Would you buy a property in this scenario?

[user593]

DP and I are considering buying a 2-bed flat near our family home in London (which is mortgage free). We have a number of close relatives not in good health or just getting older who we’d like to help out/ have closer and in the long term perhaps rent it out for an income. The market seems sluggish at the moment so we’re wondering if now (or over the next year to 18 months) might be a good time to get a deal. I’d be interested for others take on doing this as I’m keen but also a bit apprehensive. We’d probably be looking at putting down a 30% deposit and settling the mortgage within 5 years.

My thoughts on this are in regard to older relatives use and potential stairs/access challenges going forward.

re renting: the law has just changed in favour of tenants so I wouldn’t touch that just now until it settles down and gets revised to something more sensible. Short term air bnb could be an option.

A flat is unlikely to suit a person with mobility difficulties. Even with a lift, or on the ground floor, there just tends to be too much walking from flat to somewhere a car can be reliably parked.

Thanks for your thoughts and appreciate your comments re mobility issues but a bungalow isn’t an option where we live. MIL and FIL are currently in a house and can’t manage the stairs well. I don’t think they’ll leave their house but we could at least offer them the flat if they suddenly had a change of heart or if one passed and wanted to be closer to us whilst dealing with the bereavement (and beyond). The other illness in the family won’t affect mobility and will hopefully be resolved over the next few years but is financially draining and stressful at the moment.

Yes, my guess is that in 12 to 18 months time you will get a good deal. Prices are almost certain to go down.
Should you rent it out or not is another question entirely. The new regulations seem to be causing a substantial exit of amateur landlords so that needs careful consideration. I would say if you buy with cash savings or have an excess of funds to loose it might still be a sensible option. The old model of borrow to let on interest only has definitely had its day thankfully.

It would be nice to let it out but we wouldn’t be relying on the income. We could also do short term lets I suppose which would keep it free if we needed it.

We have maxxed out our ISAs and pensions this year so our financial advisor is setting up a GIA for us but I suspect it’s best to diversify a bit and not just funnel all our funds into the GIA. Also it would be nice to be able to offer it to family. If/ when an acute need arises (such as FIL passing and wanting to move MIL closer) we wouldn’t have the time to seek out a bargain and the paperwork would take a long time. Wherever we buy might also need a bit of work (any bath would definitely need replacing with a shower) and this would give us the time to do it. It still feels like quite a big step though!

My dc who uses a wheelchair is moving into a flat next month. The complex has a lift and an allocated car parking space.

in many areas bungalows just don’t exist.

You should be able to do short-term lets via something like Air BnB but the changes in the law mean you can't do short-term lets to standard tenants.

This is right, you can't just have it back when it suits you anymore. It would have to be a property suitable for short stay air b&b or something similar. If you rent it as a home for someone the new regulations mean they have the right to stay as long (or as little time ) as they prefer. The only way to get it back is section 8 and the rules on that have tightened too.

I have a relative in London who has done exactly this. Importantly, they can afford to keep it and pay the mortgage without needing an income from it. If you can afford to do it, it seems like a win win in terms of investment and future relatives’ home. As pp have said though, with the recent law changes, I wouldn’t go into it if I needed long term tenants. Depending on where you are in London and your capacity to manage & clean it, it could do well on Airbnb.

It's a good time to buy because so many flats are on the market due to the new laws, and buyers are wary because of interest rates.

A g/f flat with spacious spaces and corridors could work (wheelchair / Zimmer frame friendly) , if you can get a conversion with share of freehold (no service charges except what you and the other freeholders need to do to maintain the property) and no hassles about length of lease (because you are in control as a co-freeholder.

Take into account 2nd home SDLT and Council Tax if relevant. Also that you would be subject to CGT on future sale, and that in a small 'share of freehold' property there may be restrictions on sub letting / AirBnB etc.

Re Airbnb/short term lets - before buying, check if the building allows this, a lot of flats now have restrictions. My building banned Airbnb after an incident a few years ago which made the papers!

Buying a flat rather than invest more in a global fund is probably the opposite of diversifying. Putting so much money into a flat is very risky from an investment point of view but if you want a flat for relatives that's different. Lettings, whether short term Airbnb or assured tenancies are risky and full of costs, council tax (often at higher second property rate), financial fees, buying and selling fees, management fees and highly taxed and regulated now.

Sorry, I think it's a poor financial decision from an investment standpoint but could be a great 'help specific family members ' one.

@Octavia64 , They exist where I'm from but they are in demand and aren't cheaper than houses.

I think it sounds like a good idea for your circumstances. If it's something you don't need to get income from and you can get one suitable for mobility issues, it would be great to have it bought and available ahead of when you think you might really NEED it. You could take so much stress out of a situation like bereavement by just having something there available immediately.