Have I made a mistake purchasing a London new build?

london1990

Hi there, I haven't posted in this section before but wanted some advice / reassurance.

I am well aware of the standard pros and cons of purchasing a new build property and I am well aware of the stories regarding new build quality particularly in London.

I exchanged contracts on a new build property in February and as can be the case in these circumstances, there was a six month or so gap between exchange and completion. It's due to be completed in two months and I'm confident that this won't slip as the last time they advised it had slipped, I was notified some time ago. Plus I managed to negotiate a long stop date in the contract so if it doesn't complete by mid-August I can walk away with the reservation fee and deposit.

I was extremely happy when it exchanged - I'd saved for a while to afford a deposit on an apartment. I have a well paid job for my age (26) and I was sick of living in rental accommodation in London which can be quite dire and I've put unthinkable sums of money into various landlords' pockets after years of living in London. So I was over the moon and very much looking forward to moving in somewhere safe, reasonably central in a good zone 2 neighbourhood.

However, I'm starting to fear that I may be stuck with this apartment for the rest of my life. I see it as an investment to live in for maximum five years or so and then I'd hope to sell. However, the reaction from some friends and family I have told about the purchase was that I will not make any money on it, that I've already parted with a premium for the newness factor. It's really been getting me down as I the thought that I have purchased something which may not be sellable is really worrying me. Buying a second hand apartment in the same location was unaffordable (I did H2B) and I didn't want to move too far out.

I know that nobody knows how the markets could go in the next few years, but is it really possible that the value of the property (in Zone 2, London) would NOT increase at all? I'd have thought it has already increased in value in the eight months or so since I reserved it, the developers kept threatening to put it back on the market if my conveyancer didn't hurry up and exchange in line with their silly end of financial year deadlines *eye roll*.

Any reassurance to lift my spirits on what should be an exciting thing would be appreciated! Xoxo

Pixie5740

There's your problem. You're seeing it as an investment when it's a home.

Hoploz

I think in London you're pretty safe. Are your family from London, or elsewhere? It's a market all of its own.

Have you looked around at other new developments nearby as a price comparison?

silvercar

I'd feel pretty safe doing what you have done, in fact I'm encouraging my offspring to do the same.

Zone 2 is fairly central and people will always want to live near London centre.

boliston

Surely even if you live there for years without the property increasing in value you have still avoided paying rent which is usually more than a mortgage AND you have much better security of tenure being a leaseholder rather than renter. If you like the area why would you want to move unless you are planning on having kids?

london1990

Hoploz wrote: »

I think in London you're pretty safe. Are your family from London, or elsewhere? It's a market all of its own.

Have you looked around at other new developments nearby as a price comparison?

Thanks. No they're not, they live miles away, I just moved here for university and stayed for work after graduating. Other developments nearby were similarly priced if not more expensive for one bed apartments. I had a look at the sales office website for my development and the other one bed plots now seem to be selling for 525K whereas I purchased for £460. Similar sizes too.

london1990

silvercar wrote: »

I'd feel pretty safe doing what you have done, in fact I'm encouraging my offspring to do the same.

Zone 2 is fairly central and people will always want to live near London centre.

Thank you for the reply. I don't doubt that there will be exploitation potential when I pay off the HTB loan through renting it out (it would be a breach of the covenants of the HTB loan if I did that whilst the HTB loan is outstanding). However, I would just hope that finding a buyer for the place would be reasonably achievable and not at a loss in say 5 years time. A lot of commentary online seems to suggest that new build buyers struggle to sell.

For those saying I should see it as a home and not an investment, well of course I see it as a home. However, I don't want to live in zone 2 in London my whole life and obviously am thinking about potential sale in the future.

economic

whats the location of the property?

london1990

economic wrote: »

whats the location of the property?

Stoke Newington

Pixie5740

It wasn't clear from your OP that you were aware you were purchasing a home. It was not obvious at all since you kept going on about it being an investment.

Very few people buy one home and live in it for the rest of their lives so you're no different to any other first time buyer. No one has a crystal ball. In fact you'll probably have a wobble when you buy your next home and the one after that.

Thrugelmir

london1990 wrote: »

However, I'm starting to fear that I may be stuck with this apartment for the rest of my life. I see it as an investment to live in for maximum five years or so and then I'd hope to sell. However, the reaction from some friends and family I have told about the purchase was that I will not make any money on it,

Then overpay on the mortgage and reduce the debt you owe. Rather than simply speculating on the future direction of house prices.