What is the demographic for buyers of 3 bed flats in London

[onlychildhamster]

This is just my observation but generally-

1. 1/2 bed flats- first time buyers/BTL investors
2. Terraced houses/semi-detached houses- Young families/ some BTL investors for the cheaper houses
3. Detached houses: Families with a lot of equity
4. 3 bed flats- mixture of BTL investors and downsizers i.e. fewer families and young people buying for personal use esp compared with 2 bed flats.

These observations are with regard to non new build properties as I don't really look at modern flats and houses given that my area has very few. My observation is that owner occupiers prefer houses to flats as many first time buyers are in their 30s and so want a house rather than what they deem to be a starter flat; and they also want the outdoor space. So hence the premium on houses as opposed to flats.

I guess I just want to understand the trends cos I am thinking of upgrading to a 3 bed flat (from my 2 bed flat which I have owned since 2019) in the next few years. I have less interest in gardens (though many 3 bed flats in my area have gardens) so I am just looking for the cheaper option which also gives me an extra bedroom. It is my perception that 3 bed flats are less popular and hence cheaper, but at the same time, some 3 bed flats can be more expensive than small houses in my area (maybe cos of downsizer cash).

Just interested to know Mumsnets' thought of it. If you don't live in london but have 3 bed flats in your area, would also be interested to hear your experiences

I know loads of families with 2 kids who live in 3 bed flats. If there is a garden and a good primary school nearby. (London)

Also people from some non-UK cultures who don't necessarily have the same family=> house preconceptions and would rather have a flat in a central location than a house a bit further out.

I think it's very location specific. Where I am there are dozens of 3 bed maisonettes often with gardens. However they tend to be in the vicinity of excellent primary schools. Young professionals tend to move in and either have a dc & stay to get them into school or move before school & that's because the 3 bed houses are vvv expensive. Prices of them have stagnated a bit though.

I lived in one but wouldn't do it forever.

I'm sure z1 is a different ball game though

@OperationRinka would you say that applies to z3. I think that it would apply more to z1/2? I mean I did choose my area cos its easier to find good catchments in z3 as opposed to z1/2 (there are exceptions of course like in kensington but that is very expensive). However, catchments may not be a consideration for European buyers i.e French people who have an apartment culture but can send their kids to French school (no catchment).

If it suits you then go for it or are you worried about not making money?

@fillitup they have stagnated a bit. They tend to be above 500k if they are in zone 3 so above FTB stamp duty threshold. I think people are trying to compress their moves.

the amount of moves a person does has drastically changed, older FTBs & SD.

Personally I would skip the flat stage (unless I wanted to stay in a flat) & buy a small house further out or just rent for a bit longer if I want the city lifestyle. I think the way the economy is going future proofing is key.

@fillitup I want to understand the market, I suppose. I am leaning towards this choice, but I want to understand who tends to buy these properties so that I would know the risk.

When I bought my flat in 2019, I knew that it would go down or stagnate. that has been true for the past 2.5 years, the price has maybe grown by 27k.. It would have been that way irregardless of covid. This was because
(a) fewer young first time buyers hence bigger demand for 3 bed houses
(b) BTL taxes
(c) exodus to commuter towns outside london
(d) leasehold scandal (which later became a cladding scandal); which does affect the price of flats overall even the freehold of my flat is owned by residents
I was fine with it though and I made sure i negotiated downwards. I think that its better to know the risks so that you can negotiate accordingly. Every property has a price but 'riskier' properties should have a lower price

The thing is who knows, the pandemic has turned things a bit upside down & space has become more important I think. Plus remote working may change the landscape further in a decade.

I did read the a record number of FTBs left London to buy last year so that may have an impact in the future.

@fillitup I don't mind staying in a flat actually! But if it is a less favored option in this country, then I don't want to overpay on it. Like for example, if its mainly bought by downsizers then maybe i need to look for flats which are less attractive to downsizers i.e. staircases. Or if its mainly bought by BTL investors, i think draughty flats with bad EPC may be less attractive. Gardenless flats less attractive to families...

That sort of thing. I think my current flat is less attractive to BTL investors cos it can't be extended so harder to add value. Which is why it is below the average price for the area...

HMOs?

Well I think BTL in London is less attractive these days so perhaps you want one that targets downsizers. However all the downsizers I know like the one level & practically of a flat but still want off street parking & garden access.

Maybe look for ground floor?

I'd like a 3 bed as a couple ni kids both professionals.

-bed for us
1bed as a spair room that is just bed etc
1bed fir office and dumping ground

Having 1 room do both is a hassle, uncomfortable sofa bed etc.

So as I don't want a house or garden moving from 2 to 3 bed makes most sense if I moved.

(Which I don't, I just put parents up in a nice hotel near me once a year)

@PattyPan the HMOs i know tend to be houses! Yes forgot that category. they tend to be cheaper houses in London in my experience as you can pack more people in. my MIL's street has one. her neighbour wanted to sell because they kept complaining about his music (a bedroom was next to his reception room) and this was a victorian terrace. My MIL's house is cheap for her area. I saw a new build house that is a teeny bit more expensive than a flat in the same area and they were all licensed to be HMO.

3 bed flats tend to be rented by young families in my experience...

Whatever you do I would wait until Spring, see the impact of the tax rises, inflation & if interest rates rise.

We live in a three bed garden flat in a Victorian conversion. We have a primary age DC. Zone 2/3. North London. Flat was c.£750k, a three bed house would be £1.2m.

@Twilightstarbright Exactly the same prices in my area and we are solidly z3 north london!

@Twilightstarbright do you have plans to stay in the flat?

Plenty of families in London in 3 bed flats. Not everyone moves out to buy a house.

Most people I know in London HMOs are in 3 bed flats I think, on reflection. I don’t think I know anyone in London sharing in an actual house. But this will be z1-2.

@PattyPan MIL's house in z3, house is worth 750k. It can have up to 5 bedrooms -3 bedrooms and double reception; and kitchen extension can be the 'reception'. so total rental income per month is £3000 if you assume £600 per room. So its a much better investment than a flat...

True, from an investor’s point of view. But not an attractive option from a 25yo tenant’s point of view.

I live in another major city and lots of families live in 2-3 bedroom flats near me, probably because they're at least £100k cheaper than a similar size house in the same area. It's a balance between proximity to the city centre / amenities / school catchments and cost of property i think. There's also lots in certain parts of the city used for flat shares by students and young professionals. I can see they might become more popular if working from home stays a thing for many people.