First time buyer - need adivce

[Minimini0001]

Hi, I've recently obtained my permanent residence status and have been looking for a property to buy. As a foreigner and a first-time buyer with no one to assist me, I need your advice on these two options:

Building A:

• Location: Zone 2
• Price: £370,000
• Features: 2 Bedrooms / 2 Bathrooms (82 square meters)
• Building: 20 years old, mega-tall building with hundreds of flats
• Area: In a very trendy location
• Pricing: £20K-30K cheaper than other flats in the same building as the owner wants to sell it quickly
• Service Charge: Almost £6,000 and expected to remain high or keep increasing due to major planned building works
• Market Situation: At the moment, the price of flats has been falling, possibly due to the steep service charge increase

Building B:

• Location: Zone 3
• Price: £470,000
• Features: 3 Bedrooms / 2 Bathrooms (84 square meters)
• Proximity: Close to an overground station, but the train only goes to the outskirts of London (not anywhere close to the central)
• Building: 10 years old
• Condition: Needs a complete decoration, including painting, as the same tenant family has lived there for 10 years with 3 kids (lots of drawings on the walls!)
• Service Charge: £2,500, which is manageable
• Negotiation: The agent said he could make a contract around £460,000, and my offer of £450,000 got rejected.

Considering my personal status, I can't get a good mortgage rate. When I calculate the repayment interest and service charge, they are almost the same.

Any advice I need to consider in making a decision?

I'd be concerned at the service charge and such a drop in price for a quick sale with flat A.
How long have they both been on the market and have other recently sold flats in both buildings been sold for same amounts?

What is the cladding status of each building?

@Luckycloverz The agent said she had sold the same sized one £425,000 in March but I could see most of flats on sale £400,000 now.

@WalkingWombat so I heard the sharp increase of the service charge was only for the increase in building insurance and the work hasn’t done yet.
should I inquire about that to the agent of the other building?

How long is the lease on each?

Z2 one seems suspiciously cheap but possibly because of service charge, which is insane. What are the terms for its increase? Does it double every few years? If it’s so high, do they have a decent sinking fund (like a savings account for freehold properties, that can be dipped into for expensive repairs / maintenance)? Make sure your enquiries are really thorough - there might be a large bill incoming for all leaseholders.

I wouldn’t want to live in a mega tall building but if you’re happy with them, check the safety features are in order - does it have 2 staircases? Does it have more than 1 lift? Cladding?

Z3 must have smaller rooms if there are 3 beds. Does that bother you? Decoration is fairly cheap to do, especially if you’re willing to do some yourself, but are the bathroom & kitchen in good condition? Does the overground connect to anything useful like the Lizzie Line?

I wouldn't touch the Z2 flat £6k service charge and might rise? Nope. If I were going to consider it ( I wouldn't) I would need some very detailed information on the proposed works. Any Section 20 notices been served ? ( For major works) I would probably try to discover who the managing agents are and establish what the likely works are. The price reduction is a bit of a worry as well, but the steep insurance rise is a real concern- coud be related to fire risk.
But serously - run.
I might be tempted to leave your £450K offer on the second property on the table for a week or so. Why is the Landlord selling? Again check what the situation is with service charges increases.
You haven't mentioned ground rent either? WIll that be increasing ? If so, at what rate?
Do you need to be in London? You might find better properties out of London.
There is some good guidance on buying property on the Which? website. I used a book they published on house buying many years ago when we bought our first house and it was very useful. The MoneySAving expert website has a section on property purchasing as well.

Don't buy a property with a service charge would be my advice.

Generally I'd always prefer to live more centrally and within reach of decent public transport so building B would not be ideal. You don't say anything about transport for building A, but I'd expect it to be a short walking distance of a tube station (not Overground or NR). High rises aren't ideal but it wouldn't necessarily put me off, I've lived in one and it was fine. I like trendy areas and it's more fun living there especially while you're young but it would depend specifically on which area. The service charges look too high though, although I think ruling out service charges at all limits you too much in London, especially in zone 2.

It’s completely normal to have a service charge on a flat in London ( & most FTBs can’t afford to buy a house straight away). However, the service charge on flat A is unusually high for zone 2 and potentially rising. What are the major planned building works? If it’s anything to do with cladding, run a mile.

Building B sounds ok, as long as you don’t need to be in central London regularly. But do you need 3 beds? If not it may be better to find a 2 bed in a slightly better location.

okay Thanks everyone for your advice. High service charge seems like a deal breaker in the property.

I might need to wait to hear from the agent of the building B in Z3. Or will raise my offer to be accepted.

Thank you 🙏🏻🙏🏻

You haven't said where you work, or which areas you prefer so that also is a consideration.

The zones don't necessarily mean too much (apart from transport costs), there could be some areas in outer zones that are closer to the centre than inner zones.

For example if you work in Victoria, Deptford Bridge is in Zone 2, but it's much quicker to get there from Croydon in Zone 5.

Your maximum budget appears to be £470k but that comes with a £2.5k service charge. I think that's equivalent to paying about £500k for a freehold house, and I think if you extend it to Zone 4 you should be able to get a 3 bed one near a tube station.