Advice on buying a new build apartment!

T-faz

What I fail to understand is why people state that new build are priced at premium rates?

I cannot even find a decent second hand property in the same area which falls under the same price bracket. The ones that are available, for the same price, are uninhabitable (in my opinion) and would require extensive work before they could be deemed livable.

In terms of renting a place, I cannot imaging wasting £500+ on a place that would never be my own. An apartment similar to the one I am interested in buying is being advertised for £800 rent per month. I feel this amount is very high for an attractive but small flat. Saving while renting is impossible so I cannot consider it a viable option right now.

Lets be honest here, house prices will never come down to such an extent that houses will all of a sudden become very affordable. This sort of unrealistic expectation hinders any real effort that people could make to better their situation.

Anyhow, I am also looking at part buy/part rent schemes, what are your opinion on those?

Kilty_2

T-faz wrote: »

What I fail to understand is why people state that new build are priced at premium rates?

........ because the vast majority are poorly constructed using cheap materials, so you don't only pay a premium for being the first owner but also degrade the value quickly due to the fact things begin to fail and require regular maintenance.

New build flats? Enjoy hearing your neighbours go to the toilet?

bitsandpieces

T-faz wrote: »

What I fail to understand is why people state that new build are priced at premium rates?

They usually are more expensive than similar-sized second hand properties. Of course, you may be looking in an area with an unusual property market. If you're happy to post the area you're looking in, others may be able to check what similar money will buy second hand. Understandable if you'd rather not, though.

The ones that are available, for the same price, are uninhabitable (in my opinion) and would require extensive work before they could be deemed livable.

It might help if you clarify what you view as uninhabitable. Are we talking places that could use redecoration, or holes in the roof?

In terms of renting a place, I cannot imaging wasting £500+ on a place that would never be my own.

If you buy, do take care that you're getting a good deal in order to minimise the odds of falling straight into negative equity. There is a risk that you'll hand over your £7k+ deposit and - in return - get a flat which is worth less than £0 (worth less than the loan secured on it). This also seems like a waste.

An apartment similar to the one I am interested in buying is being advertised for £800 rent per month. I feel this amount is very high for an attractive but small flat. Saving while renting is impossible so I cannot consider it a viable option right now.

If you really couldn't afford to save any money while paying £800/month rent, it does sound like your budget will be tight on a £600 mortgage. It's worth thinking about what will happen if you need to spend money on the property or if interest rates are higher in 2 years. You may think it's a risk worth taking, but don't go into this blind.

eyeofthetyne

SERVICE CHARGES

If you're buying a flat, service charges will be payable by you monthly as well as ground rent. This can in some cases add £200 a month to your outgoings, and if uncapped can be as high as the management company likes.

Check this first!

19lottie82

GlynD wrote: »

You are not listening. You have a fixed point of view and are failing to note that there have been three recessions where property prices have crashed in the last 25 years. On all occasions they have come back up and will again. Your friend's property will too. In the meantime she takes the same risks as everybody else.

You introduced the sarcasm too. If you don't want someone to get shirty with you then stay polite.

I’m not disputing that property CAN be a good investment, of course it can.
Neither am I disputing that it will go up in value IF you wait long enough.

What I am disputing is your claim that property is the best investment that you can make.

I know plenty of people who have bought property and regretted it. Again, of course, if they wait long enough then, yes, I agree, it will go up eventually, BUT this could take many many years, and peoples circumstances change, so it isn’t always a realistic option for most people, so they are forced to sell and the property is in neg equity, then they make a loss.

It’s all fair and well saying “but it’s GOT to go up EVENTUALLY”, but do you think the majority of people would be willing to put their life on hold (should it be refusing a promotion that involves moving to another region, or put off starting a family), just to stick it out for 10 years (for example) while the price of their 1 bed flat increases? Or likewise cram themselves, their now spouse and 2 kids in there for the foreseeable future?

Again, in regards to my friend that I told you about, yes of course, her property will go up in value eventually, but what about the 3k a year she is losing while she rents it out, because she can’t afford to sell it? Will she get that back? Because of that flat she is chucking money in to a black hole and she’ll never see it again.

Richard_Webster

look at what similar 5-20 year old flats in the area are selling for.

If there aren't any nearby be very cautious because this means that th builder can invent his own price.

If there are then the price should be comparable with them because in 5-10 years time nobody is going to pay you more for this flat because it is slightly newer than one down the road.

AbbieCadabra

what's the area like for new build apartments, not many or loads?

in the area i keep an eye on i'm seeing new build flats that were first sold in 2007 for £350k-£250k now being marketed in the £280k-£190k region. i've seen quite a few take at least a £50k loss from what they paid new.

this is an area with lots of over supply, builders went crazy just as everything fell apart in 2007-08. new blocks that have gone up since are just standing empty or being let out.

in another area more local to me that doesn't have an over supply problem with new builds, a friend has just sold his 3 storey 2 bed for £9k less than he purchased it for 18 months ago. it was a forced sale as his circumstances changed.

no-one can predict the future markets but do plenty of research for your area before you jump in. i still think we've got a good 5 years before we see any type of stability in the housing market.

GlynD

19lottie82 wrote: »

I’m not disputing that property CAN be a good investment, of course it can.
Neither am I disputing that it will go up in value IF you wait long enough.

What I am disputing is your claim that property is the best investment that you can make.

I know plenty of people who have bought property and regretted it. Again, of course, if they wait long enough then, yes, I agree, it will go up eventually, BUT this could take many many years, and peoples circumstances change, so it isn’t always a realistic option for most people, so they are forced to sell and the property is in neg equity, then they make a loss.

It’s all fair and well saying “but it’s GOT to go up EVENTUALLY”, but do you think the majority of people would be willing to put their life on hold (should it be refusing a promotion that involves moving to another region, or put off starting a family), just to stick it out for 10 years (for example) while the price of their 1 bed flat increases? Or likewise cram themselves, their now spouse and 2 kids in there for the foreseeable future?

Again, in regards to my friend that I told you about, yes of course, her property will go up in value eventually, but what about the 3k a year she is losing while she rents it out, because she can’t afford to sell it? Will she get that back? Because of that flat she is chucking money in to a black hole and she’ll never see it again.

Your friend's situation is unusual, even you must agree that? Going back to previous recessions however I can well remember people in serious negative equity and very worried about it - especially the first time it happened. The market recovered, they still had their homes and they were able to sell at a good price and make money, the way people always do in a healthy property market.

I was generalising. You (or more to the point your friend) have a specific situation which I find unusual. Regardless of that the property market will come back up. Your friend will mitigate some of her her loss and if she holds on to the property for long enough will make money. The upshot is that, despite fluctuations, property investment always makes money.

Wait until the next time round and you'll be giving the same advice.

hazyjo

If prices go up, having a one bed isn't gonna help much with 'moving up the ladder' unless they can save a massive deposit. Whatever they buy will have gone up percentage-wise.

I think people are generally trying to say be careful buying a one-bed anything.

We all know prices will go up at some stage, but it could be two years, or ten years.

What people do not want to do is be stuck with a tiny place if they're ever likely to want something bigger.

I bought in 2006 (£228,500) and sold for exactly the same price in 2011. If I take into account all the interest, and the things I paid for (new kitchen, boiler, shower, flooring, new roof & guttering, etc), I am extremely out of pocket. If I'd shoved that money in the bank, I'd have made on it.

People are just saying that in a falling market, there is not a mad rush to buy - especially a new build that can lose money like when you buy a brand new car.

Another year of saving to get a bigger deposit or an extra bedroom wouldn't hurt in this market.

Jx

sarahg1969

My son is the same age and is currently buying his first property.

He has looked at apartments, new houses and older houses.

The new apartments he looked at were the most expensive and the smallest. They also had high management fees and a large number of other properties on the estate have been on the market for a long time.

The new houses he looked at were similar, but with lower estate management fees. Again, he felt there could be problems on resale.

The prices of both of the above have dropped significantly over the last 18 months or so, and all of the second-hand ones are up for much less than their new cost, and are already beginning to look tatty.

The properties are all small, with paper-thin walls and the most basic of fittings.

He's also looked at older houses, some of which have needed some work.

For the same price as a small 1-bed flat, he is currently buying a 2-bed terraced (which could be converted to 3 beds if required) in a quiet street, with lounge, dining room, kitchen and outside space. Once he's bought it and done some work on it, it should be worth up to £15k more than the purchase price. It's a good, sturdy property, with tons of space, plenty of storage, loads of sockets, a substantial central heating system (whereas the new builds were all electric), and should sell very easily when the time comes ( a number of the other similar properties he looked at were snapped up within a couple of weeks).