Purchasing a flat in London

[babba2014]

I've noticed that ground floor flats with gardens are selling for crazy prices.
But does anyone know about other types of flats?
I could never afford London prices now but my relative has offered to sell a flat at a heavy discount. I could make £100,000 profit on it by my calculations but I'm not sure how easy it would be to sell or if it is worth it.

The flat is in a block of flats with three floors. There is no lift. It is on the first floor.
There is a large communal garden, not private. It is located near Brent Cross.
There are a couple of other similar block of flats attached to this one and there's parking for the flat residents.

But I don't know if it is a desirable property. I would live there for a bit so in closer to work as the commute is getting ridiculous but I'd need to sell it as it's not big enough for my kids.

Currently I rent hours away and having to commute in. I do want to move back to London.

I won't get a mortgage, it will be cash (a large part from inheritance). I can afford this lower price and definitely not the £500000 (but I could save that over the years it I had a head start by selling this flat and making a profit).

I have no idea what to do. I don't really want to rent privately as there's no way I could save with London rental prices right now.

What do comparable flats sell for in the same road and surrounding roads? If they really do sell for 100k more than this flat then it sounds like a No brainer to buy it?
Why is your relative selling at 100k below market price though? If you do go ahead make sure you get a full structural survey and a good solicitor to make sure there are no unpleasant surprises.

Check the lease arrangements, length of lease, share of freehold or not, ground rent (and whether that could increase) and service charges. All of these have a big impact on desirability of flats especially as some mortgage lenders won’t lend if they don’t meet certain criteria which wouldn’t impact you but might make it hard to sell.

Where does £500,000 come into it? Is that the market value of the flat?
You're talking about making a profit, how? By doing it up? How quickly would you plan to resell and does your relative know that this is your plan?

Right, so is the relative is so generous for your take 100k profit? Or he/she can’t sell it, because it’s undesirable, but agents made that to believe it’s worth 500k? If the latter I’d stay away. If ex council block I’d stay away too. Newer generation of ftbs is so much more pickier, I see those sad flats in premium locations that just sitting unsold until council buys them for pennies.

House conversions with gardens tend to fetch a premium in London compared with other flats. They have advantages - lower or no service charge and a private garden. They can also have big drawback - absentee freeholder or challenges getting on with neighboirs if freehold is shared, a
small or awkward rooms, noise due to bad conversion.

Purpose built flats will often have bigger rooms, better sound proofing and more storage (especially those built between 1930 and 1970) but there will be higher service charges as there are more communal areas to maintain (eg car park, lifts etc..) and you will not have a private garden (although many will have private balconies).

Blocks of flats (from 30s on really) lack the charm and good period features of conversions though. I’d never buy in a block. Just the idea of all those neighbours and the management involved…

Bigger blocks (the wise ones anyway!) will be mananged by a company so you wouldn't have to do much.

But then there’s the risk of a bad one, which I have experience of, and it’s very stressful.

I’d only buy a small conversion with share of freehold personally.

Oh of course it is a risk. Just like it is a risk to have share of freehold with one other owner and they turn out to be an unreasonable dickhead who say, refuses to talk about roof repairs.

Sharing responsibilty for common parts with other people is always a risk.

That’s true, but in a bigger block you either have potentially more people who could be dickheads, or a company that behaves badly and can be difficult to remove. I’ve been in both situations (including a tricky co-freeholder) and the company was far harder to deal with. In addition, many blocks are share of leasehold, and that can be a total nightmare.

Would the relative be happy to see you accept the big discount and then flip it at a £100k profit?

It sounds a good desirable flat, communal garden and parking space are good.

Just check the factors listed by PP. Especially maintenance charge, ground rent, lease length and no cladding issues.

Do you have young / school age kids living with you? What would happen to their schooling if you move to this flat and then move again?

I think you would have to check the lease, is it long enough to be mortgageable when you come to sell. Are there renovations that are going to have to be paid for in the near future and are they affordable.

Have a look at the Ground rent and Service charge amounts per year and what you get for the money.

Look at the square footage and the square footage on other similar flats and what they sold for. Very few people in the UK look at price per square foot

Also what is the neighbourhood like. Also what does the energy certificate say. Is it rentable and if so what would the rent be if you rented it out
I know btl in London gives a lower return but would a btl landlord be able to get a 75% mortgage on it and it would fulfill both the lenders requirements and give a landlord even just £100 profit

Even the most awful places sell eventually for the right price.
The council doesn’t go around buying property no matter how undesirable it is for pennies. They will lease property from a btl landlord.

I think if everything looked ok. Even if it wasn’t at a £100k discount I would go for it

You also have to look at what this flat would give you in terms of shorter and cheaper commute and a lot more time.

Depends where about it is, but I don't really think it's 'crazy' prices. And are you assuming you can get the asking price? Often it don't work like that, especially now.

Similar to the description you get something like this in Rightmove.
https://www.rightmove.co.uk/properties/133376699#/?channel=RES_BUY

But it's been up for sale since April, for good reasons too, looking at the sold prices hardly any get sold here, and the current price is asking a peak price even though the flat needs a refurb. Even if an investor paid in 50% deposit I doubt it would be profitable after all deductions.

But everything has a price. Let's say it was for this flat in the link above, them offering it you for £225k is not likely to be £100k profit at all and considering that you're gonna be living there and it doesn't fit your needs, the risk is you'll be stuck there for longer than you like and cutting the price also mentally cuts into your imaginary profit.

In fact you could argue the relative offering at £225k seems a fair deal for the relative considering the potential difficulty selling on open market, not being bothered to refurb, some discount for relative. If the real selling price at which a transaction could be done is £250-£275k for the flat (basically pre covid price) then it's not much of a discount at all.

TLDR, really need to make sure the projected sell price is actually one that can be had, not merely an asking price.