Please help me choose a flat in London: 1 bed ex-council flat in Camden, London or 2 bed new build in Ware, Herts

[ldnflatbuyer2021]

Hi,

I am starting to go insane trying to make one of bigger decisions in my life !

I will be staying in London for at least 2-4 years - and will either sell the flat or keep it rented while likely moving abroad or renting somewhere else.
So basically my most important thing is trying to keep value for at least the short-term (next 2-3 years) !

After a lot of viewings, my two main options are:

1. Ex-council 1 bed flat in central Camden (small, well maintained block) - £385 000

PROs:

• excellent, excellent location
• seems like flats in this development have sold previously for much higher prices meaning this is a good price point - also compared to other nearby properties
• low ground rent / service charges
• lively area with lost of things to do

CONs:

• whilst good sized overall (>45 sq.m.), it's still somewhat small for more than 2 adults and one very small baby
• needs a lease extension soon (likely costing £10k in total)
• council as leaseholder - which can supposedly be problematic with big repairs
• half of other flats are council tenants
• I don't know if the city center exodus has stopped or will keep going?

2. Newish build 2 bed flat in Ware, Hertfordshire (smaller block) - £315 000

PROs:

• everything is new
• allocated parking - which you could perhaps rent out
• very high demand in the area at the moment due to everyone moving to suburbs
• about 40% cheaper per sq.m. than the 1 bed flat in Camden

CONs:

• ground rent increase every 5 years with RPI - will go over £250
• bad management company - all bad reviews, relatively high service charge for such a new block
• bad lease terms such as restrictions like no dogs, license to have a cat
• flat could be of shoddy quality, I've seen issues with it mentioned by others

council freeholders have a reputation of paying significantly over the odds for repairs / maintenance, and any private leaseholders are required to contribute to the inflated cost.

I didn't know that. Thanks!

We also had dealers AND a crack den in our block.

OP I would go for neither flat.

Don't go for a bad management company/freeholder whether they are private or a social one as your life can be made a misery by their inaction on issues and charges.

Always research your freeholder/management company. (A simple Google search can reveal a lot.) Then if they are bad move on to another property.

Thank you everyone.
We've had a good think about it - and we know both properties we are looking at have issues (as also outlined here in the thread) but think those are reflected in price - both are priced reasonably with simplest comparables though maybe not priced well compared to general market.
Since the market for both is not too hot, we will just keep waiting a bit.

What do you think about this alternative: a 2 bed flat also in a great position in Camden (though with a 2nd room being a small box room) with a share of freehold, long lease, ok management company, reasonable service charges.

The main drawback is that it's quite small for a 2 bed (only 50 sq.m. - second room is like 55 sq.f./5.2 m2) and pricey at circa £415 000 asking price - www.rightmove.co.uk/properties/111024809#/?channel=RES_BUY.

Not sure who our buyer could be - I a younger couple or a single, someone who downsizes?
Seems like most of the residents in these blocks are tenants - with landlords having bought a long long time ago so it's financially viable for them (given how low rents are compared to prices in that block).

That second bedroom isn't ridiculously small. A box room would be a couple of feet smaller in one direction or both.

I like that flat a lot more than the other Camden one

That's also a great area. I know it slightly and it's always going to be popular.

What floor is it on?

@ldnflatbuyer2021 I live in a similar sized 2 bed flat with DH in East Finchley (except that my second bedroom is 3.8m by 2.44m). Bought in 2019 for £392k and we are in zone 3, so the zone 2 camden flat looks like good value. Its the perfect size for a couple and we even wfh during the pandemic.

My development has many young children and they play together in the communal garden. The children are mainly the kids of renters rather than owner occupiers, but I think most of the owner occupiers are retired anyway. I think I would prefer a 3 bed flat when I have a baby mainly because I don't want to lose my office, but the fact is I could not have gotten a 3 bed flat in a part of London I want to live in for below 500k anyway and it would take me a while before I can upgrade to 3 bed flat. And the previous occupier of my flat had a young baby and a dog so there isn't a reason why I can't have a child in this flat (the hamster would probably need to be moved to the lounge lol which DH doesn't like!).

@saraclara yes the Elm Village area is very nice. Though this is a ground floor flat so perhaps this is why the price is a bit lower. Also it definitely needs some work...

@onlychildhamster - seems like prices have stagnated a bit in the last couple of years for flats in central London (I think these prices have been static from 2016)...

@ldnflatbuyer2021 we were the only ones to buy in London, most young people we knew bought outside London. It's the trend now, esp with increased remote working/Instagram home interiors (much easier to decorate a large house as opposed to a flat), greater dog/cat ownership amongst millenials. And for BTL landlords, it really doesn't make financial sense if you are a higher rate taxpayer which you probably would be if you are in London buying a second property...
I have calculated the costs of commuting in comparison with the cost of having a flat in London + service charges and staying in London has always worked out cheaper even before you added in the cost of owning a car (we don't have a car in London). But most people in our generation prefer to move out even if it's more expensive overall

@onlychildhamster Yes, I've noticed that happening as well over the last couple of years.
It seems like prices in commuter towns are now catching up with London prices, so perhaps the pendulum swings again the other way in a couple of years - though work from home trends are definitely giving commuter towns more of a life.

@ldnflatbuyer2021 WFH makes the commute more doable but may not make it cheaper. Most people I know are not full time WFH, they need to go in once a week or so. It is so easy for an employer to increase once a week to 3 times a week (meetings etc) which would be the same cost as travelling in five times a week.i think the pendulum would swing only when generation z come of age, the biggest predictor of moving out of London is children/plans to have children and gen z seems much more gender fluid/non conformist which means the usual timeline of marriage-house-babies may not appeal to them as much and they have less reason to pay more to live outside London and commute.

Desirable commuter town locations have crazy prices. Places like St Alban's in particular...

Life is expensive & is only getting more expensive. If you are happy to stay in a flat forever (& no shame in that) then buy a flat. However if I was young now I would try and buy a house even if it was further out. FTBs are much older & are already stretching themselves so it's hard to climb the ladder at all.
I personally think flats & expensive houses in London will stagnate.

@gibletjane I am grateful I bought a flat in London cos life is expensive. If I had bought a house in a commuter town, money would be very very tight esp cos my DH is going in 5 days a week now even with the pandemic and we would be paying over 800 a month in commuter fares if we lived outside London. Now gas and electricity is increasing too, it's probably more expensive to heat a house as opposed to a flat. I also don't have a car in London so save money on that. Often walk everywhere to save money and can therefore pay an extra £1000 per month into my mortgage in addition to £1020 mortgage.

I am on a fixed rate mortgage so I guess I am good for the next 3 years even if interest rates rise...so am trying to pay down as much as I can on this low interest rate. I calculated that if interest rates are similar, it is much cheaper for me to upgrade to a 3 bed flat than a house outside London. You basically have to be in the £1 million house price territory to justify a move outside London (where you can get a big house in somewhere well connected in bucks or herts for 600k). I don't think I would be in that category ever even though I am in my 20s. Interest rates have to increase quite significantly in order for it to be more expensive to stay in London in a flat (even accounting for service charges) than for two people to commute from outside London (+ run a car + pay increased childcare hours). And I can't see BOE increasing interest rates by so much at this stage though I guess we can't always predict it .

An estate agent told me that the people buying houses outside London are people who can't get the bigger mortgage but just spend a lot more of their income on train fares.i would rather use that money to pay down the mortgage as I probably can get some of that money back when I retire and sell up.

You basically have to be in the £1 million house price territory to justify a move outside London (where you can get a big house in somewhere well connected in bucks or herts for 600k).

That doesn't even make sense. One can move to outer zones & not everyone commutes into central London anyone.

Plus the data is showing more FTBs then ever who are moving out of London to buy. I don't think that will reverse & I don't think most will go back to 5 days a wk in the office if already have the option.

Besides you don't need to justify why you chose the option you did, if it works for you , that's great. I bought a flat too as a FTB, I just wouldn't do it now in this current climate & would go straight to a house in say Z 4/5 that cost what my flat did in Z2/3.

Everyone I know who has moved further out have either done it to get on the ladder or because they want more for their money. We will be moving to an outer zone next year as I'm no longer satisfied with what I can get in my current area & space is now far more important to me than location.

@gibletjane I agree that probably a house somewhere like pinner (zone 5) might be the lowest cost overall. I was comparing the cost of a house in my z3 area, easy Finchley and somewhere like St Albans.

But a house in zone 4/5 would cost more than 500k unless it's somewhere like Sutton so would have to pay full stamp duty. A house in pinner costs £625k which is more than what OP and I would pay for our flats in z2/3 .

I think a lot of FTB just look at the ticket price of the house. Many of them may already have cars so it's a lot easier to get somewhere with parking outside london while that had a premium in London. And they would have a car even if living in London unlike me. So yes everyone has different circumstances but I can only use my own as a frame is reference!

I think FTBs are older so they think about lifestyle as well as ticket price.

@gibletjane thats probably it! I am 28, bought at 27 and was worried about overall living costs as I spent 3 years rent free at in-laws house and wanted to keep costs as low as possible for my first proper home!

If you're still under 30 you can travel a lot cheaper with the 26-30 travel card - especially if you only have to go in 2-3x times a week.

@ldnflatbuyer2021 but I guess you would grow older and eventually have to pay. My DH's colleague is younger than him - mid 20s and spent over £5k per annum on Reading to London. But it made more sense for him because his girlfriend worked in reading but he still shared a car and his girlfriend had to drive him to and fro from the station daily. On the nights she had Pilates, he would walk the 1.5 miles home. He eventually found a job closer to reading.

Is it near the station in Ware?

@batmanladybird

Is it near the station in Ware?

Yes quite close by - only a 5 minute or so walk to the station so you can easily get to London :)

I think I will be going with the 2 bed share of freehold flat in Camden in that development !

It certainly seems the safest options as it's a share of the freeholder with a good management company, low service charges and etc.

Also it easily rents out, especially in Autumn months if we choose to do so.

Lastly, it's also in a great location that we love with a 2nd bedroom (even though it's small).

Our only concern really is with: 1) the capital growth prospects of the area but can live with those being low and 2) the second bedroom being too small to live in...

If it is between the 2 then Camden definitely.

You also have to factor in the cost of the commute from Ware to London each day.
That, the ground rent inflation and it being a new build would put me off Ware
Personally I would look at different areas of London and see if you could get a 2 bed. Depending on where you need to get to. I would follow the tube/rail routes out in all directions. Maybe a 3-5 mile radius of your work and look around different areas just in case you stumble in an area you hadn’t thought out before