Selling/letting quandary

[Fedupwithflat]

Hi everyone, I bought my one bed flat in London for £300k in summer 2016, as a first time buyer, when I was 28. I stretched myself to buy the flat and thought it would be a good investment for my financial future. Around the time I bought, other flats in my development were selling for £290-310k, so £300k seemed a reasonable price. However, due to a combination of factors, the exact time I bought seems to have been the peak of the market - within a couple of years of buying, the prices for flats in my development had dropped considerably, and the most recent sold prices are now around £260-£277.5k. No flats in my development have sold at all since early last year, despite some being on the market for some time.

DP and I have been living in the flat together for the last 1.5 years (we’ve been together 3.5 years in total) and are now ready to buy somewhere bigger together with a view to starting a family, and also to relocate to be closer to our own families. I’ve had my flat on the market for £275k for around three months now with only seven viewings (the first viewing resulted in an offer of £265k which I rejected because it was so early on and I was hoping for more, but I’ve had no offers since).

I’ve now got to the point where I’m desperate to move and I don’t know what to do. Should I keep trying to sell the flat at the current price for longer (which is feeling increasingly futile) or reduce the price and make an even bigger loss (I would need to sell for around £280k to break even compared to having rented for seven years, when all the mortgage repayments, stamp duty, legal fees, renovations etc. are factored in)? I’m starting to worry I won’t be able to sell the flat in the current market even with a big reduction.

Alternatively, I could rent the flat out and we could rent elsewhere, but I would actually be making a loss of around £250 a month on the letting when tax, mortgage, agents fees etc. are factored in. I’m concerned about the risks of being a landlord and the flat potentially dropping even more in value, plus the lease is only 93 years so I’m concerned that extending the lease (which I think will cost around £10k) will become an even more pressing issue the longer I keep the flat.

I could go into more detail but think I’ve probably ranted long enough! Any advice would be greatly appreciated, as I feel I’m going round in circles with this, I’m wearing out the patience of my DP, family and friends and I can’t get any perspective any more. I’m so anxious about this all the time and am starting to feel like I’m living in a prison!

I bought a flat at the peak of the market in 2005 and when I sold I made a loss of 50K. I was moving overseas and had to sell quickly. I sold a 3 bed terrace last year for 100K profit so the housing market eventually worked in my favour.

If you've only got 93 years on the lease I'd be selling ASAP.

I took my first baby home to a 1 bedroomed flat and it was absolutely fine for the first 2 years, 2 babies was pushing it but the market will be unrecognisable in 18 months one way or the other. She's not expecting yet so that's at least 27 months to see what happens.

I doubt many people would choose to do that and OP has options

I know several people right now who are in a similar situation where they bought 1-2 bed flat in London around 2016 and are now trying to sell, all are selling for less than they paid. But I do think it’s location dependent, the more central the worse, also depends if it has an outdoor space and if there is potential for loft conversion etc.

Your lease length isn’t an issue with lenders don’t bother extending it it will only cause delays and potential extra expense. It is added stress and unnecessary gamble. Whoever wants it will extend the lease to peppercorn.
The market will probably remain flat, maybe go slightly lower for a year, then boom again in the next 1-2 years but will ultimately crash in ‘2025 as the figures versus wages just don’t add up anymore.
I know it’s hard I swallow but your life quality and mental well-being is way more valuable than any money. Property profits has a lot to do with luck, timing coinciding with life choices.
Sell and move on if it’s an option or stay and wait if it’s not.

Thank you - my thoughts exactly!

Thanks, in a way it’s comforting to know there are other people in the same boat.

Thanks for the advice everyone and for sharing your experiences. On balance, I think the way forward is to sell as soon as possible, even if it means making a chunky loss - it’s just a case of facing up to the situation, which is quite a bitter pill to swallow. I’ve had a chat with my agent and the plan is to try for a couple more weeks at the current price (viewings are coming in, just very slowly) then look at reducing it.

As a general question (from someone who’s never tried to sell a property before), how long would you typically expect a property to take to sell/how many viewings would you expect before it’s sold?

I live in a flat and a few years ago the lease was extended from 80 something to 1000 years, it cost all the leaseholders £100 each. Are you sure it'll cost 10K OP?

It's cheap to do if you're a freeholder but as a leaseholder is a lot more expensive.

so in this case the freeholder exploits each leaseholder to the tune of £9,900!!
jeeze talk about a rip off😮

Yes, my flat was over 18K to increase the lease. Also, you have the ground rent issue mine doubled every ten years. It's a huge scam.

That’s impossible to say really as every property is different.
When we sold my Dads flat in central London last year it took several months and 30 viewings, which felt like a lot to us compared to other properties we had sold. But the flat was in poor condition which may partly explain it, plus central London with no garden less popular since the pandemic.

I actually got a formal quote through from the freeholder yesterday - the premium would be just under £6k, but with my legal fees, covering the freeholder’s legal fees etc. it would cost about £8k all in (plus it sounds like it would take a while). Leasehold is definitely a scam, but very difficult to buy a first property in London if you’re looking for freehold!

for some reason I thought profiteering freeholders were a thing of the past but clearly they are still clinging on with snouts firmly wedged in the trough and drinking up all that free money
I wish you a good outcome OP🙏

Suggest you find out how much the SVR is on your current mortgage as that is what you’ll be on when your fixed term ends in July, as it is unlikely you’ll have sold and completed by then.

Be careful on quotes from the freeholder. It is common the freeholder will sneakily change the terms of the lease to swing in their favour. A least of around 93 years probably 15-20k to extend including fees

that prices too low. But if you’re selling maybe you don’t care as long as the numbers look good to a buyer

Have you tried the leasehold calculator OP?

www.lease-advice.org/calculator/