Is it even worth buying a starter flat? (London)

[hangrypony]

With no real equity gains to be had with purchasing a flat, does it make sense to try and do the whole “housing ladder” thing in London anymore?

Rents are often a fair bit cheaper than mortgages & service charges in Inner London. So might it be better just to rent somewhere reasonable and go straight for the “forever” home? I e go for a three bed flat or house rather than a 1 bed for 3-4 years then a bigger place

Yes, you're right. It just feels like any number of reasons can cause people to get stuck on the wrong rung of the property ladder - and hard to know what you'll need/want post kids beforehand. I've had a few friends get stuck in small flats with kids and not be able to sell and it really is not fun.

I have seen many articles re couples who bought their nice house but now can't afford kids. It would be nice in an ideal world if we had everything but now with work being 3 days a week in office at least, I don't get how the commuting from SE works out financially plus childcare on top.

As someone who works in the sector, if I were buying a flat the only ones I would be looking at would be ones in low rise buildings (less than 11m tall). High rise buildings (over 18m) have become subject to a massive amount of compliance requirements as a result of the Building Safety Act and it’s costing leaseholders a fortune; and the industry feeling is that it’s likely to be extended to mid-rise in the not too distant future.

Low rise buildings are cheaper to maintain and redecorate and often don’t have lifts which are also expensive to remediate. It’s likely they won’t look as fancy as a newish build but the service charges are far, far cheaper.

I would say hold your horses for the time being. There are laws in the pipeline to make leasehold illegal (might just be for new properties) and the whole economy is so uncertain. Whilst the overall trajectory is up, fluctuations in the market can force property prices down. With prices so high in London, it's a bubble waiting to burst - or at least deflate a bit. You don't want to end up with a mortgage greater than the value of your home.

Depends really. My first flat was an ex council, two bedrooms with balconies and big. I could have happily stayed and raised my family there, retired there etc, though at some point the lack of garden would’ve grated. Cheap at the time and had been on the market a year with a disinterested agent.

If I had my time again I would buy the same again, or a one/two bed with a garden, or something with potential to extend into the loft, further out into Zone Whatever if need be. Buying a bog-standard one bed with no outside space and a high service charge… I think this would be a failure to future proof unless other circumstances are at play.

The bubble is already bursting. Many flats in London haven't risen, even in nominal value, since 2016. Prices in central London have fallen massively; it's even being reported in the mainstream media at this point.

I bought a 2bed share of freehold flat for 370 in north London in 2021

just sold it for 400

I’ve come out all right

Only buy where you are one of 3 or 4 flats in a building. Property always goes up in value in London. Buy a SoF place.

It very much depends on where you want to buy. Where I live in London, rents are on a par with mortgage repayments as the rental market is pretty much through the roof while flat prices are stagnating.

I'm sure you are right about your own area but the OP says that renting is cheaper where she wants to live and I've heard a lot of other Londoners make the same comment.

But that doesn’t make long term sense as a decision. The market for 1-2 beds flats is relatively depressed in London at present so there are some good deals to be had for buyers (flats which pre-Covid would have cost a LOT more) whereas as the rental market has higher rents due to the reduction in the number of landlords. So if the OP doesn’t buy now because renting is cheaper than a mortgage, she’s going to be stuck in the rental bubble (unless she moves to a different area) as rents may or may not fall but inevitably the property value of flats will rise again in the medium term and the gap between rents and mortgage costs will only widen. As more people are being forced back to their offices, there are already signs of improvement in the market for flats.

Not worth it for most.
The ladder has existed in years as pp said.

I agree and this is what I will be encouraging my son to do and to avoid leasehold/shared freehold wherever possible.

I haven't suggested that the OP or anyone else should rent for long term, although I'm not sure what you mean by long term. It could mean a couple of years or 30.
I understand what you are saying about a reduction in landlords. Is that actually born out by the stats in London? Whatever the case, the OP clearly says that renting in her area is cheaper than buying. There is no inevitability about flat or house prices rising. In many areas, as I already said, that are at 2016 nominal levels so massively down taking inflation into account. What worked well for people in 1970 or 1990, does not work anymore for several reasons.

I believe a record number of FTBs are buying houses & skipping the flat stage. it makes sense.