Are London properties priced too high for the quality on offer?
I was really excited going property hunting as I haven’t been for a while! Even with all the ‘horror stories’ I had been hearing about - 20+ people turning up to viewings, I still wanted to have a ‘look’ to see if there was anything worth buying and investing in.
I expect as I’m already on the housing ladder and am looking for an additional property, it’s not as stressful for me as it would be a first time buyer who hasn’t bought before and doesn’t know whether they are getting a good deal or not.
There was a bit of a surprise as although we were out viewing on a Bank Holiday, there didn’t seem to be that many people looking. Also, over the last few months I had seen more properties come onto the market within my search criteria.
When I first started, I was lucky to get one or two properties a week which then sold over the weekend. This week I must have had 10 properties come through from the portals via the property alerts.
So it looks like demand might be slowing while supply is increasing – certainly in the areas where I’m looking.
What was I looking for?
The ideal was a two bed flat for around £250k. A tall order I know and I had pretty much realised a decent one bed would be more realistic for that price.
I was pretty much looking at flats, although if a bit of a distance from a tube, I may have secured a maisonette.
The key questions I had, even before I looked at a property were:-
Not all agents were good at this information – some much better than others and it was with these that I built a rapport and gave my time to chat about what I wanted. The others I just dealt with on a property alert basis.
Dangers of buying a flat in London
What I found in the main was not good.
Huge numbers of properties in old buildings which clearly needed tonnes of work. You could see damp just from looking at the photos on-line and it was fairly obvious that the property wasn’t being looked after as it needed a good paint job or the windows were in pretty poor condition.
I quickly learned too if the advert said ‘great views over London’ then the flat needed to be bought with cash, so ignored probably half of the properties that were sent to me as they were unlikely to be sold to someone needing a mortgage and this could make it harder to secure capital growth or a buyer in the future.
Some of the flats too didn’t have things like reserve funds. These are critical for flats in that any work required should be saved up for over a period of time, not just ‘plonked’ on the poor owner at the time.
Good managing agents and freeholders offer a fair system where they are upfront about the works required in the future and plan ahead. Many don’t which means you are potentially ‘at their mercy’ and may be forced to sell at a discount if you can’t afford to pay for the works.
Warnings and what to do!
It is difficult. You want to find somewhere near work, but the prices are so high and if you buy over £250,000 the government will expect £7,500 or more in stamp duty, making it outrageously expensive to buy your first home.
If I’m honest and I was buying for the first time, I think I would look at options such as shared ownership instead and compare this to moving further out and staying at friends at weekends or even a hotel as you can get some great deals.
I’d rather spend a ‘reasonable’ amount of money on a decent quality property, have a longer commute and build up my cash equity to be able to buy closer in the future than risk everything on a property of poor quality
but nearer to town now.
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