‘I was ridiculed for buying a London flat, but it's already gained £100k'
As a single woman in her 20s, owning my flat gives me a level of independence and security that would be impossible otherwise. Dodgy landlords are no longer a concern of mine and I don't have a looming eviction date.
I don't even have to worry about finding a suitable partner with the means to escape the pressured rental market, as the cost of renting a room in the capital continues to surge.
Before I bought my flat last year, I'd been a student, sleeping on sofas for weeks at a time while taking on summer jobs. After that I became a renter, living for two years with university friends.
But once the keys were in my hand, I suddenly had something I'd not had since I'd left my family home for university – a permanent base.
My colleague, Josh Kirby, writes that he does not 'believe a flat in London is a good investment for me at this moment in time'. But I decided to buy because I wanted a proper home.
And while some like Josh have cast doubt on the wisdom of buying a flat in the capital, I think it is still a sensible option. And if it is located in the right area and well looked after, there is little concern about it holding its value.
Some worry about the uncertainty around the current housing market, but I took a gamble on a nice flat in a popular location. I now live near the Thames, a 30-minute commute from work, and near a number of friends. And so far, I've had no reason to worry about it.
In fact, Zoopla has estimated that in the year since I bought it my flat has increased in value by £100,000 – which, frankly, does seem ridiculous. But I don't place much weight on the value growth: I have no plans to sell my flat in the near or even mid-term and, without sounding too much like an estate agent, looking at your home as only an investment is a mistake.
That's not to say that money was not on my mind. I have been up front with friends, and in my previous column, that my parents gave me a very sizeable deposit to help me buy. But I am far from the only one.
My mortgage is entirely my responsibility, as are the ground rent, service charges, utilities and upkeep.
I was paying over £1,080 a month in rent; now, my mortgage payments are £650. Even when service charges (mine went down this year) and ground rent (peppercorn) are taken into account, I am still better off. And I've got a fixed rate of 3.99pc for the next four years, so I don't have to endlessly stress about the latest inflation figures.
Currently, I overpay by roughly half, because if I spent the full 40 years paying off my mortgage, I'd pay close to £500,000 in interest. That's more than £3 for every £1 I borrowed. And because I bought last year, I benefited from lower stamp duty – saving me £4,000.
I also have lodgers. They get a good deal, with below-market rent, and I get help saving towards some of the renovations I want to do.
Being a landlord – even in a relatively informal way – has been eye-opening. I feel confident I haven't lost any future opportunities by being tied down: if I wanted to move away for a period, it would be pretty easy. Flats in my postcode are currently being let for as much as £2,700 a month, and charging a monthly rent of £2,000 would more than cover my costs. Even with the upcoming changes in the Renters' Rights Bill, I'd still be able to regain the flat within four months if I wanted to move back in (assuming tenants moved out as asked).
Making my flat my own
One of the joys of being a homeowner is that you get to decide what the place you live in looks like. No more 'landlord specials' for me – I can decorate to my heart's content.
Considered renovations can also add significant value to a home. I increased the size of the second bedroom by moving a wall, and have replaced some flooring. I also plan to have a new bathroom – all of which should help to keep the value of my flat level.
While these are not insignificant investments, increasing the value of the flat isn't my only driver. Improvements make the flat a nicer place to live. It's a different priority, but one that is just as important.
It should also make it easier to sell. Before I bought it, the flat had been let to social housing tenants and had not been that well looked after. I made the decision to buy it based on its good bones. Now it's being looked after – and with no stars in my eyes as to what I could sell it for – I am confident it would go quickly if I wanted it to.
Now is a good time to buy a flat
There are a lot of numbers floating around which make the London market look less than healthy. The price of flats has not significantly increased since 2016, with buyers put off by concerns around high service charges, cladding issues and incomplete leasehold reform.
But one thing this meant for me was I could negotiate a significant discount. My flat was initially listed for tens of thousands of pounds more than I paid for it.
The sellers, who the estate agent told me were living abroad, had already been almost the whole way through the sale process once before, but the buyers had dropped out.
With weakened interest in flats generally, even my two-bed, within walking distance of Canary Wharf, was struggling to sell at its original price.
The average home sale at the moment is being agreed at 3pc – £16,000 – lower than the average asking price, Zoopla has found.
I used this knowledge, and my position as a chain-free buyer with a mortgage already approved, to promise a swift and easy sale, and secured a larger discount as a result.
Obviously, not every flat on the market will turn out to be a bargain. But as sellers move away, buyers who can be flexible and move quickly will reap the rewards.
Mortgage lenders are rapidly relaxing affordability rules and stress tests in order to lend more to first-time buyers, and are lobbying hard for regulators to go further. This means that homes which could have been out of budget may now be within reach.
Maybe I only strongly support buying because, for now, it has worked very well for me. But the fact remains that it works very well for most, providing a level of housing and financial security you can't get through renting. That's why people want it so badly.
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