Would you buy a flat in London at the moment?

[teeseebee]

We are thinking about buying a one or two bedroom flat. It’d be our first purchase (late 20s). Our top budget is about £600k with a 90% mortgage.

Don’t need/want a house so looking to buy within Zone 3.

Would you do it?

Personally, with the uncertainty over lease and services charges, I preferred to look further out and get a freehold.

There were share of freeholds for flats when I was looking, but my budget was less than yours so more limited choice.

Yes. Has there ever been a five year period where London prices have fallen? Most flats are leasehold - I wouldn’t worry too much unless it was a new build (and if so, I’d check the terms). We recently bought a share of freehold for our flat (zone 2) and it was pretty straightforward and cost a few thousand.

Yes, many of my friends have bought flats and are very happy in them. If you don’t want a house, I’m not sure what other options there are?!

Only if it was freehold and had some sort of outdoor space.

Share of freehold. There are no freehold flats.

Yes. I maybe wouldn't max out the budget totally, but generally housing in London is always going to be needed so you shouldn't have a major problem selling it on! Just make sure it has a long lease, decent condition etc. you can get some nice 2 beds in zone 1-3 decent areas for £450-500. If you did that & invested the difference in mortgage payment between that and £600k place, you could have a bit of a cushion

I wouldn’t buy ex-LA or anything newly built in a large block, due to uncertainty around service charge rises and maintenance; but flats in period conversions and purpose built smaller blocks of traditional build materials, yes. Flats in my London postcode are largely in the latter groups and consistently rise in value year on year.

All my previous flats were leasehold and I never had any problems. The reality is that people without problems aren’t saying much about it, so you only hear from the minority of people with horror stories.

Not right now. I would wait to see if Labour sort out the whole leasehold/marriage value ho-ha.

That said, if they do, flat prices will probably spike pdq.

Def buy a 2bed if you can. Gives you so many more options for if life / economy changes and you cant resell as easily. But i dont quite understand your line about houses and zone 3. If going for a flat, I'd try and go for zone 2 if you can, which I think your budget would allow for. I don't know what part of London you are looking in, but for example, there are a few 2bed period conversions in Clapham for £600k and the odd one even further towards the centre as well.

Lots of London flats are leasehold share of freehold with very long leases (up to 999 years which is almost as good as Freehold). I would buy one of those if I wanted to live in London.

But I would avoid anything with a short lease of under 90 years or obviously anything with cladding issues.

I bought one last year.

Period conversion share of freehold.

I am buying one now. Very happy about it.

£600k budget should get you a decent place. What is making you hesitant?

DD just bought in Zone 2. Smaller budget as limited by LISA max, so a one bedroom in small block, Victorian conversion. Leasehold. The freeholds she could afford were dire ex-rentals needing lots of work.

Yes.

The majority of residential properties in London are leasehold flats. It is surely the way most people in London (including me) get on the housing ladder / afford somewhere to live.

I personally would avoid high rise, anything with a lift or high service charge, or any service charge actually.

I would look for a maisonette or 2 flat conversion, preferably with a share of freehold.

We did although are just about to sell (we bought 8 years ago and can just about affford to buy a house).

Victorian conversion, share of freehold, huge garden. Zone 2.

Yes BUT Make sure it’s share of freehold and has outside space. Check very carefully how overall repairs to the fabric of the building are handled.

Yes. You should be able to get share of freehold and some sort of outside space/patio/terrace for that. Don't rule out looking at Zone 2 you might be surprised what's available. I'm 10 minutes walk from the staiton and 2 bed flats in my block go for way less than £600K.

I'd suggest going for something low rise e.g up to 4 floors and I prefer purpose built older blocks over conversions which can have weird layouts and bad sound insulation. Be wary of anything with communal block heating and/or hot water (lack of control over when heating goes on and off, plus electricity/gas is charged at commercial rates and energy cap doesn't apply). Also consider age and state of lifts, pools or anything like that which will also increase service charges.

Service charges aren't a bad thing at all, but ensure the block is well managed, there is a preventative maintenance plan in place and a decent reserve fund for big infrequent costs like roof replacements or internal redecorating in common areas etc. Also ask about maintenance history to check it's well looked after and what has been done(or not) in the past and when it will need doing again.

A solicitor should check all that if you purchase but do make sure they ask about current section 20 notices to leaseholders and any non notified upcoming repair/refurbishment costs.

Didn’t quite understand your 1st sentence. ‘are leasehold share of freehold’ Did you mean leaseholds with 999 year lease is as good as share of freehold?

Share of freehold just means you have a share in a company that owns the freehold of the land and in most cases are entitled to a 999 year lease on a peppercorn rent. You still occupy the property on the basis of a leasehold contract.

Thanks but still not sure I fully understand. I used to have a flat that was a 999 year leasehold. It definitely wasn’t share of freehold.

It doesn't have to be a share of freehold to be on a 999 year lease, freeholders can offer whatever leasehold terms they want so they could issue a long lease of that sort. Commercial freeholders generally don't though as their sources of income (and therefore ROI) are ground rent, lease extensions and reversions so it's not in their interest to offer more than 99 or 125 years. Doesn't mean it couldn't happen though 🤷🏻‍♀️

Yep. Just bought a shared of freehold 1 bed.

A 2 bed SoF with garden, close to transport, ideally in Wandsworth for the low council tax, sure why not. Unless you’re both paying 0 rent now, in which case why not wait for rates to settle lower while saving.

Leaseholds are a scam, better to get freehold further out. London flats prices are down relative to 2017 and will not get you on the housing ladder.

Yes, I would, buyers are in a good position to buy at the moment and over the long term I think it would work out to be a good investment.

We bought our first flat in London zone 1 over 10 years ago, it was a leasehold in a modern building and paying service charges was fine as we'd budgeted for it. No disputes or issues with the management company. No outside space which wasn't an issue as we were out all the time. No regrets about choosing a more flat over a house further out. We've moved up to a house now but we had a brilliant time in that flat.