House vs Flat

[housevsflat]

First time poster but long-time follower. Sorry for the long post!

I inherited my family home following the death of my parents and sold it earlier this year, currently living in rented after a flat purchase fell through. I am in the fortunate position of having around £400k to spend on a property, mortgage free, although I would prefer to not spend the entire budget.

I am torn between two properties and would love some outside opinions:

Property 1 - House
2 bed, Victorian terraced house in a larger town, been on the market since January, asking price £390k (I wouldn’t go above £375k)
Pros
· Recently renovated, no work needed in the foreseeable, but obviously the higher expense of the upkeep
· Outside space, easy to manage garden
· Walking distance to town centre, close to friends
· Walking distance to station
Cons
· On-street parking, but I’ve driven down there at all times and there's always been spaces directly outside
· 1hr30 to work, longer with rush hour traffic (although I work shifts so not always an issue)
· Old property, would likely need a lot of upkeep
· Higher end of budget

Property 2 – Flat
2 bed Flat in smaller town, only recently come to market, asking £325k (cannot afford a house in this town)
Pros
· Easier upkeep
· Under 1hr drive to work, close links to motorway
· Walking distance to station, quicker & cheaper to get to London than property 1
· Allocated parking space
· In the long term would be easy to rent out, if say I moved in with a partner in the (distant) future
· Centre of town
· Lower end of budget, could invest the rest elsewhere
· 125 year lease
Cons
· Flat (?)
· No outside space
· Service change and ground rent (£250 a year)
· Further from friends but easy to get to larger train via train or car

Both towns are in the South East, London commuter belt.

I am single and 26yo, I’m not looking for a future proof home, so it needs to be a good investment for the next 3-5years, and I need to move sooner rather than later as I feel like I’m just wasting money in rentals.
Am I silly considering a flat over a house? Should I be looking towards the top end of my budget as property is a good investment, although is it a good investment at this point in time?

Thanks in advance!

Option 3 - find another house nearer to your work.

I would always choose a house over a flat, unless a first time buyer.

I'd always choose a house. How big is the development the flat is in? Seems very low for total ground rent, leasehold fees a year. What's it like with neighbours? Above/below etc. standard of communal areas, what type of maintenance may be required in future? As you won't have much in the budget for decorating, anything else needed if that is the amount you pay yearly.
I'd avoid anything leasehold. Personally I think you may get more of an increase in investment in your house. Have you checked the prices of houses and flats in each area, what they were five years ago, three years ago and now. That may give you an idea.

Just be wary of the "recently renovated".

Often it is just cosmetic slap dash which covers up a multitude of problems.

A lot of renovators just slap down some laminate and stick a couple of coats of paint on the wall. They don't look at fixing major structural issues like leaking roofs and damp.

I'm guessing OP cannot afford anything nearer to her work.

Do you drive to work or train? Do you have to be in everyday?

Minimum commuting time is often a good strategy to go for because the commute, especially by car, is dead time that sucks away your life and gives nothing back.

A flat would be fine if near your work and friends.

Thank you all so much!

To answer a few questions,
@parietal I only commute in 2-3 times per week so the drive isn't too much of an issue, the ease of the commute from the flat is appealing though.

I could afford to live closer to work, but its not in the nicest area, and I know this area well enough to feel safe walking alone, plus its where my social life is.

@PatsyJStone The total service charge and ground rent is £3000 a year, sorry I missed that out of the OP, its not the biggest development, and it seems to be well maintained, just had scaffolding removed and the communal areas are all very neat. The house is currently decorated so I could just move my furniture in , I do have some savings on top of my budget for furniture if needed.

@GasPanic the house was renovated by the owners and it seems to be very high quality, I have a second viewing next week with a friend who is very good at spotting any cover-ups so I'll have a thorough check

Buying a leasehold seems like a risk at the moment, I think my heart is saying flat, but my head is saying house.

How much more would you have to spend to get a house in the same area as the flat?

Earth and floor beneath me, own front door, roof above all my own, personal outside space, a house can be grown into, a flat can be outgrown.

personally I’d go for the house.

I think I'd go for the flat. As you say it's easier to rent out should you get the opportunity to do so.

You also need to know the length of the lease and if any works to the block are planned for. If the lease is short it makes it hard to get a mortgage. Not for you but for the next buyer.

It's very nice to have that cushion of savings after buying the cheapest property. It's also more secure and easiest to leave empty if you go travelling

House every time.

Only had a flat once, never again.

Just sold our flat after 3.5y on the market actively trying to sell, it became a trap, we’ve outgrown it very quickly. had to drop the price more than 10% to what we paid 7y ago. Management company is awfully slow to get things that buyers request. It’s a lovely flat in great condition with ideal balance between commute time and villagy feel, but never again we buy a leasehold and wish someone warned us before we bought it. We are so happy that we finally managed to get rid of it although with a huge mental and money cost

I'd go for the house and put in an offer of 370k with plans to increase to 375 if necessary. We're selling our 3 bed starter home and although it was valued at 300k by 4 agents initially, we reduced to 390k after a sale fell through and happily (on my side rather than DH's) accepted 275k. I was prepared to take the hit just to move on to our next place. Worst case scenario, your offer is rejected and you can move on.

Although recently renovated sometimes means flaws have been hidden by paint, it's not always the case. Our house was described as turn-key when we bought it. The whole house was freshly painted by the owners (one a painter-decorator) and just felt like it had been loved and cared for. When we moved in, there were no hidden issues at all. Most of the colours also suited us so the only thing we needed to decorate was the nursery which was becoming our spare room.

The service charge would swing it for me - apart from that, I would have gone for the flat.

I would go for the house and make sure I got a decent survey. Put money away in a high interest account for any work. You are young and working so presumably can put some aside for a safety net? I would never live in a flat due to noise and service charges. A flat would be just as easy to rent out as a flat I’m sure.

Yes that service charge / ground rent is huge- if you factor that in the flat is basically more expensive. Is the house near enough to your friends?

I’d find something else.

1.30 hours is simply too long for a commute so the house is out.

I like flats myself as they often feel more spacious, especially compared to terraces, but I’d want a longer lease or freehold and if you aren’t somewhere terribly swanky then an outside space too.

… and that service charge is v high

Are you likely to want to try to grow your career over the next five years, spend longer hours in the office, need to go to networking events? If so, go for the one with a better commute.

If that doesn't apply, go for the house. You will have a far better quality of life and it will be easier to resell.

I would not be happy with 3k pa service charges on a flat. Especially during a cost of living crisis, when it's frigging impossible to get tradesmen, and the cost of any build works has doubled in the last few years. If they decide a bunch of works needs doing whilst you own it, you are looking at a far, far riskier bill than you would be previously.

People didn't worry about the odd 3k a year when food inflation wasn't at 20%, electricity was a third of the price and folks mostly got decent payrises. These days, any additional costs will be scrutinised, and that's a big one.

I would go house.

Having previously paid ground rent and services charges then having no help from the maintenance company, it's not something I would ever do again!

That service charge is v high. I would steer clear. We had a slightly higher service charge on our flat we sold last year but it was a massive sticking point for many viewers and it took ages to get an offer. If you're only looking to have it for 3-5 years then that sort of service charge is too high- even if you can rent it out that service charge would eat into your profits massively.

House definitely! We lived it a flat where most of the service charge was just the management fee. We then had no say in when work was and wasn’t done….we just had to pay for it.

Always freehold

House not a flat

It seems that there are different things working in the favour of both the flat and the house. Where do you see yourself leaving?

My partner and I are currently in the process of acquiring our first property, which is a 2bd leasehold flat in Zone 3. Most flats in London have experienced an increase in value since their initial purchase, which makes them a good investment. May I ask which area this flat is in?

Have a feel for the neighbourhood, try to figure out who would your future neighbours be.

Be careful thinking a flat (or any property) will be 'easy to rent out'. I would not recommend becoming a landlord personally. Or intending to become one. It's so expensive and there's little chance you'd made a good income from it.

Neither of these seem ideal. But I'd go for a house over a flat.