Have we made a financial mistake buying our flat rather than renting?

[squalle]

We bought our flat in 2016 for £670k. It’s a one bedroom flat in a conversion with a terrace in zone 1/2 borders. We spend around £6,000 a year on service charge. Our interest rate is now 4.8%.

The total monthly cost of running and maintaining this place is £3,700 a month. On the open rental market, it would fetch around £2,800.

We have just had it valued for £650k.

We have therefore lost a significant amount of money vs if we had rented and invested our deposit in stocks and shares.

Behind the scenes large commercial landlords will be quietly trying to sell units, they can afford to drop prices to get rid, heavily mortgaged private landlords can"t.

https://www.ft.com/content/1372a542-50a4-459b-9698-2eca86a99b8f?syn-25a6b1a6=1

The generation of homeowners trapped in unsellable flats.
The article says that the average price of a flat in the UK is £192,000, yet the average service charge in England and Wales is £2,405, rising to £2,800 in London, according to Hamptons.
Nationwide, the UK’s biggest provider of first-time buyer mortgages, has a number of stipulations on lending for leasehold properties. Those with service charges greater than 1pc of property value, ground rents greater than 0.1pc or leases ending in 55-85 years may have to be referred for additional scrutiny.
Similar policies concerning annual fees exist at other major banks and building societies, from Santander to TSB.
“Lenders were asleep at the wheel of leasehold for years when money was cheap – but now they are quite rightly wanting to protect their security and these service charges are unsustainable”

https://www.telegraph.co.uk/gift/b100a1dc0bb48158

You paid the price of flats at the time so know you didn’t overpay.

A 10% hit on 1999 prices?

You did overpay in investment terms though.

Obviously not

You will struggle to sell at only 10% off today"s asking prices.

I’m not selling anything so I don’t know what you’re talking about 🥱

You haven’t lost really if you view it as a home not a money making investment

declining house prices will be very painful for people who need to move but that’s the only way to really fix the whole economy is to make housing affordable again and you can’t do that in a global market by raising wages. Housing needs to take only a sensible share of a typical wage

laws around service charges and leasehold in England and wales may need to be investigated

Yes, but you weren't to know at the time and what's done is done so it's no use dwelling on it I suppose. I guess at least you have the security of somewhere you won't be moved on every few years as happens to many London renters.

Covid has definitely depressed the market for flats in London and no one could have seen that coming. I noticed just the other week that a flat round the corner similar to the one we sold 11 years ago (we're on the same street as our old flat still) was on sale for only 10% more than our place was listed for in 2015

Covid? How so, most people didn"t stop buying London flats because of Covid, that is just another "Don"t look at the Elephant in the Room, look over there!" excuse to try and pretend the debt Ponzi is somehow normal.

Buyers much less so for obvious reasons.

Oh, I'm not making any excuses for it or saying it's the only thing, everything is ludicrously overpriced, but I think Covid did dent the appeal of flats and a gap has opened up since then. On top of that one-bedders have really had a collapse because, for most people they are only going to be a short-term option and the asking prices are not short-term prices and I think people worry about getting stuck when they want more space like the OP, but can't afford a two bedder. Buying has not been good value for some time, but is certainly getting less so.

I agree with the sentiment, but you won"t get lockdown again, unless there are literally bodies in the streets, then you wouldn"t need to mandate staying indoors, and most people can"t afford a house in the country with land, it was just a fantasy exploited by out of town EAs at the time to get those who did have a bit of cash to overpay.

How can you possibly know that?

You can"t, but you can make a judgement based on prices in the area and historical prices, the opposite side of the coin is people trying to move saying their house is "worth" X before they have sold it and including X in the pot for the next house.