Not sure whether to buy a doer-upper house or nice flat

A0911

Hi everyone, appreciate the thoughts of you lovely and sensible people in a decision I'm trying to make, as to whether to buy a flat now or rent 1-2 years in a houseshare to save extra for a house.

I'm 34, single FTB, have been looking for a house for a few years and found myself rapidly getting priced out during the pandemic. I have been through the sale process with two Victorian terraces, both looked fine but the survey turned up ridiculous amounts of work (check post history for saga of the last one).

Now I can pretty much only afford this kind of house, in worsening quality as prices have increased, and I don't have the cash (or time/inclination) to pour into it. I don't have nearby friends and family to come do DIY, and my career is my main focus for the next five years at least. If I do the houseshare/saving thing I can push my budget to an extra 20k, but looking at what's available, it'd still be a place needing some work. Especially if prices continue to rise.

I've just received a Section 21 notice on my rented flat, and a flat has come up for sale in a converted mill around the corner. Same price as a fixer-upper house, but very high spec. I love the building, it's next to the park where I run, and went to view the flat last week, which I immediately loved (v. rare for me when viewing).

I didn't want to buy a flat because of all the things that come with leasehold, but as they go it seems OK. 999-year lease, peppercorn rent, low service charge at £750 a year. It opened 2020 and is still under guarantee. There is a lift, but no gyms/communal areas/gardens.

My main worry is losing money on it via service charge increases and/or depreciation. Some flats have been sold on since the block opened, all at a profit. The only one sold at a loss so far will be the one I want to buy, because the estate agent took the sellers for a ride. They have now reduced the price by 10k, which is in line with another that recently sold.

Additionally, if I buy the flat I can immediately rent out the spare room to build savings back up, plus it'll rent out easily should I need to go elsewhere. It needs nothing doing to it (obviously survey will confirm).

To me it makes sense to buy the flat, rent out a room, save another deposit in case I can't sell it at a profit, do my due dil on the management and lease terms then sell in 5 years or rent it out.

Last thing I'll say is doing this would cost me the same as renting on my own, and with a flatmate, the same as a room in a houseshare. Obviously losing FTB perks and future SDLT isn't great, but workable.

Would appreciate any thoughts. I feel like people just tell me I'm stupid for buying leasehold, but I can't see the better thing to do in these circumstances. The dirt cheap flats have all the ground rent/lease extension issues, plus still need some work.

Brie

Well what you've written convinces me you actually want to buy the flat.  If you're spending all your time working you need some place you can come home and just flop, not put on old clothes and start doing some plastering.  

Work might be a great place to find a during the week only lodger, someone who just needs a place close to work M-Th nights.  

Albermarle

Brie said:

Well what you've written convinces me you actually want to buy the flat.  If you're spending all your time working you need some place you can come home and just flop, not put on old clothes and start doing some plastering.  

Work might be a great place to find a during the week only lodger, someone who just needs a place close to work M-Th nights.  

OP - As above in bold.

If you are not a big DIYer, and do not have any mates in the trades, and your career is your main focus, then I think you can forget the doer upper.
Especially as you already pulled out of two sales just for that reason.

RHemmings

Look at the leasehold document very carefully. Sometimes they can be quite ... complicated ... and the devil can be in the detail. I'm not saying that I'm suspecting that's the case for the flat you're interested in, but it could be good to check. I've been looking at some cheap flats being sold by auction. Sometimes the first thing I find wrong with them is the leasehold terms. 

BTW: I'm also thinking that unless you are keen on DIY and have the time and energy for it, buying a fixer-upper may not be a good idea. 

annetheman

I have a visceral hatred for leasehold and have been campaigning and picketing with the National Leasehold Campaign and EndOurCladdingScandal for years. I'm selling my flat now to buy a freehold doer upper.

I will admit though that many people live in the same leasehold home their whole lives with no issue; just that when it goes wrong, it is terrible. What you want to be avoiding is fleecehold, and from what you've shared about this flat, it does tick the "okay" boxes for all the normal fleecehold traps.

Of course, you should understand any other convenants, restrictions and review periods contained in the lease, but you are unlikely to get that until you start with the legals (i.e. you're buying).

I'd actually say in your position and given your individual circumstances and priorities, the flat sounds like the best option for you, all being well with the lease. 

Taking on a doer upper isn't something I'd do half-heartedly at all; of course, if you can find a freehold that isn't a doer upper, do consider that (I'm sure you've tried!), but you have fallen for the flat and really if it's right for you, it's right for you.

I find it useful to write pros/cons lists and highlight the cons I can realistically change (albeit with time and money) in blue and the ones I can't change in red. Then, if there are loads more reds, it's a no! 

JustinTime19

Having owned freehold and leasehold. I can tell you that owning a leasehold flat was the worst thing i have ever done in my life - it's taken a toll on my mental health and i've lost a lot of money in the process. I am trying to sell to buy something i could do up and make mine. 

Selling/buying leasehold is also a nightmare hence the lengrh of time to purchase and the costs involved are higher.

I dont know anyone who would buy leasehold again, its a truly awful system.

DullGreyGuy

You have my sympathy.


The majority of the service charge isn't a loss, it's predominately doing things you'd need to do anyway. The difference is that if the roof is shot through old age and you own the property you have more control over when you do it and if you go for a basic fix or a proper fix and the agent will charge some oversight fees but its not the night and day you say. Commercial rates may be higher than private rates for some utilities but you'd still be using utilities. 


We ultimately decided to go for leasehold because it was materially cheaper in the timescales we had (also under notice of a sale but wife didnt want to entertain viewers). There were no big doer uppers, the houses that were a bit dated were still materially more expensive. 

My words of caution, expect the freeholder/their agent to be more painful than you expect. We in part went for our flat because the only clause in the lease about the balcony was you couldn't dry laundry on it. In practice there has been a torrent of emails/letters about what you can/cannot do with the balcony using dubious arguments around clauses about doing things that could increase the costs of insurance etc. 

FreeBear

RHemmings said: BTW: I'm also thinking that unless you are keen on DIY and have the time and energy for it, buying a fixer-upper may not be a good idea. 

Ditto. And if you go for an older property, you can't go throwing modern materials/fixes at it if you want the building to last. e.g. Repointing with cement where lime mortar was originally used, or worse, slapping modern render over old soft bricks.

An old property will suck up spare funds for many years, and you will need to learn a whole bunch of skills unless you have money to pay for (decent) trades.

RelievedSheff

It sounds like you really like the flat in which case read through the leasehold documents very carefully and if there is nothing that alarms you go for it.

You have to be happy with the home that you buy. It has to suit you which it sounds like this flat will do.