Is buying a property with Pocket Living a good idea?

ruelle

'We sell well-designed, local and affordable homes so the people who make a city can also make it their home.

The exciting thing about Pocket homes is that they're at least 20% cheaper than the surrounding market rate.

They're the perfect starter home for a first-time buyer.'

https://www.pocketliving.com/about/pocket

So compact 1 beds that are 38 sqm available at a discount. Great idea to help get people on the ladder and they look super stylish. The only thing is when you go on to sell, it has to be to another first time buyer earning less than the affordable housing limit. Does this mean that you'll likely not build up that much equity then if your asking price will be capped?

Prohorenkovs

Not necessarily. If you buy, say, one of those Streatham flats for £256,000, it will still probably go up in price. But only to a degree where it is 20% below similar properties in Streatham.

The 'capping' is done at the outset. And when it comes to valuing the property, I'm pretty sure that will be taken into account.

ruelle

I get that it's very likely to go up in price but if it's limited to buyers on a certain salary won't that mean that the amount they allow it to sell for could be less than 20% given that pay growth is much much slower than the increase in house prices?

ScorpiondeRooftrouser

The salary limit seems to be 90K. Presumably per person, if there are two of you. Is that really a big restriction for first time buyers, even in London?

HappyMJ

ruelle wrote: »

I get that it's very likely to go up in price but if it's limited to buyers on a certain salary won't that mean that the amount they allow it to sell for could be less than 20% given that pay growth is much much slower than the increase in house prices?

The market is not very limited when no single occupier can earn more than £90,000. That's quite a high figure to earn even in London. Your potential buyer also needs to either already live and/or work in the borough. It even says if you live just one street outside the borough you do not qualify. The purchaser needn't be a first time buyer they just need to not currently own a property.

It looks more like social housing that's been privatised. £256,000 for a 38sqm 1 bedroom flat might be okay if you are young or intend to retire in the flat but would not be suitable if you ever wanted to plan a family. I can't see them selling particularly quickly. Although you would normally have 9 months notice that a baby is coming and I'm sure you could find a buyer within that time. Anyway a few months of having a baby in the same bedroom or living room shouldn't be too much of a hardship.

You got me thinking my flat £110,000 and 58sqm is around £1,900 sqm and that flat at £256,000 and 38sqm is around £6,750 sqm. It's only 3.5 times more expensive than my flat...but my flat's not in London fare zone 3.

ruelle

ScorpiondeRooftrouser wrote: »

The salary limit seems to be 90K. Presumably per person, if there are two of you. Is that really a big restriction for first time buyers, even in London?

D'oh. Hadn't thought about the fact there could be 2 of you buying.

ruelle

HappyMJ wrote: »

You got me thinking my flat £110,000 and 58sqm is around £1,900 sqm and that flat at £256,000 and 38sqm is around £6,750 sqm. It's only 3.5 times more expensive than my flat...but my flat's not in London fare zone 3.

£6,750 per sqm - yikes!

ScorpiondeRooftrouser

ruelle wrote: »

D'oh. Hadn't thought about the fact there could be 2 of you buying.

It's not so much there could be 2 of you buying as the fact that a 90K salary restriction only rules out a tiny proportion of prospective buyers, most of whom would not be first time buyers, or looking for a 1 bedroom flat. It's about 3% of the UK population but skewed heavily to older people, as salary tends to increase throughout a career. The stipulation about living in the borough and the inability to sell to anyone who already owns property cut down the potential purchasers a lot more. I wouldn't even take the £90K restriction into account; its effect will be negligible.

Cakeguts

http://www.rightmove.co.uk/property-for-sale/property-36027759.html Why do they need to have a discount? You can buy a flat in London for less than £256k in a much better area than any of the ones on the Pocket Living website. It makes me think that people who buy from PL are people who can't be bothered to look round to see what else there is. Basically lazy.

It seems to me to be a pointless exercise to offer very small flats in poor areas at a discount when there are full price bigger flats already being put onto the market?

ruelle

ScorpiondeRooftrouser wrote: »

It's not so much there could be 2 of you buying as the fact that a 90K salary restriction only rules out a tiny proportion of prospective buyers, most of whom would not be first time buyers, or looking for a 1 bedroom flat. It's about 3% of the UK population but skewed heavily to older people, as salary tends to increase throughout a career. The stipulation about living in the borough and the inability to sell to anyone who already owns property cut down the potential purchasers a lot more. I wouldn't even take the £90K restriction into account; its effect will be negligible.

Ah, I see what you mean now.

ruelle

Cakeguts wrote: »

http://www.rightmove.co.uk/property-for-sale/property-36027759.html Why do they need to have a discount? You can buy a flat in London for less than £256k in a much better area than any of the ones on the Pocket Living website. It makes me think that people who buy from PL are people who can't be bothered to look round to see what else there is. Basically lazy.

It seems to me to be a pointless exercise to offer very small flats in poor areas at a discount when there are full price bigger flats already being put onto the market?

I guess Pocket chooses good locations that most FTBs would struggle to get anything at full price. They had a recent development in Dalston which sold for £231k. There's no way you could get a 1 bed in that area that cheap otherwise.