Offer accepted, worried about buying

diamonsinthesky

I have been looking at properties for a while in London, and have found somewhere I think I would be happy in. It is a one bedroom flat in an attractive period conversion in a desirable location. I am worried however about London prices and I have found out that my offer that has been accepted is lower than the price paid by the vendors around 5 years ago. The flat has been on the market for a year and I am very worried that I am buying something that won’t be easy to resell. Other properties in the area are taking a long time to sell (if at all) and are regularly being reduced.

I am still young and single, so I am not sure whether it is sensible to buy this flat. My financial head is saying that now is not a good time to buy (Brexit, interest rates at record lows for 10 years, very low rental yields in London, government intervention from HtB, changes to BtL tax rules, an influx of new build flats to the London market, low demand from international buyers etc), but on the other hand I could see myself living there for at least 5 years and would be saving on rent if I do. I also don’t want to price myself out of the market by not buying now when I can and as I will be living in the flat, so it is not an investment as such.

Does anyone have any advice as I am going around in circles as to whether to proceed?

AnotherJoe

How do the mortgage payments compare to rental?

AdrianC

diamonsinthesky wrote: »

I have found out that my offer that has been accepted is lower than the price paid by the vendors around 5 years ago.

Lucky for you, unlucky for them.

The flat has been on the market for a year and I am very worried that I am buying something that won’t be easy to resell. Other properties in the area are taking a long time to sell (if at all) and are regularly being reduced.

The market goes in cycles. It was on a high, now it's at a low. Will it go lower? Will it go back up?
<shrug>

I am still young and single, so I am not sure whether it is sensible to buy this flat. My financial head is saying that now is not a good time to buy (Brexit, interest rates at record lows for 10 years, very low rental yields in London, government intervention from HtB, changes to BtL tax rules, an influx of new build flats to the London market, low demand from international buyers etc)

That, to me, sounds like a list of reasons WHY you should buy now - because they're all currently negatively affecting the market, so suppressing prices.

but on the other hand I could see myself living there for at least 5 years and would be saving on rent if I do.

EXACTLY! In the mean time, you are providing a HOME for yourself!

diamonsinthesky

AnotherJoe wrote: »

How do the mortgage payments compare to rental?

I have done a full comparison on my current situation renting and what my cash-flow would be if I bought (including service charges, insurance etc.). The difference is minimal which is also why I am going around in circles.

Thrugelmir

You are buying a home. Buy somewhere where you want actually to live. Once the property is paid for, you'll have security and peace of mind. Whatever is going on in the wider world at the time.

AdrianC

diamonsinthesky wrote: »

I have done a full comparison on my current situation renting and what my cash-flow would be if I bought (including service charges, insurance etc.). The difference is minimal which is also why I am going around in circles.

Now think about the amount of those repayments which will be building equity, by paying off your loan. What does that add up to over 5yrs?

Then there's the security of tenure, and the freedom to decorate as you wish.