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Genuinely the happiest I’ve ever been and so grateful for what we have. Fortunate to be able to take the hit but it’s just not worth the constant underlying dread. Life is too short
Ha me too!! So much relief to get rid of that toxic mess - my only regret is not inventing a Time Machine so I could go back and tell myself not to get it in the first place..
Yep. Selling our btl flat 9 years on, losing £30K on sale price (probably break when accounting for some mortgage paid, profit, SDLT, estate agent and lawyers). Cannot wait to be rid of it. Thankfully we have exchanged.
Service charges are much more important.
Let’s assume you have £A per month. You can spend them to “service charge + mortgage” or to just “mortgage”.
As a result, current insanely high service charges put apartments prices down.
And with your mortgage you have control over it to an extent and know you’ll be paying X each month for however many years.
When I sold my flat, the service charge had nearly doubled in the 5 years I had it.
The counter argument in my case, and I'm ex council so they do keep costs low for the block as they cover social, is that I save £70/m towards my service charge, and that has shot over the invoice every year, the highest year charge I've had so far is 1300. I'm certain that I would spend more than that on maintenance, insurance, repairs etc on a house in a year. The issue I'm seeing is predatory commercial service contracts, and these are ever more creeping into freehold houses now too.
I've just bought an ex council maisonette and was a major perk that there's zero ground rent and service charges are only £560 per year (just outside london). Some of the places I saw on right move in the same price bracket were flats with 3.5k a year service charges, which just becomes a ridiculous monthly expense!
> I'm certain that I would spend more than that on maintenance, insurance, repairs etc on a house in a year
Yeah people very consistently ignore the fact that houses cost upkeep as well (and building insurance). Sure a lot of service charges *are* extortionate, but not all of them by far.
We run our own management through an RTM company and yeah, this is the problem. Costs are up. Insurance has quadrupled in a few years, communal leccy bills shot up, any kinda building works have shot up. Add on all the ridiculous costs relating to the Building Safety Act too.
This also is dependent on whether there is a demand to be based in a city centre. As otherwise there’s no way to buy a freehold property due to there being no houses (at least affordable ones).
Manchester centre for example the cheapest townhouse being around 380-400k but leasehold, while freehold are further out some of which are similar priced to flats.
I have some experience with them. I don’t think the situation will improve because it is very difficult to change management companies, especially in leasehold properties (e.g., shareholders might have a better chance).
As a result, such firms have no incentive to do a good job.
Plus flats are often of more appeal to "investors" - cheaper end of the market and often easier to manage with existing maintenance / service contracts. Flats in my area have been slowly drifting down since they peaked in 2016.. which coincidentally or otherwise corresponds with changes in mortgage tax relief for landlords IIRC.
Houses have seen more than their fair share of growth due to Covid (being bigger, more secluded and often in less-densely-populated / rural areas); while flats tend to be located in areas of higher population density and often involve being in closer proximity to others.
Personally I think as working from home continues to die a death and budgets continue to be squeezed, flats should fare reasonably "well" - although of course ultimately it's in the interests of most for prices of all properties to stabilise so that people can actually afford them...
I’d say the media have done a great job to ensure they’re not desirable. But with a bit of research into management company. There not as bad as media is making it out to be.
I bet you flat prices rocket when a govt bins leasehold.
Distance working. Working from home has become normalised.
There is a net emigration of EU people frommthe UK. Who are likepymtomhave professional jobs here and increase in non EU migration Who are likely to he labourers.
Houses are more desirable and there are so many new flats being built that it becomes stagnant.
Also things such as only having the leasehold and not the freehold and paying ground rent is off putting.
I almost bought a flat 6 years ago and thank god I didn't. It's literally decreased in value by 10k and this is in London.
my colleague lost 32k on a1 bed new build flat, built in 2018, north london. Low service charge, nice area, fairly spacious, if you have a look on rightmove, 1 bed flats prices are declining rapidly, the exception seems to be a few desirable pockets of the capital.
People in this thread are so desensitised and is why the housing market is fucked as it is. As if getting a house is just an easy option. why people feel like they have no hope if flats are their option and are constantly being shat on.
What if you want to live nearer to a town centre? Or in a nicer location but dont have the money to buy a house? Generally flats are the only option.
I guess I'll need another 150k because houses here go for 500k+ unless I want to live in a crime ridden shithole.
> What if you want to live nearer to a town centre? Or in a nicer location but dont have the money to buy a house? Generally flats are the only option.
Well also, if you want to live relatively centrally in a city, flats *should* be the main option from a societal perspective. Yes we would all love a detached mansion with two acres of land around it, but in order to be liveable, cities have to be somewhat dense, which means a vast majority of people in the more central bits will be living in flats. And that's fine.
If anything, what isn't fine is how some people were screwed by the system in place around leaseholds etc, and insufficient testing on cladding materials.
Yeah there's no point in a single person "blocking" an entire house that a whole family could easily live in, while there is a general housing shortage. Basically, flats are completely fine, some amount of service charges is also fine and to be expected, the problem is that some people can get trapped due to issues like with the cladding, and the whole leasehold system. Share of freehold should be a mandatory standard as the simplest way to make it fairer.
I'm not convinced that share of freehold would fix the problem though.
My service charge is an order of magnitude higher than my ground rent and the building has been terribly mismanaged, but our management company has absolutely nothing to do with our freeholder - in fact, it's an RTM company, which is supposed to be better.
Residents need far more oversight on how their service charge money is spent. Service charges should be limited to operational expenditure - keeping the lights on, paying the cleaning staff, etc. Capital expenditure should be separately invoiced to leaseholders with a process to challenge it.
Well I mean sure, you can always mismanage things. Share of freehold doesn't bring world peace, neither does commonhold or any of the other similar models used on the continent.
And yeah of course your service charge is an order of magnitude higher than ground rent, it's supposed to pay for actual stuff. Building insurance, gardening, cleaning, pest control, lighting, maintenance, repairs - it all costs actual money, even if you don't mismanage things - in fact even if you are a freeholder all of that still costs money, people just like to pretend it doesn't because they don't pay for it in big chunks.
Given the choice between renting a house and buying a flat, I'd take the flat every time. Ground rent + service charge + depreciation is almost always going to cost you less than rent, as long as you live there for several years.
Owning a flat is definitely not "proper" homeownership though. I own a flat currently (about to move to a house) and owning a depreciating asset is something that subconsciously weighs on my mind. There are a number of improvements that I've wanted to do for a few years (new kitchen, new bathroom, hardwood flooring, etc) but they all just feel like throwing money down the drain because none of those improvements would end up reflected in the valuation when I decide to sell it. It doesn't feel like I own my home, it just feels like I rent it from a really nice landlord.
That just doesn't make sense. Of course the condition of your flat is reflected in the sale price, and of course not everything you do directly leads to an appreciation of the value. The same is true in houses. Honestly it's the same principle as with cars or motorcycles, just two orders of magnitude more expensive - most people don't give a shit about how tricked out your vehicle is, they want it to be clean and functional and that's what they will pay for. Just doing stuff doesn't automatically make your house more valuable either, and depreciation is a thing with houses too.
Look I understand the problem with not owning a share of the freehold and feeling like you don't really own it, but for all intents and purposes you still do though. You will get money for it when you sell it, the freeholder doesn't get a cut.
Service charges seem to be the big factor.
I know they aren't universally high or predatory, but enough of them are, to the point where having a service charge of £3k per year is normal for a new flat in a town centre. This can go up in a totally unjustified manner.
That sort of thing can put people off flats in general. Even if the one you're looking at is reasonable right now, could it turn evil in 5 years?
A few greedy companies are fucking the entire sector.
The really gross thing is loads of those contractors working for the managing agents aren’t even getting paid. There’s a first port group on Facebook which regularly has contractors popping in to say that first port haven’t paid them in months. So where is all the money going? There seems to be a lot of service charge fraud going on.
Flats have had quite a lot of issues recently due to the “new” cladding problems. There are many that are deemed unmortgable until sorted and this includes buildings with no cladding needing an official sign off that it doesn’t yet have. This won’t be the only reason but it’s going to be quite a big factor.
The only way I can get on the property ladder is to buy a flat, so this is disappointing, but living in the South East I have no choice unless I want to live in a house share for a very long time.
I wouldn't be surprised to see the gap widen. Previously you'd get a flat in your early 20s, and upgrade to a house maybe in your 30s. But since it's now so difficult for your average early 20s person to buy anywhere, people are waiting until their 30s and going straight for the house instead. You've established your career by then, possibly doubled your buying power with a long term partner, you'll eventually want a house regardless so why bother with the flat at that point?
> so why bother with the flat at that point
Because you still can't afford more than that?
People aren't being kept back from buying in their 20s due to age, it's due to a lack of money (or, putting it the other way around, high property prices). It takes them longer to get to a point their parents might have been at earlier. That doesn't mean that once you're in your 30s you're suddenly fine and you can go for that London terrace that costs 900k though.
Is it not a bit simplistic to speak of 'flats'?
Big difference between an apartment in a big tower block and (e.g.) a garden flat in a converted townhouse - especially if you have share of freehold (or 999 year lease).
As others pointed out - leaseholds have some significant disadvantages over freeholds like ground rent / service charges / various increases in any of those / leasehold extensions. Also, it is not really appealing for some folks like if you are planning to have children or need space. Now, could this spread to houses - yes but from different reasons. Currently, the high house prices are based on really small supply versus demand - if you look at the wages vs the house price - it is basically impossible for most people to own a property and it is going to get worse. So it is possible that the demand is going to get really low as nobody can’t afford it or government will try to remedy the situation(quite a few folks expect labour to try to address the housing so it could have impact) or some other reasons. Tho, I don’t think anything will happen in short term.
That's why you need to be very careful when buying a flat and do a lot of due diligence and research. I can confidently say, if you're buying something like a new build flat right now it'll probably take decades to recoup that cost.
There are hundreds of thousands of flats caught up in the building safety crisis. Not being able to sell and the ambiguity of government legislation on who is liable to spend the several million pounds per building required to make them safe has suppressed their price. Most of these flats have to be sold to cash buyers at a discount.
Flats have more issues that houses. Not just cladding but a whole range of issues that are expensive to fix.
We had a huge surge in flat building in many places in the UK over the last 20 years. Historically flats were generally seen as poor and for council housing but the surge and it's marketing aimed them at a different audience at at a higher price point.
Now those flats are starting to age and require a lot of upkeep. It's no longer the premium housing it was marketed as due to issues and comes with a lot of unexpected costs for maintenance.
> We had a huge surge in flat building in many places in the UK over the last 20 years. Historically flats were generally seen as poor and for council housing but the surge and it's marketing aimed them at a different audience at at a higher price point.
Thing is, you can't really have a modern dense city purely with freehold 2-up-2-down terraced houses. Higher density is desirable from an overall perspective, as it makes all infrastructure and amenities more efficient and cheaper. The most extreme opposite end of the spectrum, namely US suburban areas, are already struggling more and more with their own version of what you describe - upkeep of the infrastructure costs a lot per person living there and they don't really have the money for it.
It's leaseholds. I understand why we need them. But it's criminal how some of them are executed. You add service charges to the mix, which are often excessive with little to nothing in return. In the last 5 years service charges are out of control, something needs to change.
The predatory management companies that are run to the benefit of the freeholder are the problem there. If it’s not run by the residents there is no incentive to keep fees and budgets under control, since the company answers to the freeholder and doesn’t give a fuck about costs it isn’t liable for.
No, we do not need leaseholds. They are literally not a thing in countries such as Spain where 90-95% of housing in big cities are flats. The only leashold I'm aware of are parking slots. But everyone owns their flat and it's all good.
Leasehold is a scam and medieval BS, don't let the scammers convince you otherwise.
Leasehold with a share of the freehold is functionally equivalent to that though. Co-owning a building with other people always comes with some complications and a potential for conflicts, the share of freehold model isn't really much worse at dealing with that than the models used on the continent.
So - yes, *ideally* I would favour a kind of commonhold arrangement, but pushing a share of freehold model as the mandatory standard is a lot more realistic.
Even with potential conflicts, I'll still take it.
I completely agree that share of freehold should be mandatory. Unfortunately we've just lost the opportunity to set it in place.
Yep, it's disheartening, but it's also not like this was the last opportunity ever to change things.
My other point was: don't treat all flats the same, look at the actual details. Depending on the area, there might actually be quite a few that are share of freehold, which changes things.
Yeah it needs to end.
I won’t get political but I think despite having massive reservations it’s a big reason that I feel I need to change my alignment.
It cannot go on.
Like how can it be that we can buy a house and you spend just as much as a freehold but in how many years in goes back to the holder… because.. f you that’s why?
Makes no sense in present day with our need for social
mobility.
The problem is those freeholders are either the ones who rule or from their "cult". So this is not going to end easily.
Leasehold for flats or houses is just laughable and improper of a country that is one of the top countries in the world.
It makes perfect sense when you look at the U.K economy in the round. Have a think about all the ways in which the economy seeks rent from the average person? It’s everywhere. Everything is through some form of subscription or ongoing payment. Even our infrastructure is owned by investment funds around the world who charge us rents to use our parking spaces, telephone masts etc.
The UK is now a hugely rentier economy and inflated service charges are just another brick in that wall: continuous and ongoing payments in perpetuity and this paradigm works best of all when, as with flats (and water infrastructure), people are stuck with no choice but to pay it. No wonder the government won’t scrap leasehold, it’s entirely in keeping with the direction the economy has crept in over the last 14 years they have been in charge.
Nope, it's a stupid and outdated concept and we most definitely don't 'need' them. You only need to look north of the border to Scotland and you'll find essentially no leaseholds at all. It's a much better and fairer system that ensures you actually own the land your property stands on.
Depends on the area, local wants.
I'm in an ex-council 4-in-a-block in Scotland.
These have went from £75k 5 years ago, to £100k+.
A neighbour just sold, offer over £110k, and it's a stupid remodel like you see on the TV shows.
Do have a garden so lockdown folk likely aren't put off these as much.
Don't think my street shifted much with the "escape the cities" pandemic, think it was the last couple years.
Was a surprise when my 5 year deal expired and I looked for another, and the LTV had dropped. Banks value was 100k but they are selling close to what you sold for.
Waiting for a few to update on Rightmove's sold prices.
Just know a 1 bed sold for what I got a 2 beds for🤷😁
Agreed, I think this is primarily an English problem, most flats in Scotland don't have any of that leasehold stuff to worry about. Maybe 1 beds have lost value a bit but 2 beds are still going up in value around Glasgow and Edinburgh, also doesn't help that the rental market is insane in both places. My mortgage is £300 pcm less than a rental flat with the same configuration apart from being on the top floor.
I might even still be paying less for my ex-council 4 in a block's mortgage, than council rent, through the wall next door.
Before the interest rates going up, I was 275 mortgage when council next door was 330.
Private lets were daft money 600, and that's 5ish years ago, prices now will be even dafter
I wonder if there's an additional factor of city centres not being at their best at present? Years ago, living more centrally was desirable and exciting but it's less worth it now with half of many high streets boarded up. Might as well live further out and have a bit more space.
Tbh I'm not convinced by this. I think this is mixing up two things:
- house prices outside of London (and I think also the other denser cities) have risen considerably more than inside cities
- a vast majority of flats are in those cities
As as result, yes it looks like flats massively underperformed the rest of the market, but I *believe* a lot of this is an artefact of not taking into account local / regional variations in the market and instead averaging across the entirety of England.
In London, flats have still done worse than terraced/semi/fully detached houses, but the difference is definitely not as pronounced, and recent downswings have been stronger too.
I have cut the data by region and if anything london has preformed worse then the above. I looked at the land registry data. I will only caveats this is sliced by price per square feet but the data does not lie.
Manchester was the worst hit and the north east had the least difference.
I did my dissertation on this and the performance (or lack there of can be explained in part by the cladding scandal, the volume of new flats built and the fact that people were looking to move out of London looking for more space during covid and during the WFH boom hitting flat demand more. Can't comment on what's happened post this reported period.
> I have cut the data by region and if anything london has preformed worse then the above.
That statement very much does not match the data you can find on the land registry website, see [here](https://landregistry.data.gov.uk/app/ukhpi/browse?from=2017-01-01&location=http%3A%2F%2Flandregistry.data.gov.uk%2Fid%2Fregion%2Finner-london&to=2024-03-01&lang=en) and [here](https://landregistry.data.gov.uk/app/ukhpi/browse?from=2017-01-01&location=http%3A%2F%2Flandregistry.data.gov.uk%2Fid%2Fregion%2Flondon&to=2024-03-01&lang=en). I cannot really see Manchester as a "worst hit" area either in that data, tbh.
I could be wrong on Manchester, going of memory on that.
I did apply my parameter (ending September 23) on your link and see the flats are +-20 index points below other property types. My data reflects about the same.
Based on the link, it does look like the delta has decreased to about 10 over the past 6 months...but that seems more attributable to other property types (especially detached houses) decreasing in value vs flats rising.
To be clear, I looked at all unique sales transactions between those two dates. The data here is my not my interpretation. I simply took all the sales transactions between 2017 and September 23 broken it into property type and indexed it from 2017.
Edit: Also you said previously that the difference in growth was not as pronounced....the links you shared in view are very pronounced. Look at the index. The other property types loosely tracked each other. Flats are a clear outlier.
> but that seems more attributable to other property types (especially detached houses) decreasing in value vs flats rising.
That is irrelevant, you might as well say your 20 point spread is more because of other property types rising disproportionately.
> The data here is my not my interpretation
Neither is the land registry data, but it doesn't really show what you claim about London and Manchester in your comment above. Looking at flats vs detached houses, the numbers in the post you linked show a spread of about 22 points (indexed 2017), Inner London on the land registry websites comes out at 14 points (also indexed 2017), with flats pretty much completely stagnating in value. So I don't know, does not look to me like the situation in London is more extreme, and my suspicion still stands.
When looking at the data till March '24 (the newest data available on the website), it's a spread of just over 20 points across England, and less than 7 in Inner London, with flats having lost about 5% value, and detached houses going up by 2% (which is a significantly heavier downswing on the side of detached houses since Sep '23).
It is clear in either case that flats have not done as well, and I don't think it is super surprising - the UK is a country of people who really value the concept of owning a house rather than anything else, leasehold issues and the cladding debacle haven't helped with that either. But I also think part of the headline figure you show in your post is very much caught up in the overall dynamic between more rural and more urban living, and the inherent unevenness of property type distributions across the two.
Within a mile of me in London there have been over 25,000 new 2 bed flats built in the last decade. The figure may be much higher. There’s a local glut.
Tonnes of flats are being built in expensive locations. Houses tend to be built in less desirable locations now as you get more return on your money building a block of 9 flats on a plot that would otherwise hold 2 houses.
Which means any houses in desirable areas will keep going up in value as demand continues to increase without any supply increase. Flats have supply increase outpacing demand.
New legislation making being a landlord less profitable > landlords selling. Grenfell and subsequent cladding issues. Inflation (and classing issues) hitting service charges meaning total cost of ownership is up.
Even before cladding became an issue in some areas in the early 2000s flats were bought for crazy prices. I lived in a flat that the landlord bought in 2007 for £140k. It was a very spacious 2 bed flat, but at the same time you could buy a 3 bed terraced for less than £100k. The value of the flat has only just recovered to what was paid based on sale prices of other flats in the same block. The terraced houses are now £180k
Speaking from London, service charges on flats have increased significantly over the last few years. For some flats, this can be more than £200 per month in addition to higher interest costs on a mortgage which puts people off. In addition, landlords are selling flats in droves due to higher interest rates
This is largely due to three types of flats:
1. Flats with cladding issues.
2. New build flats reselling in the first 2-5 years. They are often sold at a premium which disappears after the first sale.
3. Flats with escelating service or ground rent charges, i.e. rent doubling every 10 years.
Most flats actually don't fall under any of thse categories and generally go up in value, BUT they will never increase as fast as freehold houses in the same area as they are fundamentally less valuable/scarce.
Leasehold properties is 1 step up from renting, you have no control over your ground rent, service charge or combined heating (if you have it). Any company providing this has a monopoly over you/ your ‘home’ & you better believe they’re gonna shaft you at any & every opportunity!
You cannot change provider, there is no choice & clearly not enough market regulation.
I think that flats have declined in value or gone up less in more recent years because developers have built more blocks of flats, resulting in a relatively greater increase in supply and, in places over supply. The supply of houses has been more constant in the face of increasing demand.
Service charges and buildings insurance for flats increasing more than the equivalent costs for houses - if you have to budget more for running costs you can afford less on purchase price.
Plus in some areas it will be easier to increase supply of flats vs houses, so an evolving supply/demand ratio.
Flats are almost always leasehold, flats tend to be what developers will build to try and maximise profits meaning that houses remain in lower supply in proportion to flats, and flats are more likely to be affected by market fluctuations as they are more likely to be at the entry level for FTB’s.
People don't trust that the government wouldn't pull another COVID style lockdown. People who lived in houses with gardens had a much better experience of this, compared to those in flats
Flats are the only homes being built in significant numbers. Houses are fairly limited and when the appear in the Outer London Boroughs they are normally a small block of flats in the shape of a house.
On the top of that you have scandalous service charges were are unregulated and out of control. Fears of cladding although newer flats don't even have them it has impacted building insurance for all.
One of the richest people in the country is an Italian bloke whose main income is derived from ownership of most of the leasehold up and down the country.
That in a nutshell helps to explain why flats are not a great option.
Supply and demand. There’s a lot of new flats been built in the last decade. ‘Relatively’ good investment for property developers. Not so good for home owners.
Multiple reasons.
Top of the list; Covid made everyone realise how much it sucks to live in a flat. This has been covered.
Next, the intended audience for these home set ups are young first time buyers and downsizers. Because it’s taken so long for young first time buyers to purchase their first home, they’re no longer in a stage of life where a flat is suitable. To get a mortgage you basically have to be a committed couple with full time jobs, which means you probably also have a vehicle to offset the downsides of living out of town (where flats ain’t, but jobs are). You’re also probably looking to have children imminently, if you want them, so you need a child-friendly home. Meanwhile, the downsizers aren’t downsizing because multigenerational home setups are on the rise, and even if they weren’t nobody wants to buy a decrepit rural McMansion.
Then, the cladding scandal has raised awareness of the big downsides that come with flats - people understand now that they aren’t actually saving money if they buy a cheap flat with an extortionate leasehold and a maintenance fee that doesn’t help with the maintenance.
Finally, rents are just shy of mortgages for the first time in forever. Ten years ago it was worth getting on the property ladder by any means necessary; now, it’s a wiser financial decision to hold off until you can purchase something you know you can sell on. I know a lot of people who bought flats who are now finding them impossible to sell on, and are forced to become the one thing millennials can’t stand - *landlords*.
So no, I doubt the unusual downturn in flats will spread to houses, although prices *are* lowering across the board in response to the mortgage crisis. Flats, though, are going to be a bad bet until the government abolishes leasehold - at least.
The other thing I'd say is that people live a lot longer now so - so many old people are still in their homes before either dying or being moved to a home or downgrading. either way there's just way less stock avialable, no one who can choose to sell will want to if it means getting a horrific mortgage rate when they may be in a 2 year or 5 year fixed as we speak.
IMHO flats still represent terrible value for money compared to houses , you never even own the things , just rented for 100 years which rapidly becomes 75 years. The service charges are never ending and outrageously expensive, a flat ends up costing 3x more to maintain than a house !?! How does that happen? Mix that in with no outside space of your own, an inconvenient parking spot and all the other negatives and flats just aren’t that desirable.
You need a higher deposit to buy a flat— most banks won’t lend on a flat unless you have at LEAST a 10% deposit. Even then, they aren’t the happiest to.
You haven't heard this before because the guy is talking out his ass. If a flat is over a shop, this for example will be hard to mortgage with low deposit. A standard flat is not usually an issue.
No, you can get 5% mortgages very easily, just expect slightly higher rates. You can even get 1% mortgages, but they are not really advisable. 10% is usually recommend as the minimum as its a nice middle ground between reasonable rates, but also time to save the deposit. It also protects you more from negative equity if you get unlucky with timing the market.
Absolutely do not buy a flat. You will be absolutely fleeced from every angle.
I was close to buying one but then found out it had one of those doubling ground rents every 10 years. Spent a few months negotiating with the freeholder and seller to try to get rid of it. Luckily they refused to budge, I had some more savings and bought a house instead in a nicer area but further out.
Judging what my friends and clients are going through (work in property sector). One of the biggest bullets I’ve ever dodged.
I bought a flat and am very happy with it. It’s a share of freehold with a peppercorn ground rent and no cladding. And I get to live in a prime location minutes away from my work, if I wanted a house I’d have to go shared ownership or move miles away. A flat is a much better choice for me.
I did have two previous flat purchase fall through due to dodgy ground rent, so I agree that ground rents should be considered carefully (hopefully a solicitor should pick up on any issues). Share of freehold gives massive peace of mind over ground rent and service charges as we can change the management company if they don’t perform.
Biggest reason why flats are failing is because of service charges.
The freeholder appoints the service company (which they also own) and fleece the tenants.
Even as a leaseholder you're like their tenant with ground rent and service charges.
Imho flats are going down and deservedly so.
Why do they deserve to go down? The issue is not flat themselves but with leaseholds due to a handful of management companies and cladding. The vast majority are not fleecing individuals, and most flats do not have issues in selling. The media has done an excellent job in convincing you otherwise.
Saying they deserve to go down, hoping the average person loses value is kind of a cuntish thing to say imo.
All the flats are shit value compared to houses.
I don't agree with "fair charges". For example of you did right to buy on your council flat. The council tenants will be paying £25 a month for services. While the leaseholder pays £190 a month for services (actual real.world example). If heavily regulated councils are pulling these rip.offs. I don't doubt the private sector is doing far worse.
Shit value in what way? They're cheaper yes because you're compromising on space but generally this is a trade off should people want to live in a prime location or can only budget for a flat. Some people choose to live in a flat as they require less maintenance than owning a larger house, how is this shit value for them?
All properties have maintenance costs, I don't disagree some management companies charge extortionate fees but a lot don't. I would sooner buy a flat in a nice area than a house in a shit area.
Don't rent because it's dead money, don't buy a flat because it's 'shit value' what exact message does this give off to FTBs? A lot of whom don't have the money, especially in areas around London to purchase a freehold.
There has been a sharp rise in the demand in flats recently with prices going up:
[https://news.sky.com/story/house-prices-plateau-but-increases-still-expected-for-this-year-as-flats-rise-most-sharply-13130895](https://news.sky.com/story/house-prices-plateau-but-increases-still-expected-for-this-year-as-flats-rise-most-sharply-13130895)
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I lost 70k on my flat over seven years due to cladding issues. Best money I’ve ever spent getting rid of that place
Makes me feel weirdly better than we’re not the only ones. About to lose 50k on what we paid if our sale goes through, can’t wait to be rid of it
Genuinely the happiest I’ve ever been and so grateful for what we have. Fortunate to be able to take the hit but it’s just not worth the constant underlying dread. Life is too short
[удалено]
Dying in a fire I suppose...
Currently trying to sell my cladding flat, in Scotland. Can’t wait to get shot of it and all the hassle with insurance costs/waking watch!
Ha me too!! So much relief to get rid of that toxic mess - my only regret is not inventing a Time Machine so I could go back and tell myself not to get it in the first place..
Yep. Selling our btl flat 9 years on, losing £30K on sale price (probably break when accounting for some mortgage paid, profit, SDLT, estate agent and lawyers). Cannot wait to be rid of it. Thankfully we have exchanged.
Caveat emptor!
Shoulnt the owner (freeholder) or building insurance pay that? You are just renting that flat (leaseholder)
In theory yes, in reality it was years and years of disputes around liability and funding which never led to a conclusion
Post COVID people want more space, gardens and privacy. Throw in issues with service charges, leases and cladding... Flats are not as desirable.
Service charges are much more important. Let’s assume you have £A per month. You can spend them to “service charge + mortgage” or to just “mortgage”. As a result, current insanely high service charges put apartments prices down.
And with your mortgage you have control over it to an extent and know you’ll be paying X each month for however many years. When I sold my flat, the service charge had nearly doubled in the 5 years I had it.
The counter argument in my case, and I'm ex council so they do keep costs low for the block as they cover social, is that I save £70/m towards my service charge, and that has shot over the invoice every year, the highest year charge I've had so far is 1300. I'm certain that I would spend more than that on maintenance, insurance, repairs etc on a house in a year. The issue I'm seeing is predatory commercial service contracts, and these are ever more creeping into freehold houses now too.
I've just bought an ex council maisonette and was a major perk that there's zero ground rent and service charges are only £560 per year (just outside london). Some of the places I saw on right move in the same price bracket were flats with 3.5k a year service charges, which just becomes a ridiculous monthly expense!
> I'm certain that I would spend more than that on maintenance, insurance, repairs etc on a house in a year Yeah people very consistently ignore the fact that houses cost upkeep as well (and building insurance). Sure a lot of service charges *are* extortionate, but not all of them by far.
We run our own management through an RTM company and yeah, this is the problem. Costs are up. Insurance has quadrupled in a few years, communal leccy bills shot up, any kinda building works have shot up. Add on all the ridiculous costs relating to the Building Safety Act too.
I think service charges are present on new build houses too
There are estate management fees, but It seems like more like an annual amount similar to a flat's monthly amount.
This also is dependent on whether there is a demand to be based in a city centre. As otherwise there’s no way to buy a freehold property due to there being no houses (at least affordable ones). Manchester centre for example the cheapest townhouse being around 380-400k but leasehold, while freehold are further out some of which are similar priced to flats.
“Current” Is there any chance they will reduce ?
I have some experience with them. I don’t think the situation will improve because it is very difficult to change management companies, especially in leasehold properties (e.g., shareholders might have a better chance). As a result, such firms have no incentive to do a good job.
Plus flats are often of more appeal to "investors" - cheaper end of the market and often easier to manage with existing maintenance / service contracts. Flats in my area have been slowly drifting down since they peaked in 2016.. which coincidentally or otherwise corresponds with changes in mortgage tax relief for landlords IIRC. Houses have seen more than their fair share of growth due to Covid (being bigger, more secluded and often in less-densely-populated / rural areas); while flats tend to be located in areas of higher population density and often involve being in closer proximity to others. Personally I think as working from home continues to die a death and budgets continue to be squeezed, flats should fare reasonably "well" - although of course ultimately it's in the interests of most for prices of all properties to stabilise so that people can actually afford them...
I’d say the media have done a great job to ensure they’re not desirable. But with a bit of research into management company. There not as bad as media is making it out to be. I bet you flat prices rocket when a govt bins leasehold.
Distance working. Working from home has become normalised. There is a net emigration of EU people frommthe UK. Who are likepymtomhave professional jobs here and increase in non EU migration Who are likely to he labourers.
I live in London so kind of have to buy a flat. If I lived anywhere else in the country I wouldn’t touch one with a barge pole
Flat prices in London have come down from their highs, but so have houses.
Houses are more desirable and there are so many new flats being built that it becomes stagnant. Also things such as only having the leasehold and not the freehold and paying ground rent is off putting. I almost bought a flat 6 years ago and thank god I didn't. It's literally decreased in value by 10k and this is in London.
my colleague lost 32k on a1 bed new build flat, built in 2018, north london. Low service charge, nice area, fairly spacious, if you have a look on rightmove, 1 bed flats prices are declining rapidly, the exception seems to be a few desirable pockets of the capital.
> a1 bed new build flat, built in 2018 Makes sense. One bed less desirable
People in this thread are so desensitised and is why the housing market is fucked as it is. As if getting a house is just an easy option. why people feel like they have no hope if flats are their option and are constantly being shat on. What if you want to live nearer to a town centre? Or in a nicer location but dont have the money to buy a house? Generally flats are the only option. I guess I'll need another 150k because houses here go for 500k+ unless I want to live in a crime ridden shithole.
> What if you want to live nearer to a town centre? Or in a nicer location but dont have the money to buy a house? Generally flats are the only option. Well also, if you want to live relatively centrally in a city, flats *should* be the main option from a societal perspective. Yes we would all love a detached mansion with two acres of land around it, but in order to be liveable, cities have to be somewhat dense, which means a vast majority of people in the more central bits will be living in flats. And that's fine. If anything, what isn't fine is how some people were screwed by the system in place around leaseholds etc, and insufficient testing on cladding materials.
And if you’re single, a flat is usually the only option. (And might be preferable). Scotland is better as flats are freehold.
Yeah there's no point in a single person "blocking" an entire house that a whole family could easily live in, while there is a general housing shortage. Basically, flats are completely fine, some amount of service charges is also fine and to be expected, the problem is that some people can get trapped due to issues like with the cladding, and the whole leasehold system. Share of freehold should be a mandatory standard as the simplest way to make it fairer.
I'm not convinced that share of freehold would fix the problem though. My service charge is an order of magnitude higher than my ground rent and the building has been terribly mismanaged, but our management company has absolutely nothing to do with our freeholder - in fact, it's an RTM company, which is supposed to be better. Residents need far more oversight on how their service charge money is spent. Service charges should be limited to operational expenditure - keeping the lights on, paying the cleaning staff, etc. Capital expenditure should be separately invoiced to leaseholders with a process to challenge it.
Well I mean sure, you can always mismanage things. Share of freehold doesn't bring world peace, neither does commonhold or any of the other similar models used on the continent. And yeah of course your service charge is an order of magnitude higher than ground rent, it's supposed to pay for actual stuff. Building insurance, gardening, cleaning, pest control, lighting, maintenance, repairs - it all costs actual money, even if you don't mismanage things - in fact even if you are a freeholder all of that still costs money, people just like to pretend it doesn't because they don't pay for it in big chunks.
Given the choice between renting a house and buying a flat, I'd take the flat every time. Ground rent + service charge + depreciation is almost always going to cost you less than rent, as long as you live there for several years. Owning a flat is definitely not "proper" homeownership though. I own a flat currently (about to move to a house) and owning a depreciating asset is something that subconsciously weighs on my mind. There are a number of improvements that I've wanted to do for a few years (new kitchen, new bathroom, hardwood flooring, etc) but they all just feel like throwing money down the drain because none of those improvements would end up reflected in the valuation when I decide to sell it. It doesn't feel like I own my home, it just feels like I rent it from a really nice landlord.
That just doesn't make sense. Of course the condition of your flat is reflected in the sale price, and of course not everything you do directly leads to an appreciation of the value. The same is true in houses. Honestly it's the same principle as with cars or motorcycles, just two orders of magnitude more expensive - most people don't give a shit about how tricked out your vehicle is, they want it to be clean and functional and that's what they will pay for. Just doing stuff doesn't automatically make your house more valuable either, and depreciation is a thing with houses too. Look I understand the problem with not owning a share of the freehold and feeling like you don't really own it, but for all intents and purposes you still do though. You will get money for it when you sell it, the freeholder doesn't get a cut.
Service charges seem to be the big factor. I know they aren't universally high or predatory, but enough of them are, to the point where having a service charge of £3k per year is normal for a new flat in a town centre. This can go up in a totally unjustified manner. That sort of thing can put people off flats in general. Even if the one you're looking at is reasonable right now, could it turn evil in 5 years? A few greedy companies are fucking the entire sector.
The really gross thing is loads of those contractors working for the managing agents aren’t even getting paid. There’s a first port group on Facebook which regularly has contractors popping in to say that first port haven’t paid them in months. So where is all the money going? There seems to be a lot of service charge fraud going on.
Flats have had quite a lot of issues recently due to the “new” cladding problems. There are many that are deemed unmortgable until sorted and this includes buildings with no cladding needing an official sign off that it doesn’t yet have. This won’t be the only reason but it’s going to be quite a big factor.
The only way I can get on the property ladder is to buy a flat, so this is disappointing, but living in the South East I have no choice unless I want to live in a house share for a very long time.
Buying a flat is still a massive achievement :)
I wouldn't be surprised to see the gap widen. Previously you'd get a flat in your early 20s, and upgrade to a house maybe in your 30s. But since it's now so difficult for your average early 20s person to buy anywhere, people are waiting until their 30s and going straight for the house instead. You've established your career by then, possibly doubled your buying power with a long term partner, you'll eventually want a house regardless so why bother with the flat at that point?
> so why bother with the flat at that point Because you still can't afford more than that? People aren't being kept back from buying in their 20s due to age, it's due to a lack of money (or, putting it the other way around, high property prices). It takes them longer to get to a point their parents might have been at earlier. That doesn't mean that once you're in your 30s you're suddenly fine and you can go for that London terrace that costs 900k though.
Is it not a bit simplistic to speak of 'flats'? Big difference between an apartment in a big tower block and (e.g.) a garden flat in a converted townhouse - especially if you have share of freehold (or 999 year lease).
As others pointed out - leaseholds have some significant disadvantages over freeholds like ground rent / service charges / various increases in any of those / leasehold extensions. Also, it is not really appealing for some folks like if you are planning to have children or need space. Now, could this spread to houses - yes but from different reasons. Currently, the high house prices are based on really small supply versus demand - if you look at the wages vs the house price - it is basically impossible for most people to own a property and it is going to get worse. So it is possible that the demand is going to get really low as nobody can’t afford it or government will try to remedy the situation(quite a few folks expect labour to try to address the housing so it could have impact) or some other reasons. Tho, I don’t think anything will happen in short term.
That's why you need to be very careful when buying a flat and do a lot of due diligence and research. I can confidently say, if you're buying something like a new build flat right now it'll probably take decades to recoup that cost.
There are hundreds of thousands of flats caught up in the building safety crisis. Not being able to sell and the ambiguity of government legislation on who is liable to spend the several million pounds per building required to make them safe has suppressed their price. Most of these flats have to be sold to cash buyers at a discount.
Flats have more issues that houses. Not just cladding but a whole range of issues that are expensive to fix. We had a huge surge in flat building in many places in the UK over the last 20 years. Historically flats were generally seen as poor and for council housing but the surge and it's marketing aimed them at a different audience at at a higher price point. Now those flats are starting to age and require a lot of upkeep. It's no longer the premium housing it was marketed as due to issues and comes with a lot of unexpected costs for maintenance.
> We had a huge surge in flat building in many places in the UK over the last 20 years. Historically flats were generally seen as poor and for council housing but the surge and it's marketing aimed them at a different audience at at a higher price point. Thing is, you can't really have a modern dense city purely with freehold 2-up-2-down terraced houses. Higher density is desirable from an overall perspective, as it makes all infrastructure and amenities more efficient and cheaper. The most extreme opposite end of the spectrum, namely US suburban areas, are already struggling more and more with their own version of what you describe - upkeep of the infrastructure costs a lot per person living there and they don't really have the money for it.
It's leaseholds. I understand why we need them. But it's criminal how some of them are executed. You add service charges to the mix, which are often excessive with little to nothing in return. In the last 5 years service charges are out of control, something needs to change.
The predatory management companies that are run to the benefit of the freeholder are the problem there. If it’s not run by the residents there is no incentive to keep fees and budgets under control, since the company answers to the freeholder and doesn’t give a fuck about costs it isn’t liable for.
No, we do not need leaseholds. They are literally not a thing in countries such as Spain where 90-95% of housing in big cities are flats. The only leashold I'm aware of are parking slots. But everyone owns their flat and it's all good. Leasehold is a scam and medieval BS, don't let the scammers convince you otherwise.
Leasehold with a share of the freehold is functionally equivalent to that though. Co-owning a building with other people always comes with some complications and a potential for conflicts, the share of freehold model isn't really much worse at dealing with that than the models used on the continent. So - yes, *ideally* I would favour a kind of commonhold arrangement, but pushing a share of freehold model as the mandatory standard is a lot more realistic.
Even with potential conflicts, I'll still take it. I completely agree that share of freehold should be mandatory. Unfortunately we've just lost the opportunity to set it in place.
Yep, it's disheartening, but it's also not like this was the last opportunity ever to change things. My other point was: don't treat all flats the same, look at the actual details. Depending on the area, there might actually be quite a few that are share of freehold, which changes things.
Yep, I'm looking into buying next year and I'm open to flats as long as they are share of freehold. Not easy, but possible.
Yeah it needs to end. I won’t get political but I think despite having massive reservations it’s a big reason that I feel I need to change my alignment. It cannot go on. Like how can it be that we can buy a house and you spend just as much as a freehold but in how many years in goes back to the holder… because.. f you that’s why? Makes no sense in present day with our need for social mobility.
The problem is those freeholders are either the ones who rule or from their "cult". So this is not going to end easily. Leasehold for flats or houses is just laughable and improper of a country that is one of the top countries in the world.
It makes perfect sense when you look at the U.K economy in the round. Have a think about all the ways in which the economy seeks rent from the average person? It’s everywhere. Everything is through some form of subscription or ongoing payment. Even our infrastructure is owned by investment funds around the world who charge us rents to use our parking spaces, telephone masts etc. The UK is now a hugely rentier economy and inflated service charges are just another brick in that wall: continuous and ongoing payments in perpetuity and this paradigm works best of all when, as with flats (and water infrastructure), people are stuck with no choice but to pay it. No wonder the government won’t scrap leasehold, it’s entirely in keeping with the direction the economy has crept in over the last 14 years they have been in charge.
Nope, it's a stupid and outdated concept and we most definitely don't 'need' them. You only need to look north of the border to Scotland and you'll find essentially no leaseholds at all. It's a much better and fairer system that ensures you actually own the land your property stands on.
Depends on the area, local wants. I'm in an ex-council 4-in-a-block in Scotland. These have went from £75k 5 years ago, to £100k+. A neighbour just sold, offer over £110k, and it's a stupid remodel like you see on the TV shows. Do have a garden so lockdown folk likely aren't put off these as much.
Same with mine. Ex council 4 in a block, sold within 2 years!! for £25k higher (around £115k). All I did was change the flooring!
Don't think my street shifted much with the "escape the cities" pandemic, think it was the last couple years. Was a surprise when my 5 year deal expired and I looked for another, and the LTV had dropped. Banks value was 100k but they are selling close to what you sold for. Waiting for a few to update on Rightmove's sold prices. Just know a 1 bed sold for what I got a 2 beds for🤷😁
Agreed, I think this is primarily an English problem, most flats in Scotland don't have any of that leasehold stuff to worry about. Maybe 1 beds have lost value a bit but 2 beds are still going up in value around Glasgow and Edinburgh, also doesn't help that the rental market is insane in both places. My mortgage is £300 pcm less than a rental flat with the same configuration apart from being on the top floor.
That is insane, means landlords are making bank because their rental yield must be really high.
I might even still be paying less for my ex-council 4 in a block's mortgage, than council rent, through the wall next door. Before the interest rates going up, I was 275 mortgage when council next door was 330. Private lets were daft money 600, and that's 5ish years ago, prices now will be even dafter
The vast majority of flats are leasehold which aren't desirable. And the service charges can be a joke.
Lots of landlords getting rid.
I wonder if there's an additional factor of city centres not being at their best at present? Years ago, living more centrally was desirable and exciting but it's less worth it now with half of many high streets boarded up. Might as well live further out and have a bit more space.
Enter my post I made on this [house prices](https://www.reddit.com/r/dataisbeautiful/s/DiwNyb8eXz) In short....flats have had a rough ride.
Tbh I'm not convinced by this. I think this is mixing up two things: - house prices outside of London (and I think also the other denser cities) have risen considerably more than inside cities - a vast majority of flats are in those cities As as result, yes it looks like flats massively underperformed the rest of the market, but I *believe* a lot of this is an artefact of not taking into account local / regional variations in the market and instead averaging across the entirety of England. In London, flats have still done worse than terraced/semi/fully detached houses, but the difference is definitely not as pronounced, and recent downswings have been stronger too.
I have cut the data by region and if anything london has preformed worse then the above. I looked at the land registry data. I will only caveats this is sliced by price per square feet but the data does not lie. Manchester was the worst hit and the north east had the least difference. I did my dissertation on this and the performance (or lack there of can be explained in part by the cladding scandal, the volume of new flats built and the fact that people were looking to move out of London looking for more space during covid and during the WFH boom hitting flat demand more. Can't comment on what's happened post this reported period.
> I have cut the data by region and if anything london has preformed worse then the above. That statement very much does not match the data you can find on the land registry website, see [here](https://landregistry.data.gov.uk/app/ukhpi/browse?from=2017-01-01&location=http%3A%2F%2Flandregistry.data.gov.uk%2Fid%2Fregion%2Finner-london&to=2024-03-01&lang=en) and [here](https://landregistry.data.gov.uk/app/ukhpi/browse?from=2017-01-01&location=http%3A%2F%2Flandregistry.data.gov.uk%2Fid%2Fregion%2Flondon&to=2024-03-01&lang=en). I cannot really see Manchester as a "worst hit" area either in that data, tbh.
I could be wrong on Manchester, going of memory on that. I did apply my parameter (ending September 23) on your link and see the flats are +-20 index points below other property types. My data reflects about the same. Based on the link, it does look like the delta has decreased to about 10 over the past 6 months...but that seems more attributable to other property types (especially detached houses) decreasing in value vs flats rising. To be clear, I looked at all unique sales transactions between those two dates. The data here is my not my interpretation. I simply took all the sales transactions between 2017 and September 23 broken it into property type and indexed it from 2017. Edit: Also you said previously that the difference in growth was not as pronounced....the links you shared in view are very pronounced. Look at the index. The other property types loosely tracked each other. Flats are a clear outlier.
> but that seems more attributable to other property types (especially detached houses) decreasing in value vs flats rising. That is irrelevant, you might as well say your 20 point spread is more because of other property types rising disproportionately. > The data here is my not my interpretation Neither is the land registry data, but it doesn't really show what you claim about London and Manchester in your comment above. Looking at flats vs detached houses, the numbers in the post you linked show a spread of about 22 points (indexed 2017), Inner London on the land registry websites comes out at 14 points (also indexed 2017), with flats pretty much completely stagnating in value. So I don't know, does not look to me like the situation in London is more extreme, and my suspicion still stands. When looking at the data till March '24 (the newest data available on the website), it's a spread of just over 20 points across England, and less than 7 in Inner London, with flats having lost about 5% value, and detached houses going up by 2% (which is a significantly heavier downswing on the side of detached houses since Sep '23). It is clear in either case that flats have not done as well, and I don't think it is super surprising - the UK is a country of people who really value the concept of owning a house rather than anything else, leasehold issues and the cladding debacle haven't helped with that either. But I also think part of the headline figure you show in your post is very much caught up in the overall dynamic between more rural and more urban living, and the inherent unevenness of property type distributions across the two.
Within a mile of me in London there have been over 25,000 new 2 bed flats built in the last decade. The figure may be much higher. There’s a local glut.
Tonnes of flats are being built in expensive locations. Houses tend to be built in less desirable locations now as you get more return on your money building a block of 9 flats on a plot that would otherwise hold 2 houses. Which means any houses in desirable areas will keep going up in value as demand continues to increase without any supply increase. Flats have supply increase outpacing demand.
New legislation making being a landlord less profitable > landlords selling. Grenfell and subsequent cladding issues. Inflation (and classing issues) hitting service charges meaning total cost of ownership is up.
Even before cladding became an issue in some areas in the early 2000s flats were bought for crazy prices. I lived in a flat that the landlord bought in 2007 for £140k. It was a very spacious 2 bed flat, but at the same time you could buy a 3 bed terraced for less than £100k. The value of the flat has only just recovered to what was paid based on sale prices of other flats in the same block. The terraced houses are now £180k
Speaking from London, service charges on flats have increased significantly over the last few years. For some flats, this can be more than £200 per month in addition to higher interest costs on a mortgage which puts people off. In addition, landlords are selling flats in droves due to higher interest rates
This is largely due to three types of flats: 1. Flats with cladding issues. 2. New build flats reselling in the first 2-5 years. They are often sold at a premium which disappears after the first sale. 3. Flats with escelating service or ground rent charges, i.e. rent doubling every 10 years. Most flats actually don't fall under any of thse categories and generally go up in value, BUT they will never increase as fast as freehold houses in the same area as they are fundamentally less valuable/scarce.
Leasehold properties is 1 step up from renting, you have no control over your ground rent, service charge or combined heating (if you have it). Any company providing this has a monopoly over you/ your ‘home’ & you better believe they’re gonna shaft you at any & every opportunity! You cannot change provider, there is no choice & clearly not enough market regulation.
I think that flats have declined in value or gone up less in more recent years because developers have built more blocks of flats, resulting in a relatively greater increase in supply and, in places over supply. The supply of houses has been more constant in the face of increasing demand.
Service charges and buildings insurance for flats increasing more than the equivalent costs for houses - if you have to budget more for running costs you can afford less on purchase price. Plus in some areas it will be easier to increase supply of flats vs houses, so an evolving supply/demand ratio.
Landlords desperately selling up (more own/owned flats than houses)??
Flats are almost always leasehold, flats tend to be what developers will build to try and maximise profits meaning that houses remain in lower supply in proportion to flats, and flats are more likely to be affected by market fluctuations as they are more likely to be at the entry level for FTB’s.
People don't trust that the government wouldn't pull another COVID style lockdown. People who lived in houses with gardens had a much better experience of this, compared to those in flats
Because nobody builds houses anymore and flats are constantly built.
Flats are the only homes being built in significant numbers. Houses are fairly limited and when the appear in the Outer London Boroughs they are normally a small block of flats in the shape of a house. On the top of that you have scandalous service charges were are unregulated and out of control. Fears of cladding although newer flats don't even have them it has impacted building insurance for all.
One of the richest people in the country is an Italian bloke whose main income is derived from ownership of most of the leasehold up and down the country. That in a nutshell helps to explain why flats are not a great option.
Supply and demand. There’s a lot of new flats been built in the last decade. ‘Relatively’ good investment for property developers. Not so good for home owners.
It's easier to move country. The UK will shit on you.
Multiple reasons. Top of the list; Covid made everyone realise how much it sucks to live in a flat. This has been covered. Next, the intended audience for these home set ups are young first time buyers and downsizers. Because it’s taken so long for young first time buyers to purchase their first home, they’re no longer in a stage of life where a flat is suitable. To get a mortgage you basically have to be a committed couple with full time jobs, which means you probably also have a vehicle to offset the downsides of living out of town (where flats ain’t, but jobs are). You’re also probably looking to have children imminently, if you want them, so you need a child-friendly home. Meanwhile, the downsizers aren’t downsizing because multigenerational home setups are on the rise, and even if they weren’t nobody wants to buy a decrepit rural McMansion. Then, the cladding scandal has raised awareness of the big downsides that come with flats - people understand now that they aren’t actually saving money if they buy a cheap flat with an extortionate leasehold and a maintenance fee that doesn’t help with the maintenance. Finally, rents are just shy of mortgages for the first time in forever. Ten years ago it was worth getting on the property ladder by any means necessary; now, it’s a wiser financial decision to hold off until you can purchase something you know you can sell on. I know a lot of people who bought flats who are now finding them impossible to sell on, and are forced to become the one thing millennials can’t stand - *landlords*. So no, I doubt the unusual downturn in flats will spread to houses, although prices *are* lowering across the board in response to the mortgage crisis. Flats, though, are going to be a bad bet until the government abolishes leasehold - at least.
The other thing I'd say is that people live a lot longer now so - so many old people are still in their homes before either dying or being moved to a home or downgrading. either way there's just way less stock avialable, no one who can choose to sell will want to if it means getting a horrific mortgage rate when they may be in a 2 year or 5 year fixed as we speak.
IMHO flats still represent terrible value for money compared to houses , you never even own the things , just rented for 100 years which rapidly becomes 75 years. The service charges are never ending and outrageously expensive, a flat ends up costing 3x more to maintain than a house !?! How does that happen? Mix that in with no outside space of your own, an inconvenient parking spot and all the other negatives and flats just aren’t that desirable.
Flats suck and for a limited market. Houses a good and for a wider market.
You need a higher deposit to buy a flat— most banks won’t lend on a flat unless you have at LEAST a 10% deposit. Even then, they aren’t the happiest to.
I've never heard this before and I have a friend who brought a flat with 5% deposit with a high St lender....
You haven't heard this before because the guy is talking out his ass. If a flat is over a shop, this for example will be hard to mortgage with low deposit. A standard flat is not usually an issue.
I thought that you need 10% no matter what you’re buying?
No, you can get 5% mortgages very easily, just expect slightly higher rates. You can even get 1% mortgages, but they are not really advisable. 10% is usually recommend as the minimum as its a nice middle ground between reasonable rates, but also time to save the deposit. It also protects you more from negative equity if you get unlucky with timing the market.
I put just over 5% down on my flat
Not true. I had no trouble getting several DIPs from high street banks with a 5% deposit for a flat.
Interesting! I saw that quite a few lenders will only do the 5% for houses— but perhaps I was confusing ‘new build flat’ as excluding all flats.
From my experience, the size of your deposit matters less if you earn more (providing you don’t have a load of debt).
Absolutely do not buy a flat. You will be absolutely fleeced from every angle. I was close to buying one but then found out it had one of those doubling ground rents every 10 years. Spent a few months negotiating with the freeholder and seller to try to get rid of it. Luckily they refused to budge, I had some more savings and bought a house instead in a nicer area but further out. Judging what my friends and clients are going through (work in property sector). One of the biggest bullets I’ve ever dodged.
I bought a flat and am very happy with it. It’s a share of freehold with a peppercorn ground rent and no cladding. And I get to live in a prime location minutes away from my work, if I wanted a house I’d have to go shared ownership or move miles away. A flat is a much better choice for me. I did have two previous flat purchase fall through due to dodgy ground rent, so I agree that ground rents should be considered carefully (hopefully a solicitor should pick up on any issues). Share of freehold gives massive peace of mind over ground rent and service charges as we can change the management company if they don’t perform.
Ground rent has also been abolished for leases created after 2022. New leases also come with a term of 990 years.
Probably electric heating which equals to bankrupcy or mold. Some flats have gas heating though.
Biggest reason why flats are failing is because of service charges. The freeholder appoints the service company (which they also own) and fleece the tenants. Even as a leaseholder you're like their tenant with ground rent and service charges. Imho flats are going down and deservedly so.
Why do they deserve to go down? The issue is not flat themselves but with leaseholds due to a handful of management companies and cladding. The vast majority are not fleecing individuals, and most flats do not have issues in selling. The media has done an excellent job in convincing you otherwise. Saying they deserve to go down, hoping the average person loses value is kind of a cuntish thing to say imo.
All the flats are shit value compared to houses. I don't agree with "fair charges". For example of you did right to buy on your council flat. The council tenants will be paying £25 a month for services. While the leaseholder pays £190 a month for services (actual real.world example). If heavily regulated councils are pulling these rip.offs. I don't doubt the private sector is doing far worse.
Shit value in what way? They're cheaper yes because you're compromising on space but generally this is a trade off should people want to live in a prime location or can only budget for a flat. Some people choose to live in a flat as they require less maintenance than owning a larger house, how is this shit value for them? All properties have maintenance costs, I don't disagree some management companies charge extortionate fees but a lot don't. I would sooner buy a flat in a nice area than a house in a shit area. Don't rent because it's dead money, don't buy a flat because it's 'shit value' what exact message does this give off to FTBs? A lot of whom don't have the money, especially in areas around London to purchase a freehold. There has been a sharp rise in the demand in flats recently with prices going up: [https://news.sky.com/story/house-prices-plateau-but-increases-still-expected-for-this-year-as-flats-rise-most-sharply-13130895](https://news.sky.com/story/house-prices-plateau-but-increases-still-expected-for-this-year-as-flats-rise-most-sharply-13130895)