Should I buy a flat in London right now?

ViolaLass

Fraise wrote: »

But the OP hasn't said he's buying leasehold? So I don't see the relevance. If he does buy an apartment that has maintenance fees he just has to check what it covers, and usually maintenance fees have a sinking fund for things such as new windows etc, but how often do you need them replaced?:

The OP has said precious little - I have merely been pointing out things that they need to consider. It isn't as straight forward as 'buying good, renting bad'.

Philuk

Fraise wrote: »

You're assuming the tenant will get his deposit back in full. He may not if he accidentally damages something.

And you are assuming that the house maintenance for a home owner will be free?

You have much more cost owning a house over a period of few years than you put deposit down.

As for interest rates, they don't make any difference to FIXED RATE mortgages.

The OP is likely to borrow for 20 years+. No interest rate are fixed for ever in this country, they do it in France for instance where variable don't exist. The max the OP will ever get is 10 years at a premium interest rate of course. After that, we might be in a very different world where the average mortgage may be 5%-6% as a standard.

And as history proves, property always goes up in value. Always. You may have the odd dip here and there, but if it's your home and you're not intending on selling every five minutes it doesn't matter, because eventually all property increases in value. Certainly in London and the South East it does.

Check out the property prices for the last 100 years....:)

The price outside the London and SE are back to 2004 level when adjusted with inflation. Talking about historical housing value, the acceleration we witnessed especially in the area you mentioned, are staggering and have completely dislocated the market from its affordability base. In fact, the historical affordability ratio usually around the 3.5-4 mark is now sitting way over 5 outside London (SE) and between 8 and 12 within London depends on the area. How can you be so affirmative that this super bubble bear no risk of deflating and "market will always go up"?

agrinnall

ViolaLass wrote: »

And thus reduce with inflation as time passes i.e. £500 a month in 5 years' time will be worth less than £500 a month now.

Fraise wrote: »

You're forgetting something.....inflation.

If your mortgage repayments are, say, £1000 a month now, in 10 years from now that £1000 payment will probably seem very reasonable as wages increase, so you have MORE money left over after you've paid your monthly mortgage whereas if you're paying rent it goes UP with inflation.

That's a fact:)

Opportune timing that it's been announced today that inflation has fallen to its lowest level in modern time at 0.5%, which while it will have an impact on repayments it's going to be pretty small if it stays that way for the next 20 or 30 years- and some commentators are talking about a further drop or even deflation.

http://www.bbc.co.uk/news/business-30794673

ViolaLass

agrinnall wrote: »

Opportune timing that it's been announced today that inflation has fallen to its lowest level in modern time at 0.5%, which while it will have an impact on repayments it's going to be pretty small if it stays that way for the next 20 or 30 years- and some commentators are talking about a further drop or even deflation.

http://www.bbc.co.uk/news/business-30794673

I doubt we can make predictions (about inflation) of any real certainty over that time period.

buglawton

Fraise wrote: »

It all depends on the flat. Some flats are freehold, usually large Victorian conversions that have been turned into 2/3/4 flats. If you buy one of those, and you own the freehold with the other flat owners, you're in charge so to speak. Neither would you have ground rent charges as you own the land.

It's usually apartment blocks and estates that require a managing agent to carry out repairs etc, and that's obvious why. But if it's just a house that's been converted into a few separate flats, and you're the freeholder along with the other couple of freeholders, it's a different ballgame. You're not going to effectively 'fine' yourself each month by paying high fees to an agent....to pick up a telephone on your behalf and call in a builder if your drains are blocked or your gutters are leaking :rotfl:

That's all an agent does...call in workmen on your behalf, but if it's just one house you can phone a builder yourself. Usually, you get three separate quotes and then choose with your other couple of freeholders which builder you want.

You can't do that if there's 100 flats on an estate of its a giant block.

So there's lots of choices really.

Just try getting a mortgage on a 'freehold' flat.

agrinnall

ViolaLass wrote: »

I doubt we can make predictions (about inflation) of any real certainty over that time period.

I agree, but that's what you did - you're probably right that it's more likely to be inflation rather than deflation over the long term, but it can't be relied on.

hpifever

2 bed flat for around £450-500k! That's insane.

ViolaLass

agrinnall wrote: »

I agree, but that's what you did - you're probably right that it's more likely to be inflation rather than deflation over the long term, but it can't be relied on.

True, although I was making a much vaguer prediction - that there would be inflation at all over the next x years, whereas you were talking about the idea of very low or negative inflation. I don't think it's THE reason to buy though, either way.

Fraise

Philuk wrote: »

And you are assuming that the house maintenance for a home owner will be free?


You have much more cost owning a house over a period of few years than you put deposit down.



The OP is likely to borrow for 20 years+. No interest rate are fixed for ever in this country, they do it in France for instance where variable don't exist. The max the OP will ever get is 10 years at a premium interest rate of course. After that, we might be in a very different world where the average mortgage may be 5%-6% as a standard.



The price outside the London and SE are back to 2004 level when adjusted with inflation. Talking about historical housing value, the acceleration we witnessed especially in the area you mentioned, are staggering and have completely dislocated the market from its affordability base. In fact, the historical affordability ratio usually around the 3.5-4 mark is now sitting way over 5 outside London (SE) and between 8 and 12 within London depends on the area. How can you be so affirmative that this super bubble bear no risk of deflating and "market will always go up"?

You can assume as much as you want, but until you know the facts that's all it is - assumptions. If the property has a fairly new roof and is in good decorative order etc, there's little much maintenance to be done. I owned my previous house for over 25 years, and except for one gutter repair, reprinting window frames every 5 years or so, there wasn't much to do! The upkeep of your garden costs, but if you have a tenant that's their job.

So we shall have to agree to disagree on that one.....my own experiences prove otherwise.

You're wrong about fixed rate mortgages. You can fix them for 20 years...one of my friends has just done it, and another one fixed for 15 years. Whoever gave you that information is wrong. But you don't have to fix if you don't want to. They're so low, and looks like they're going to stay that way for a very long time, it shouldn't matter fixing. IF they do eventually go up, there's always speculation that they are about to, and you can easily fix a mortgage just before
And, tbh, a 5 or 6% mortgage is still pretty reasonable...especially when you consider they were once 17%.....

As for prices outside London being back to 2004 levels, I think you're wrong. There's only one area that's fallen....northern markets are picking up. And inflation is going down! Gp haven't you seen the news today?

Of course london and the South East is the dearest in the country, and it's obvious why. It's the capital for one thing, and the southern East has beautiful properties that hold their worth. It's a desirable area. Oh...and the weather is nicer than up north. Yes, it sometimes goes iffy and rains, snows etc, but it's always drier, sunnier and Warner than the North. That's a meteorological fact.

No, london and South East prices won't go down. They may stay static for a bit, like they always do every once in a while, and they may even have a price drop, like they do every decade or so...and then WHOOSH, they jump up even higher than before.

AND even if they do ever go down for a year or two, they NEVER go as low as they were 5 years previously. The do up north, that's tried, but you're talking two totally different areas.

Fraise

agrinnall wrote: »

Opportune timing that it's been announced today that inflation has fallen to its lowest level in modern time at 0.5%, which while it will have an impact on repayments it's going to be pretty small if it stays that way for the next 20 or 30 years- and some commentators are talking about a further drop or even deflation.

http://www.bbc.co.uk/news/business-30794673

20 or 30 years???? Hahaha, give over!