First time buyer guidance - London

Planet_Switzerland

No offence, but £12k deposit is not that much, especially in London. Also I know people who earn more than you in London who house share because they cant afford to rent a one bed by themselves, let a lone buy somewhere.


I understand where you are coming from with buying being more cost effective than renting.


When I first moved to London I didn't have a big enough deposit or earn enough to buy somewhere. I saved hard and my salary went up to the position where I could buy. Unfortunately the property prices went up so much in that time that the amount needed to borrow became more than the total price of the same sort of property when I first moved to London. Not to mention the amount spent in rent over that time as well.


So on that basis it would have certainly been more cost effective to buy when I first moved to London, unfortunately I simply wouldn't have been able to get a mortgage at the time.


If you do find yourself able to afford a property in London in the future then go for it, some people say you're mad to pay so much for a small flat when you could buy a big mansion up north for the same price, but that just means that if you want to buy a big mansion up north you can buy it by selling your London flat.

SavingSteve

My 2p for what it is worth (all personal opinion, no liabilty accepted etc etc!)

Prices in London are not going down any time soon or ever. The draw, the population growth (Brexit or no Brexit) is just too high. So IMHO if you're after returns then get in on it ASAP.

Bad news, as Planet Switzerland put it, 12k is naff all in London. I also agree with others that shared ownership is horrendous. You may just get away with it as even shared ownership seems to sell in London, but if it were my money I wouldn't be doing it.

So the plan is good, but you need more cash to pull it off.

csgohan4

I am also sure you aware SO exposes you to the same costs as a full home owner for leasehold. Hence service charges and maintenance fees that HA notoriously ask for.


We're not talking about a cracked bathroom tile but re reroofing, exterior painting and replacing windows/lifts.


These costs are shared amongst the leasholders and come in the thousands if not tens of thousands.


So whether you own 50% or 100% you will pay your share as a full home owner, so no discount.


Not to mention you can't cry to a landlord if you need a new boiler or new cooker, because you have to sort it out yourself.


There is more to it than the typical ' It's cheaper than renting' rubbish. Don't forget the insurance policies you need to take out and all maintenance you need to carry out for the flat/house.


You may find it will be difficult to stair case up to 100% given the rate of house price increases is above your rate of wages every year. So you will never own 100%.


Realistically your not going to own 100% on your current wage tbh any time soon.


Also when you come to sell, the people to sell to will be a lot limited than if you owned a regular non SO house.

Summary here:
https://www.cml.org.uk/news/news-and-v/626/


Plenty of threads on SI and why it is a scam:


https://forums.moneysavingexpert.com/discussion/5416679




https://forums.moneysavingexpert.com/discussion/5416679


finally document from the council of mortgage lenders:


https://www.cml.org.uk/documents/cml-shared-ownership-fact-sheet/cml-shared-ownership-fact-sheet.-infographics-included.pdf

Trevelyan

I am incredibly wary of SO for the service charges reason. My girlfriend didn't buy her place with right to buy, it was just somewhere closer to a Jubilee line station and it was a step up from her previous place. However, the service charges and Southwark Council are one of the reasons she is going. Perhaps THE reason. She has made me loathe to ever buy a flat as I have seen the various legal battles and huge major works bills she has been slapped with, but it is the only realistic option I have at this point if I want to think about ownership of anywhere, even in part..

My hope is that housing prices will stop rising for the next couple of years and just settle (supposedly they will dip by a bit even), giving me some breathing space to build things up a bit more.

Oh and I am aware 12k is really naff all, but it is 5% of 240k, which should be enough to get something, somewhere, I would hope. I just need a salary that matches; which may be impossible in the next couple of years, but that just depends on my own career situation really.

As for my reasons, my quality-of-life and the rest.. it is all subjective. Everyone has their reasons for things they do, but consider this as purely relevant from a looking-to-the-future point of view (or, "What is the best thing to throw my savings and monthly household costs at").

And my way of thinking is along Planet Switzerland's lines, since this is not going to be my "dream home" at this point of my life.. but it will help me to buy something better in the future, in a part of the UK I would be happier to live in. The point is, is that I am currently without any commitments, attachments, holdbacks and I am at an early part of my working life.. so the challenges of London don't really affect me (yet!).

Oh and thanks for all the replies so far, by the way!

SavingSteve

Trevelyan wrote: »

My hope is that housing prices will stop rising for the next couple of years and just settle (supposedly they will dip by a bit even), giving me some breathing space to build things up a bit more.

IMHO this is not going to happen in London. London just doesn't work the same way as the rest of the country.

csgohan4

SavingSteve wrote: »

IMHO this is not going to happen in London. London just doesn't work the same way as the rest of the country.

I think the OP is hoping, but realistically London prices generally don't dip.


TBH I don't think you can afford a good place for investing in London on your wages and deposit, you might get a small place somewhere beyond zone 6.


Your not alone in thinking investing in property and buying your own house, obsessive culture.


It's fine if you can afford it and have the capital.


A house is not given but earned and respected. You do not want too put yourself in financial trouble stretching to buy a small flat only to find out about the repair costs for the re roofing e.t.c.


Why the rush to buy now? Focus on your career.


People earn double what you earn and not all have a desire to buy in London for it's investment purposes. Your not going to reap the rewards immediately.

Rich2808

SavingSteve wrote: »

IMHO this is not going to happen in London. London just doesn't work the same way as the rest of the country.

London has the biggest housing bubble in the country mainly held up by government props and foreign investment. Even London may hit the limit of credibility eventually. Prices will go up - until they don't.

Prices will almost certainly be higher there in a decade than now - but to say we will never see drops at all simply isn't credible. Economic shocks and recessions happen - who knows how Brexit may affect the City for example and all those financial services jobs.

Not an Argument against buying there - but just be prudent and don't borrow more than you can realistically afford and buy somewhere you want to live for the medium term. Cos in London at present there is a lot of stock on the market which isn't shifting - even in nicer areas that would have gone quickly a year or two ago.

SavingSteve

Rich2808 wrote: »

Cos in London at present there is a lot of stock on the market which isn't shifting - even in nicer areas that would have gone quickly a year or two ago.

Where is this? Genuine question as I have friends and relitives looking in west London and properties are often already under offer before their Rightmove page even goes live, thats still happening as of this weekend just gone. So unless we're talking about unrealistic/ hopeful pricing the stock is shifting quicker than it's appearing by my experience.

upoiupou

I'm sorry, but living in London and commuting to Luton for work makes zero sense. How can you possibly not get a job in London if you put your mind to it?

I'm an ex-Londoner who has put up with all kinds of sup-par housing there, first renting then buying, because I loved London. If you want to make this happen, everyone can talk about 5% deposits and help to buy and shared ownership and anything else until the cows come home, but if you're not going to even get a job in London... I think you might as well forget even having a fragment of a dream.

And if you want to get on a "London" property ladder, my suggestion would be to be realistic and look at the very edges, commuting in, then throw everything you've got at that. The time for anything else has been and gone IMHO. Or just rent for a while and enjoy it. Either way, I can't understand living there but working somewhere else. It just doesn't work like that!

Rich2808

SavingSteve wrote: »

Where is this? Genuine question as I have friends and relitives looking in west London and properties are often already under offer before their Rightmove page even goes live, thats still happening as of this weekend just gone. So unless we're talking about unrealistic/ hopeful pricing the stock is shifting quicker than it's appearing by my experience.

I am seeing a lot of average nothing special fiats in east London being marketed at silly prices which stay on rightmove for sometime even after price cuts. Decent stuff will sell at a sensible price but there a lot of dumps out there a and given the OPs budget they are restricted to that end of the market.