FTB lost in London!!!

patch3228

Hi,

This is my very first post and I am hoping to get some guidance/ observations on buying a property in London (most likely to be a flat).


More specifically, I would value your input regarding:

1. Home Buy Initiatives: are there any good ones out there for London or perhaps share any negative experiences?

2. Newspaper reports alarming stats that a ¼ of available mortgages will soon be asking for 40% deposits? I understand banks are cherry picking, but this is a tad extreme...

3. Is the majority of ex-council London flats all leasehold or are there significant groupings of freehold flats? Also, are there any significant groupings in London where you can find these ex-council flats not part of an estate?

4. Are there dedicated property websites that only sell repossessed flats? Or are repossessed properties mainly only available via the auction route...


OK so some background on me:

- I am 22 years old
- Graduated from Uni July 08 and Moved to London Aug 08
- Started working Sept 08 (in a still quite secure banking grad program)


- My Debt = Student Loan £14K
- My Total Savings = £37K

---

à Savings [£17K], ISA [£17K], Premium Bonds [£3k]
- OH Total Savings = £15K

- My Salary = £34,500
- OH Salary = £22,000


Currently living in rented studio flat with OH:
- Rent = £325 each / month
- Total Bills = £25 each / month
- Transport Costs = £1,656 for me


Ideally looking for a property South of River [zone 1 - 3]:
- Minimum 2 bed
- Ex Council flat
- Region of £140k
- Service Charge < £1k per annum

Appreciate any helpful suggestions! :T

Patch3228

Doozergirl

There's no significant benefit to owning a property with a share of freehold over one that is leasehold. You will have well run leasehold blocks and poorly run share of freehold ones. You don't really get true freehold flats, certainly not in London. I wonder whether you are using the terms freehold and leashold trying to refer to thsoe that are now owner occupiers as opposed to social tenants?

Because they are ex-LA, it's completely random as to how many in a block will have purchased their home under the Right to Buy. A friend has an ex-LA in Richmond and it's very nice indeed, just a small block in a nice street, still has some council tenants but it's well looked after. It kind of fits a stereotype that the nicer ex-LAs will be in nicer areas though.

Repossessed properties will be found interspersed with all the other properties on the open market. Both through EAs and at auction - perhaps a much large proportion of auction sales are repossessions but often after they've failed to sell the regular way.

140,000 and you're still on the outskirts of Zone 3 I reckon. We sold a two bed- not ex-LA but a nice flat in what could only be described as a pretty ugly building for 180,000 two years ago in Crystal Palace. That was the bottom of the market then - the cost to us including the lease extension (it was a repossession and an undesirably short lease) was a little under 140,000. So they're out there but you'll have to dig - no point limiting yourself to ex-LAs anyhoo.

patch3228

Thanks Doozergirl for your thoughts, yeah I think you are right not to focus too heavily on just ex-LAs.

I have looked at some terraced houses in East London, which are split into ground/ 1st floor flats. They are priced same as the ex-LA flats and even though the rooms are smaller, I think in the LT they are more saleable.

I may have confused the freehold/ leasehold terms ... but yeah it looks like they are all more or less leasehold. My concern is if I wanted to alter the layout of the rooms/ walls etc?

Time-wise I am aiming for July 2009 with a view to moving into the property in October 2009...but do you think prices will plummet even further in 2010 ... or will the 2012 Olympics start to kick in and inflate prices in 2010/2011?

hethmar

Where do you actually want to live? Take it you have had time to work out where the various areas are and which you like/dont like?

patch3228

I work in Canary Wharf and my OH in Borough so we want somewhere easily accessible to both:

Initially, we focussed on South of the river: New Cross Gate, Elephant & Castle, Borough.

However, I can't find many affordable properties advertised here and so focused on East London (in hope Olympics will boost prices there).

Main target areas are East Ham, West Ham, Plaistow and possibly Upton Park.


Over the next few weeks I will start contacting Estate Agents and Banks to see what we could potentially mortgage based on our circumstances.

I reckon jointly we could get £110,000 but I hope our deposit savings will boost that figure...closer to £135K which is currently being demanded my a lot of the properties I have seen advertised.


Just a quick scenario - what is better:

Property A: Freehold £135K, 2 bedroom flat in a house conversion

Property B: Leasehold £120K, 2 bedroom flat in a house conversion

Property B has larger sized rooms, although both are in same location and same condition...?

Kynthia

I looked at a couple of ex-council properties when I was flat hunting and they were definitely bigger than other flats. However when my solicitor investigated upcoming works the council was planning, that private owners would have to pay for, it was horrendous!!! Thousands and thousands of pounds over the next five years! The council as a leaseholder is notoriously bad at keeping the costs down or building a pot to pay for these expenses.

I ended up buying a quirky little flat that I fell in love with. Size isn't everything. :rotfl:

Everything depends on your lease. You own the property and can make internal changes unless you agree to a lease that says you can't.

Prav

Even if you have a share of freehold flat, and you're part of the freehold management company, you still have to lease it of the management company i.e. you're effectively leasing off yourself. But this is a formality.

There can be advantages of having s/o freehold - regarding service charges etc, you will know that the service charge relate to the actual ongoing costs, and can influence this, but yes this does depend on how well the management company is run, and how many people comprise the company etc.

Regarding the ex LA properties, if you have a lift etc and included hot water etc, the service charge can add up. You are , as Kynthia says, subsidising the council tenants.

Kynthia

Have you talked to a mortgage broker to get a realistic idea of how much you can borrow? It saves you looking a properties in the wrong price range.

There are free brokers you can phone and it shows estate agents that you are a serious buyer.

stephen509

I would follow with not looking at ex-lags.

Have you thought of living slightly outside London, for example somewhere like Croydon which has easy transport links to London, you would prob get alot more for your money.

With a combined saving of 50k, i think you would be able to get a 150k mortgage, thus increasing your price cap to 200k. This can change your outlook completely, but then the question is how much do want to borrow.

patch3228

Kythina what you say is very true and resonates my OH's thoughts on this, as she would prioritise family home over investment potential. So basically a quirky little flat as opposed to a larger run down ex-LA

Stephen509 I would be happy to take on debt up to £170K. However, saying this my OH would prefer to borrow up to £140K as she has fewer savings and a smaller salary. Which is why I would focus more on the size of the property rooms (for potential rental/ lodger) rather than a smaller but much nicer quirky flat.

Prav it seems a little trickier with the freehold situation, but I'll take on board to check whether the council have any planned works on the horizon.


I have narrowed it down to 2 Mortgage Brokers:

1) Charles Cameron & Associates - No brokerage fee option

2) McHALE HEANEY BROKERS LTD - No fees

I'll have to get back to the thread on the 2 quotes!

pinkshoes

Personally I would not touch a conversion flat, due to the noise issues! I lived in one once, and got fed up of having to listen to the people downstairs pee at 6.45am every morning! I have friends renting conversion flats in London too, and all of them at some point have had an issue with noise, or neighbours complaining about their noise!

Some new builds have poor sound insulation too, so listen when looking round to see how much noise you can hear.

You may think a bit of noise won't bother you, but when you're run down or stressed, being able to hear the tv of the person in the flat above/below will eventually drive you nuts!