Buying in London

Matilda1975

I'd be grateful for some help, please.

I am 27 and have moved to London to work. I am renting at the moment but want to buy. I earn £30,000 a year and would need a mortgage but I also have some savings and I part own a property (from when my Grandad died) so I'll have about £120,000.00 by April to use as a deposit.. There will be a bit more money in the form of an inheritance but not yet (I hope) and not sure how much that will be.

I'm looking for advice as to how to go about getting a mortgage, whether I'd be better off buying a flat in London where I work or buying elsewhere in the country and renting it out and continuing to rent in London.

Whether it would be better to put down the largest possible deposit I can (so waiting for the second inheritance) or getting on and buying.

Whether buying a leasehold flat is safe.

Anything you can think of , really, to help me in my quest to buy!

Thank you in advance

Mattie

GDB2222

I suggest that you start by speaking to a mortgage broker, or direct to a lender, as you will obviously need a mortgage.

That will give you an idea of what budget you have, and you can start to look around at what’s available. Most likely you’ll need to settle for a flat, which will be leasehold.

I would NOT buy elsewhere in the country and become a long distance amateur landlord. 

You may prefer to buy outside London and commute. Travel times are not necessarily longer, and you get a better property for the money. Travel costs are higher, so you need to factor that in. 

LegallyLandlord

I agree with @GDB2222. 

Also from a capital gains tax point of view, it’s better for your first house to be your primary residence as it’s exempt from CGT. 

Being a landlord is not straightforward and requires a lot of education about responsibilities, even if you use managing agents. Agents will reduce your profit as they tend to take 10-15% of your gross rent. 

Kent is good value and most stations are under an hour from London. 

diystarter7

Hi OP

"wheter leasehold flat is safe"

Not sure what you mean by that.

Always buy in the best possible location you can afford to live in or rent. Decide who you are aiming to rent out to, EG its no good renting out to city slickers and its a long way from the underground/trains etc and or the black is maily HA etc etc.

Thanks

macman

A leasehold purchase is perfectly 'safe', as long as the lease is sound, which your conveyancer is paid to check.

herebeme

I’d take some time to get to know London, and spend weekends exploring the areas you might be able to afford to buy in. You probably aren’t going to be able to afford a property much over £240k, so that is going to have location limitations and space limitations. 

You aren’t always going to be working for the same company (probably), so it’s more important to consider overall travel accessibility vs getting to your current work. Outer to inner London commutes are often long. 

Are you working 5 days a week in your office/place of work or is it hybrid? If hybrid with many days at home you may want to consider the out of London option. For example my sister gets 4 beds, a garden and offstreet parking outside London (a 1 hour drive from zone 3), for the same price as my 1-bed flat in a council owned block in an unfashionable area in zone 2 (which is often a 1 hour bus ride into where I work). 

What do you mean by is leasehold “safe”? There are legal and financial considerations that are different to being a freeholder, sure. But what are your specific concerns?

sourpuss2021

I think it's difficult to get a mortgage on a property that's under 30 square metres so steer clear of those.  Shared Ownership schemes also have many drawbacks and are best avoided.

But there are more London flats available on Rightmove between £240k-£280k than I thought there'd be. 

How about this for example?:

https://www.rightmove.co.uk/properties/129774080#/?channel=RES_BUY

steampowered

Is it likely that your salary will increase in future? If so, you could wait before buying a property. 

With a £120k deposit and £30k salary, your maximum budget is about £270k. That doesn't buy you much in London. Perhaps a 1-bed flat in zones 3-4? More if you are really on the outskirts of greater London, but that's a long commute to central.

A higher deposit and higher salary would make a difference to the sort of property you can afford. 

The thing you need to really think about in London is commuting time. Commuting for 1.5-2 hours each way is grim. Think really carefully about how your flat would be located for getting to work - both now, and if you change jobs in future. 

It could be worth renting a room in a shared house for a bit. Gives you an opportunity to get to know the city. 

steampowered

diystarter7 said:

Always buy in the best possible location you can afford to live in or rent. 

Not sure this is good advice for London.

If Op had a £500k budget, would you suggest it is used to buy a studio apartment or 1-bed flat in Chelsea?

sourpuss2021

steampowered said:

diystarter7 said:

Always buy in the best possible location you can afford to live in or rent. 

Not sure this is good advice for London.

If Op had a £500k budget, would you suggest it is used to buy a studio apartment or 1-bed flat in Chelsea?

No, but I might suggest he buys a 3-bed flat in Chelsea and gets a couple of lodgers!:

https://www.rightmove.co.uk/properties/125714252#/?channel=RES_BUY

https://www.rightmove.co.uk/properties/85298482#/?channel=RES_BUY

thegreenone

sourpuss2021 said:

steampowered said:

diystarter7 said:

Always buy in the best possible location you can afford to live in or rent. 

Not sure this is good advice for London.

If Op had a £500k budget, would you suggest it is used to buy a studio apartment or 1-bed flat in Chelsea?

No, but I might suggest he buys a 3-bed flat in Chelsea and gets a couple of lodgers!:

https://www.rightmove.co.uk/properties/125714252#/?channel=RES_BUY

https://www.rightmove.co.uk/properties/85298482#/?channel=RES_BUY

And charges the earth to her lodgers to be able to renew the lease/s asap.  If she can get a mortgage against either in the first place.