Buying in South-East or South London

onetimeatponycamp

numbercruncher8 said:

I think you also have to factor in how long you intend to stay and how it fits in with your finances.

The problem is with HTB is that the flats tend to be over-priced for what they are. In a few years time they won't be new and ineligible for HTB so those premiums disappear. If prices fall, I think these flats, and 1-beds and studios at that will be hit a bit worse than average. By that time it'll be the new properties that get the discount.

A combination of high LTV, HTB and short time horizon could lead to a difficult situation later on. In 5 years time, the government part of the loan kicks in, if prices have fallen and you haven't saved, remortgaging can be difficult and you can't rent it out. It is worth bearing in mind for some London places prices are actually falling, have being doing so for the last 2 years and there doesn't seem anything to prevent them falling further. Some of the new builds built around 2016/2017 are worth less today than when they were built and still look a tad expensive relative to other flats.

In my view it is not written down but the loans favour those in careers with some fairly concrete upticks in salary over time and increasing level of savings. 

For most places on the list £260k is probably a 1-bed HTB at the most. The other options are to reduce the risk a bit and go for non-HTB properties: an older 1-bed is anywhere between £150-250k, an older 2-bed could also get into the budget.  

For me, safety in these London areas is a function of distance from the station: most times you'll be walking around alone at night is coming back from somewhere. I don't think any place is dangerous in the day but night-time is much different. This won't be easy to gauge apart from visiting the area several times at different times.

Having ranted on enough, in my view the area between South Croydon and Lloyd Park may be suitable. This is not urban at all, and also features two parks nearby for running.

I could suggest using the 'draw map' feature on Rightmove to save an area you are interested in and to filter properties by bedrooms and price. I think it's fairly likely as the year goes on, better and better properties will drop into the price bracket if prices decline.

I agree with all this. I have just pulled out of a HTB flat purchase for this reason. Before Covid I was aware that HTB flats are inflated in price, but I felt that over time the value would increase and eventually make up for the initial inflation, and I saw it as the best way to home ownership for me as my deposit is so small. However, things have changed. For me it's no longer worth the risk of ending up in negative equity, especially for a flat I love but which isn't a forever home. 

I suggest that you go and do some calculations on potential values of property vs mortgage costs on the rates currently available for HTB to see what sort of equity you might have after 5 years depending on where the value of the property could end up. I think also ideally you'd want a plan to be able to pay off the HTB loan at the end of the 5 years. I would have wanted to rely on using equity to pay that off, but I worry now that this wouldn't be possible - when I looked at property prices in the area I'm looking to buy in, after the 2008 crash it took 6 years to just get back to where they had been before, not even increase.

bouicca21

IMHO I think it is likely that 1 bed flats won't hold their value and/or be more difficult to re-sell if the market tanks, especially if you use HTB.  Also if you are likely to be working from home you will want a bit of extra space. But if you are happy with a 1 bed ...  as you probably already know you wont get a house for that money unless you move further out.  Parts of Erith and Dartford are really nice so well worth looking at, depending on how far you want to be from a station.

Rightmove only showed me two flats for £230k in Eltham.  The one in Strongbow Road is a nice location but I have always thought those flats were council flats so it might be a good idea to check that out.  Ex council flats are often fine but come with the potential of expensive repairs as and when the council decides to do something.  The other was Royal Eltham Heights which was a new build when I lived there so maybe about 15 years old.  I'd worry about traffic noise but visiting friends who live on even busier roads suggests that that might not really be a problem at all.

happy_2008

Depending on where you work Dartford offers good transport links (3 train lines) that travel direct to Charing X, Victoria & Cannon Strt

Miranda25

happy_2008 said:

Miranda25 said:

happy_2008 said:

IMO theres not too much wrong with Erith or Dartford! Dartford is becoming more and more expensive with alot of new flats building right next to the station. I have heard that Swanley is not a great area and this is reflected on the price of the properties.

Yes, this is a reason why I asked about Erith/ Dartford. They have new developments and as a first time buyer I have to find a new property in order to use government schemes.

If you are looking in dartford, i would recommend that you extend your budget to £280-£300k and you could buy yourself a 2 bedroom house. The difference in monthly repayments is probably the same as you would have to pay for service charge on a flat

I looked at rightmove and the cheapest house there in croydon for £340k (using help-to-buy scheme). The rest are outside of London but cheaper: Gravesend, Greenhithe, Swanscombe. 

Miranda25

The_Earl_of_Streatham said:

May I suggest adding Streatham to the list. Three stations, lots of buses. I have it on good authority, too, that since lockdown the feudal overlord hasn't invoked his right of droit de seigneur even once.

Streatham is £400k the cheapest flat (on buying schemes). 

Miranda25

numbercruncher8 said:

I think you also have to factor in how long you intend to stay and how it fits in with your finances.

The problem is with HTB is that the flats tend to be over-priced for what they are. In a few years time they won't be new and ineligible for HTB so those premiums disappear. If prices fall, I think these flats, and 1-beds and studios at that will be hit a bit worse than average. By that time it'll be the new properties that get the discount.

A combination of high LTV, HTB and short time horizon could lead to a difficult situation later on. In 5 years time, the government part of the loan kicks in, if prices have fallen and you haven't saved, remortgaging can be difficult and you can't rent it out. It is worth bearing in mind for some London places prices are actually falling, have being doing so for the last 2 years and there doesn't seem anything to prevent them falling further. Some of the new builds built around 2016/2017 are worth less today than when they were built and still look a tad expensive relative to other flats.

In my view it is not written down but the loans favour those in careers with some fairly concrete upticks in salary over time and increasing level of savings. 

For most places on the list £260k is probably a 1-bed HTB at the most. The other options are to reduce the risk a bit and go for non-HTB properties: an older 1-bed is anywhere between £150-250k, an older 2-bed could also get into the budget.  

For me, safety in these London areas is a function of distance from the station: most times you'll be walking around alone at night is coming back from somewhere. I don't think any place is dangerous in the day but night-time is much different. This won't be easy to gauge apart from visiting the area several times at different times.

Having ranted on enough, in my view the area between South Croydon and Lloyd Park may be suitable. This is not urban at all, and also features two parks nearby for running.

I could suggest using the 'draw map' feature on Rightmove to save an area you are interested in and to filter properties by bedrooms and price. I think it's fairly likely as the year goes on, better and better properties will drop into the price bracket if prices decline.

Numbercruncer8, may I ask you what did you choose for yourself-old property or new property?
Also are you sure that we cannot rent out flats bought on HTB scheme with equity loan (not HTB scheme shared ownership)? How about lodgers- can we take lodgers in those flats?
Can we rent out those flats after equity loan element paid? 
Thanks.

kjelyse

I currently live in New Eltham! Eltham proper is easy to get to, and the M&S there is a decent size. There's a Sainsbury as well, so you've got options other than Aldi/Lidl etc. I've never felt unsafe while living here.

Like others have said, there's easy access to the Sidcup and Bexleyheath lines.

Miranda25

movilogo said:

I would suggest that you skip leasehold flats and buy a house only. There will be a trend for people to move away from London as work from home becomes mainstream. So right now you would buy at the peak of the market. London prices won't rise fast any more - in fact likely to fall instead. Get a 2-bed house at least with some garden - if that means going bit away from London. 
Off course, it depends on how much you need to commute to central London daily and where your work can be done remotely.

I wish I could buy a house but I cannot afford it. I rely on government support of 40% in HTB scheme but outside M25 this support will be 20%. 
I did not think about old properties as I imagine that repairs in UK will be expensive. Although I have no idea what is more beneficial in terms of money: to buy new property or to buy old one plus repairs?
Also I am not sure if I want all these repairs as I am not planning to do it my home forever. Even opposite as soon as I have an opportunity to go for work to another country I would jump at the opportunity. 
Here comes another question: can I rent out property bought on HTB scheme?

Miranda25

kjelyse said:

I currently live in New Eltham! Eltham proper is easy to get to, and the M&S there is a decent size. There's a Sainsbury as well, so you've got options other than Aldi/Lidl etc. I've never felt unsafe while living here.

Like others have said, there's easy access to the Sidcup and Bexleyheath lines.

Thank you Kjelyse.
They have 1-bedroom flat on Rightmove for £230k but the lease is for 87 years remaining. How long lease should be for in order to be on the safe side please?

Miranda25

onetimeatponycamp said:

numbercruncher8 said:

I think you also have to factor in how long you intend to stay and how it fits in with your finances.

The problem is with HTB is that the flats tend to be over-priced for what they are. In a few years time they won't be new and ineligible for HTB so those premiums disappear. If prices fall, I think these flats, and 1-beds and studios at that will be hit a bit worse than average. By that time it'll be the new properties that get the discount.

A combination of high LTV, HTB and short time horizon could lead to a difficult situation later on. In 5 years time, the government part of the loan kicks in, if prices have fallen and you haven't saved, remortgaging can be difficult and you can't rent it out. It is worth bearing in mind for some London places prices are actually falling, have being doing so for the last 2 years and there doesn't seem anything to prevent them falling further. Some of the new builds built around 2016/2017 are worth less today than when they were built and still look a tad expensive relative to other flats.

In my view it is not written down but the loans favour those in careers with some fairly concrete upticks in salary over time and increasing level of savings. 

For most places on the list £260k is probably a 1-bed HTB at the most. The other options are to reduce the risk a bit and go for non-HTB properties: an older 1-bed is anywhere between £150-250k, an older 2-bed could also get into the budget.  

For me, safety in these London areas is a function of distance from the station: most times you'll be walking around alone at night is coming back from somewhere. I don't think any place is dangerous in the day but night-time is much different. This won't be easy to gauge apart from visiting the area several times at different times.

Having ranted on enough, in my view the area between South Croydon and Lloyd Park may be suitable. This is not urban at all, and also features two parks nearby for running.

I could suggest using the 'draw map' feature on Rightmove to save an area you are interested in and to filter properties by bedrooms and price. I think it's fairly likely as the year goes on, better and better properties will drop into the price bracket if prices decline.

I agree with all this. I have just pulled out of a HTB flat purchase for this reason. Before Covid I was aware that HTB flats are inflated in price, but I felt that over time the value would increase and eventually make up for the initial inflation, and I saw it as the best way to home ownership for me as my deposit is so small. However, things have changed. For me it's no longer worth the risk of ending up in negative equity, especially for a flat I love but which isn't a forever home. 

I suggest that you go and do some calculations on potential values of property vs mortgage costs on the rates currently available for HTB to see what sort of equity you might have after 5 years depending on where the value of the property could end up. I think also ideally you'd want a plan to be able to pay off the HTB loan at the end of the 5 years. I would have wanted to rely on using equity to pay that off, but I worry now that this wouldn't be possible - when I looked at property prices in the area I'm looking to buy in, after the 2008 crash it took 6 years to just get back to where they had been before, not even increase.

Thank you. 
What area are you looking to buy in? 
Please give me example of calculations. Do we really need to do these calculations? I think lenders will be so cautious in current Covid situation, they will calculate everything for you and never lend you money if they are not sure you can pay back, correct?