agree professionals are likely to look outside London as London is where all the jobs are.

Enjoy living in London.

We moved about a 40 minute commute from a city I love and I thought we'd be over there all the time but we're not. I wish we'd moved to the city.

Option 2.

I really don't think flats are a good short term investment at the moment if you're going to move country and sell it.

550sq ft is just toooooo small for a two bed unless its super desirable zone 1 imho.
If you want to stay central I'd try and find something a bit bigger.

I think Option 2 sounds better especially given the commute costs.

When we looked at areas we factored in commute costs and it helped clarify things as we both commute into London moving out of London financially didnt make sense. Our jobs are also going to be London bound for foreseeable future.

If we were in your position I think we certainly would have gone for Hertfordshire. We are just in from there but on the tube line

@Grimbelina I guess we could keep them and they would barely "cashflow" on an interest only mortgage but there are also issues like remortgaging overseas... so I would probably look to sell unless the prices dropped a lot.

@LivingLaVidaCovid - the flat is 1/2 mile from Zone 1, but it's more of a 1.5 bed flat

Definitely don't keep renting, it's throwing money away.

I own a two bed flat in an amazing location which is 560sqft. If I was on my own or a couple I'd live in ot no worries. As it is I have two teens and two dogs, so I'm buying a three bed terrace in zone 3. But once they fly the coop I'm taking over the flat! Location Location Location. And I'm a city girl.

Depends also on your financial situation - do you need to make money on your property in 5 yrs when you move abroad?

If you both have good salaries and you know you can easily buy when you move abroad (and maybe much cheaper) then I wouldn't bother buying if I were you, but instead enjoy your area which you say you love, while you are here. Buing and then selling will incur a sizeable chunk of cash within the 5 yrs, and of course some possible (likely!) stress. So you may make a prifit on a house but deduct that and the time/energy.

On the other hand, if you do need to make money then OF COURSE but a house in Herts! They aer pretty much guaranteed to grow in value within a few years - though e carefulu to check no major work on repairs involved, so you ned an expensive full survey. Yes it's an upheavl and will cost tome and some money but you will make thousands. The orice would be not ennoying the area that much.

That's why is down to priorities - do you need a prifit or to enjoy your time in london for the next 5yrs.

sorry for the shocking number of typos!

As you may move a lot I would stay renting. Buying and selling can involve a lot of fees and stress.

Thank you - I am considering just renting for now.
The rents in London are now relatively cheap again.

I don't think it's a waste of money short-term since there are also costs like interest, maintenance... Long term - I agree, it's not ideal.

DH and I faced a very similar choice late last year. We moved to Hertfordshire and haven’t regretted it once!!

You sound as though you want the London flat. Sounds as though you be happiest there. ?
But then so too would I so I may have been projecting !

Option two.

Buy a home in Hertfordshire. If you need to move then you can always rent it out and rent somewhere else like in option 3. Option 2 gives you more options imo. Plus, freehold always better than a leasehold.

House prices have gone a bit crazy in the past year. I know of people who had a decent deposit be priced out due to the percentage increase. It might slow down, but we don't know yet.

Buy the house. Flats not good at the moment.

Young professionals, may move abroad in a few years… I’d stay in London and enjoy everything it had to offer before kids arrive. And I’d probably rent too as it will offer you more flexibility and it’s not worth buying and paying the costs associated with that (survey, solicitors, stamp duty etc) if you don’t think the flat will go up in value.

Stay in London. Location, location, location

London. I hate cities now and left London 20 years ago but for 4/5 years pre kids..? Wring the best of London life then move elsewhere to raise a family-and a flat in London z2 should always appreciate, albeit more slowly than in the past.

Interesting article in the Telegraph today saying it is actually cheaper to rent than buy in many places now...

i'd stay in london. 2 bed flats will always rent to students etc.

Definitely do the flat in zone 2. Far more fun. Unless you have kids, don't go for the house is Herts. You can always do that later.

If you were staying I'd say the Herts property, but from your circumstances I'd say stay renting.

Thank you everyone for your comments.

It's a very hard decision to make unfortunately, but I will stick with London either buy or rent in Zone 2-3 (Zone 1 is too expensive for either of those).