Studio flat in london, to buy or rent

other

heh thanks for taking the time to reply to my points, i just want a good balanced view on this situation.

1.5x parents income would cover the mortgage even if my salary is £0. Yes, the recent "credit crunch" may affect such creative lending, but i assume that lenders worth their salt will at least look at each case on its own merits.

to clarify, the 2x£100 per week means that if i find someone else to live with me, 1 in bedroom, 1 in living room, i would not personally be paying much more than if I were to rent. The idea of studio flat was dropped rather quickly earlier in the thread, now we are talking about a 1 bed flat. Of course there are costs re house buying and they will be either covered by my parents now and paid back by me later, or paid by me when i buy in the future. no avoiding these unless renting all the time.

Yes i am aware that job hunting may be more difficult than before due to the recent changes, however news is that there will be a return to the old CV/interview system and it will not be computerised totally at the very least.

re the professional development loans, natwest gave my friend £20,000 who walked in and said she was too annoyed with being poor and wanted some cash so that she could live nicer. Ok, that was before the credit trouble but it can be done. also, they can be given to cover living costs and not just training costs.

I take your point about being a student and such, but in these last 3 years of school, we basically go to hospitals 8-5, 52 weeks a year. 52 weeks of rent is a lot more than 38 weeks and that's why i'm considering if the buying route is worthwhile.

moneysavinmonkey

other wrote: »

to clarify, the 2x£100 per week means that if i find someone else to live with me, 1 in bedroom, 1 in living room, i would not personally be paying much more than if I were to rent.

But that comparison is based on your mortgage figure for the studio flat?? What's an IO going to be for a 1 bed flat??

1) studio to buy = £850 IO
2)renting shared room = £435
3) 1 bed flat to buy with lodger = ??? subtract £435 (maybe factor in some voids - particularly as you say most students only want a 38 week rent)
4)renting 1 bed flat with sharer = £435

can't make a decision on best financial move until you know 3)
though really don't bother and just get on with being a student! -

can you tell i'm so jealous that i'm not one anymore!! I certainly wouldn't be !!!!!!ing around working out rent v. mortgage if i was in your position!

other

oh i see,
£160,000 mortgage, IO is £870pcm at 6.5%-based on a £160,000 1 bed flat in same area-based on real property.


so £870-435=435
not including void rental times.

so basically the only good point about buying is if house prices are still going to go up above inflation+mortgage rates.

moneysavinmonkey

In your first post a studio flat was £180k - cost £850pcm IO

but you say a 1 bed flat is £160k - cost £870pcm IO

???

A final point...
Don't confuse prices have gone up in the last year with prices are going up now/in the future.

other

moneysavinmonkey wrote: »

In your first post a studio flat was £180k - cost £850pcm IO

but you say a 1 bed flat is £160k - cost £870pcm IO

???

A final point...
Don't confuse prices have gone up in the last year with prices are going up now/in the future.

yes i was confused with the price discrepancy too...
if you really want i can post the links to the adverts. it is probably due to the length of lease on the 1 bed flat, i am currently enquiring about this.

also, i put 6.5% interest for the 1 bed flat, and it must have been on a lower % for the studio. ignore the figures for the studio, i think the website had interest defaulted to <6%-optimistic.

yes prices have gone up, and the housing market in london is said to be slowing....but does that mean decreasing prices? or just slower increase in price. And also a 1 bed flat in the patch for europes biggest medical school should be a good investment.

morg_monster

aside from anything else, I would like to caution STRONGLY against living in a 1-bed room with someone in the only other reception room, especially if you are planning to live there for the next few years.
You need to find someone you REALLY, REALLY get on with, because you will be right up in each other's faces all the time. and it is not easy to find someone that you get on with this much.
I was in this situation with someone, when I visited the flat she seemed great but it turned into a nightmare. It was horrible having no space to chill out, we'd just sit in our own rooms every evening, it was so rubbish. I wouldn't recommend it to my worst enemy! There was other stuff involved too but if we'd just had a bit more space to ourselves I think it wouldn't have gone so wrong. Especially as a med student you will have a desk, shelves, and a ton of folders, paper and textbooks - that will all have to go in your room, crowding it even more than a "usual" bedroom.

I personally also think it is a bad idea but it sounds like you have made your mind up and want people to validate it - i don't think you'll get that here. You're probably right - prices will probably continue to rise - but you must consider the worst case scenario - say prices stagnate or drop, you can't find a housemate you like, you drop out of your course or have to repeat a year, you get to the end of your course and can't find a job immediately and have to work as a medical secretary, ... If prices do drop in london your parents house will no doubt drop in value too which will mean they may have to tighten their belts, no matter how wealthy they are. If you can cope financially with the worst case scenario, then well, at least you aren't in serious danger. Will your parents be furnising the house for you?
if you are doing this to make a capital gain OVER TWO YEARS!!!!, I think this is a crazy gamble that you don't need to take. it costs money to move too, even if the price goes up, this could be eaten easily by moving costs.
if you're doing it to have your "own place", well it won't be cos you'l lhave a housemate, and that is overrated anyway. most students live in rented accom, do you really need your own house?
I personally just wouldn't want the hassle at this time when you are going to be working so hard! Potential worries over housemates, maintenance, landlord duties, what's happening to house prices, - do you really need the stress?!

other

Thanks for the viewpoints and arguements

It's not that i am all set for doing this, i just wanted to see what the arguments were for not doing so, and what people generally thought of such an idea.

I understand that there will be hassle with housemates and landlord duties (and also i thought we could sign a 6 month term rental contract so i would be stuck with them for 6 months at most), but equally there may be problems renting in a shared house (especially if not all mates beforehand) and also getting messed around by landlords in the middle of term...

about the no communal areas, apart from uni halls, the vast majority of my friends who are renting out do not have communal areas. many are actually converting 2 bed flats into sleeping 3, and there was even 6 rooms, 1 toilet, 1 kitchen in one case.

Also, you said:

If prices do drop in london your parents house will no doubt drop in value too which will mean they may have to tighten their belts, no matter how wealthy they are.

I didn't really understand why they would need to tighten their belts?


I'm not doing this to make a capital gain in 2 years, however i believe house prices would be at least slightly higher in 2 years time, so getting it now would save some money as well as letting me have more stability during the crunch time of my studies (although not necessarily hassle!-which might defeat the stability point).

Finally, it seems a number of students do live in flats paid for by parents, as a long term investment in a university town or a good rental area. However these properties were bought a good few years ago, and while prices and interest rates were still "low". Looks like this is not such a good move in the current market situation anymore.

Curious_Moose

You're young. You won't be forever. You should be going out getting laid, getting drunk, taking illegal drugs and playing poker; not worrying about a mortgage bigger than a donkeys willy.

other

i dont see how any of those things would interfere with me having my own place, heh in fact it might help if i had my own place

imo, its things like that which can screw up ur life, not a properly worked out mortgage

Sapphire

I think it's crazy that students are thinking of buying property when they would be far better off in the log run focusing on studying, and generally finding out about the world and themselves. At your age, it didn't even enter my head to own property - I wouldn't have wanted it!

You've got your whole life ahead of you to settle down into conformity. Why not enjoy yourself for a few years? Travel, go to parties, experiment with things, etc. Life's too short.

Do you not read newspapers and journals, or this forum regularly? Doesn't the state of the economy concern you, in that there is a strong possibility that things in this sphere will not go well during the next few years? I remember the last HPC (in London), and it was grim. This time around it could be much worse, given the totally insane rise in house prices, and the amount of debt people have got themselves into.

I would be very careful.