Is a London studio flat a good investment?

Brodel

I live in SW London and have been looking at buying a studio in the same area. I actually had an offer accepted on a very small place not far from Brixton. I went to look around it again today with my surveyor and he seemed to think that although it was a fair deal, that I should be careful of buying a studio with the intention of it being an investment. He said that if/when interest rates do rise and prices stop rising, 1 bedrooms becomes more affordable and the price of studios can really drop fast.

I felt like I was on to a good thing but now I'm not so sure, and given that it's such a large investment I'm starting to feel that maybe I should withdraw my offer and sit on the money for a bit...then again I don't want to miss out on a good opportunity to get somewhere that I may be able to sell in 5-10 years and come out quite well at the end of it.

Has anyone been in a similar situation or have any thoughts? It's all appreciated.

cattie

Personally I would avoid a studio at all cost, unless it were large enough to easily convert into a 1 bed place.

I always think of studios as only being suitable for those who really can't afford anything better, unless of course it's in a good central London location where it could be attractive as a Pied a Terre to somebody who lives in the sticks & needs a place to bed down during the week or for occasional overnight stays.

Far better to save your money for a 1 bed place, even if small as it will always be a far more attractive possibility for buyers, who nowadays prefer to start off with at least one bed rather than a studio & move on up the ladder into a 2 bed.

kmmr

Depends where it is, and how close to a station. Studios are fine for students or young singles (even couples in London), but not if it is in a family location, or far from shops/bars/restaurants.

Old_Git

isnt studio just a posh bedsit

socrates

Whats the price and what rent can you expect?

There is more value in studios as there are no dead rooms

For example someone claiming benefits will get the same LHA Rate for a 1 bedroom as a studio - the one bed costs more so the studio is a far better investment

Its all about yields

If I could legally convert all my properties into studios I would almost double my income over night

Norroy

Old_Git wrote: »

isnt studio just a posh bedsit

No, Bedsits would more than likely have shared bathroom facilities, with possibly just a wash basin in the room itself. A studio is very much a self-contained units with no sharing required.

Studios can be an excellent investment in urban locations especially if they offer scope to develop into a one bed flat.

One note of caution, some of the smaller units will be un-mortgageable. It depends on the lender, but anything less than 30sqm will be difficult.

time2deal

I've got a 1 bed place in London which is 29sqm and had no problem getting a (residential) mortgage with Santander (A&L at the time). Might be a little easier in London where small flats are more common.

Brodel

Thanks for all the replies. The estate agents seemed to think it would rent for between 7-800 per month, which looking around at other local properties for rent doesn't seem too unrealistic. The studio is only about 23 sqm but I'm fortunate enough to be in a position where I won't need to get a mortgage, I realise that adds to the difficulty of selling in the future though...

Another note, since I had my offer accepted, I've noticed that on the estate agents website the property is now being advertised at £25,000 over it's previous asking price. Any ideas what that might be about?

Owain_Moneysaver

Brodel wrote: »

Another note, since I had my offer accepted, I've noticed that on the estate agents website the property is now being advertised at £25,000 over it's previous asking price. Any ideas what that might be about?

Estate agent is hoping for a higher offer.

Didn't your offer require the property to be taken off the market immediately?

Brodel

Owain_Moneysaver wrote: »

Estate agent is hoping for a higher offer.

Didn't your offer require the property was taken off the market immediately?

No, I didn't really think to to be honest. This is my first time looking to buy and its all completely new to me. I guess it explains him being so slow to reply to certain questions and the way the way part of the price offering went. I'm surprised they are advertising at such an increased price though.

socrates

Before you do anything else and waste any time check that the Studio has all the correct permissions and the title deeds with Land Registry plans match up

There are a lot of people who have carved properties up then sell them to cash buyers by the time they unravel everything it is too late and they are left holding the baby