Spending £3,500 a month in rent

[sgroobles]

Having a slightly :O moment as we have just signed a rental agreement for two years for £3,500 a month in rent. This is in London so can't be that unusual based on the number of properties we saw at this rate.

We would prefer to buy somewhere but, honestly, with the way apartment prices have stagnated since about 2016, it's too big of a risk.

Feels pretty horrifying that somewhere to live can cost so much, but we also need to enjoy living somewhere as you do only live once... anyone else paying what seems a crazy amount in rent?

It’s zone 1/2 border and there are indeed 2 bed flats under £1m. In a private gated development (that’s considered very desirable) so most definitely not council. Note I wrote inner London, not central London.

Edit: I just did a quick Right Move search and found plenty of 2 bed, 2 bath flats for sale in zone 1 (Aldgate) under £1 million. Even a few 3 beds. All new modern buildings, none of them council or with short leases.

This.

You’d rather spend £3.5k a month in rent than buy a flat because why? You’re worried about prices dropping?

We sold our flat in Feb and made a profit of £135k. Flats are definitely harder to sell but I’m glad we bought ours rather than sitting in expensive rentals. If you can’t afford a house now, when do you envisage that changing?

Made a profit after how long? Based on buying price in eg 2015 versus sale price 2025? Or ? How much mortgage interest was paid during ownership? What if rates had been 4 or 5% during that time? You cannot guarantee profit on flats or houses

I’m not suggesting you can guarantee profits but unless the OP is expecting massive reductions in prices then spending c£50k a year in rent is still the worse of the two options.

Probably the best comment on the thread.

Or will buy a house elsewhere in a few years.

I sold my flat in London to rent a newer one, I did the maths and it’s daft to buy unless you plan on staying 5+ years. If you have a large deposit even more daft.

But the difference in flat prices to houses is huge. Insurmountable for some. If the OP intends to live in a flat for 2 years and then buy a house then yeah fair enough, avoid the stamp duty. But otherwise, you gain nothing from renting.

I think OP wants the convenience and lifestyle that living in central London (or close to it) brings, that's affordable for her. Perhaps she can't afford the huge deposit that's required for a similar property in her area if she wanted to buy. The market for flats seems to be pretty good from what I've seen on Rightmove in Hackney and Brixton in terms of recent sales and profit made.

That's a shocking amount of rent but depends on your income. Rent & skip the flat stage.

Lots of people buying flats in London are getting family help re big deposits.

And plenty are still skipping the flat stage. Stamp duty makes moving prohibitive & houses can increase faster than flats which makes moving up harder.

We sold our flat in Feb and made a profit of £135k.

When did you buy?

You cannot guarantee profit on flats or houses

particularly not in this climate!

You prioritise what you prioritise.
Many areas and property types in London haven’t at all stagnated. Myself and several friends have all made at least 6 figures in only a couple of years of owning our first homes, on the lower end. I only know one person who sold for the same and tbh it was a bad buy in the first place with limited potential.
Personally I would never want my basic outgoings to be so high if it wasn’t at least paying off an asset, but some people are happy to pay more for the flexibility or they can’t afford the running costs and deposit to buy so want to rent something nicer than they could buy.

Why do people feel they have to "make money" on the houses/flats they live in? This is why it's all gone so wrong.

3.5k a month on rent is just absolutely insane.

Why do people feel they have to "make money" on the houses/flats they live in? This is why it's all gone so wrong.

We turned into the main driver of our economic growth unfortunately

Myself and several friends have all made at least 6 figures in only a couple of years of owning our first homes, on the lower end.

On flats? That's really unusual when you look at data post Brexit & the last two years we have had the huge change in mortgage interest rates.

Plus if you allow for inflation something bought in 2025 will need to sell for a lot more to have kept up.

I lost £75k selling my flat I bought in London in 2017. I imagine she means that risk.

All flats, and all bought between 8 and 6 years ago.
The data on flats is quite misleading because it accounts for a large amount of diabolical flats in large blocks with restrictive leases and large ground rent or service charges. But what London is absolutely coming down with is Victorian maisonette flats which are obviously low rise, own front door and often large gardens which hold their value incredibly well, with huge growth in many areas. They

Mine personally increased by 250k on the purchase price from 7 years ago and was sold this year. In saying that a good 50k was spent on the property but the increase is still there.

Why did you go through with a sale at such a loss?

All flats, and all bought between 8 and 6 years ago

So not a couple of years ago then. It's very different post covid....

I'm a Londoner who sold a maisonette years ago. It made 200k in 2 years without so much as a lick of paint. Plenty of those flats are still not making 100s of thousands in a few years these days.

And as I said a 500k flat in 2020 needs to sell for 636k now just to keep pace with inflation.

@Hodgemollar so which areas in the last couple of years have seen huge growth in flat values?

I also think a lot of the issues are still to play in the London market. I'm not coming off my sub 2% fix for another 2 years like many others. So much of historic growth has been driven by equity and if people aren't making money on their flats it does start to feed through to houses. Plus families have left London/haven't come or just are choosing smaller families so schools are struggling with falling rolls. It's a mess really.

Another bit that isn't really talked about is that some just don't want so much of their income servicing interest even if you have the cash which is also impacting things. Everything is more expensive, school, renovations, uni, utilities, more tax etc people just can't throw everything into property anymore knowing it will double in 10 years of whatever.