A UK property market mini boom? For houses, yes — but not flats

NameUnavailable

I think all the negative press about EWS1 issues, extortionate service charges, rouge landlords, ground rent issues etc, are making people more wary of buying leasehold. Of course many who do buy don't have the option of a freehold due to budget. The government keep saying they're looking at the issues but nothing ever gets done about it. Leasehold reforms are coming, but who knows when.

SuperHan

EWS1 is a HUGE blocker to flat sales. Millions of people are living in valueless flats that people would be interested in buying if they were mortgageable. 

MovingForwards

gerkin said:

Flats = Leasehold, neighbours up, down and across, small, shoebox, no garden, go up and down flights of stairs, service charges, cladding problem, etc etc. I think there are more.

Why would anyone buy a flat and face all those issues ?

In answer to your list:
Mine is freehold.
Good neighbours, we look out for each other and depends on position of flat.
Mine would look like a house if the one half was put on top of the other.
I've a private garden, as do my neighbours.
Houses have stairs too!
I've no service charge etc.
There's no cladding on my building.

What issues am I facing? Oh yeah, I may have to pay towards communal repairs in the future, better a shared cost than having to fund all of it 😉

Perhaps forget the stereotypical new builds as there's a lot of different types around, throughout the UK, or are you forgetting there's more to it than England.

annetheman

^^^

Further to that, even where a flat-seller has a share of freehold with non-combustible brick cladding (brick is a type of cladding) their buyer may still find all major lenders they go to want an EWS1, even where it is explicitly not required. So the seller with a share of/owner of the freeholder will have to foot the bill for it and it costs £10,000s and takes potentially years to commission.  

Some freeholders are willing to pay - happy days for all in those buildings; others are not - hence the EndOurCladdingScandal movement. So, virtually everyone who owns a flat is affected. They may not know be aware now but unless the govt does something about EWS1, they absolutely will be affected as soon as they want to remortgage/sell.

So far govt has "discouraged use of EWS1 where it is not required" i.e. in buildings <18m but in practice, many if not all lenders will still ask for it.

My seller (freeholder) has paid for the EWS1 in the new-build flat with non-combustible brick cladding <18m, technically not within requirements of EWS1 but lenders valued it £0 without - even as one of the luckier ones, I'm am still waiting for the EWS1 report months later.

davidmcn

SuperHan said:

EWS1 is a HUGE blocker to flat sales. Millions of people are living in valueless flats that people would be interested in buying if they were mortgageable. 

"Millions"? I know it's a problem, but how many flats are actually unmortgageable because of cladding issues?

Crashy_Time

annetheman said:

The FT article is poorly researched. People who couldn't afford outdoor space before (i.e. wanted it but bought a flat instead of a house for finance reasons) can't suddenly afford it now when all that has changed is lockdown and change to working from home, unless they move to a cheaper area. Whilst the "flight to the countryside" is a real thing now, as many no longer need to be in big cities for work reasons, I don't think that's why flat sales have stalled.

The cladding scandal and EWS1 backlog is the true reason - it is a gargantuan issue affecting millions and I am still surprised every day at how few people are aware of it. When I explain the situation, often people don't actually believe it's real, it's that bad.

There is still an appetite for flats, they offer an excellent step on the ladder for many in areas where houses are out of financial reach - but if the seller doesn't have an EWS1, you can't buy a flat. And many, many, many buildings need EWS1 assessments vs roughly 290 qualified assessors.

Absolute mess.

Been saying this for a while now, some people seem to think that people can just magically decide to move to more space and a garden, the problem with a property bubble is that many people are going to be stuck with their original flat/new-build for a long long time as less people want to pay bubble prices for city living.

NameUnavailable

davidmcn said:

SuperHan said:

EWS1 is a HUGE blocker to flat sales. Millions of people are living in valueless flats that people would be interested in buying if they were mortgageable. 

"Millions"? I know it's a problem, but how many flats are actually unmortgageable because of cladding issues?

We don't know unless everyone tried to sell their flat but it seems it's becoming increasingly common for lenders to ask for EWS1 sign off before lending.

They have even started to ask for it on freehold houses.

Apparently the government are not going to be able to do much to change matters so this is only going to get worse.

Thrugelmir

gerkin said:

Why would anyone buy a flat and face all those issues ?

Many years ago that's all I could afford.  First rung on the ladder..........

Buying in Surrey wasn't an option. Back then people were moving out of London to commuter towns. 

numbercruncher8

Years ago that was probably true.

The article pretty much is London-centric, and the oddity is that flats have heavily increased in value since then, probably outstripping the gains in houses.

In many of the outer London boroughs I see, a modern-built flat costs the same, or even more than an older house. I've seen 2-bed new flats being attempted to be sold for £450k, while terraced 3-bed houses nearby go for £400k.

The maisonette style property I think also seems far worse value today than 10 years ago. Help to Buy pretty much increased the cost of the lowest rung of the ladder. For a 2-bed maisonette-style that's gone to £300k, but if a whole house costs £400k it just seems more sensible to skip the whole thing and jump to the house. Factors like interest rates and BOMAD is a lot easier.

IMO everything sells at the right price and that's the issue rather than lack of demand. But there is an increasing stickiness in prices. It used to be the case that the first step on the ladder was a flat, you sold it after a few years and used the equity gain to move up.

But anyone buying after 2016 in London would probably see very few or no equity gains, and some of the new builds would actually show losses. The way the market is heading at the moment there doesn't seem to be any gains for flats, yet those people will still need a certain price to move up to a house. Thus prices cannot fall to a level where they would be easily snapped up.

lookstraightahead

I genuinely prefer living in an apartment. Ok a smart expensive one, but I love the community feel and I don't want a box somewhere, or to mow the garden every Sunday, or spend all my money on the roof.  Big flat, big garden, community and high ceilings.