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Why Buying a Flat in London Sent Us Financially & Emotionally Tits Up
Day one in our flat, How the living space looked for 183 viewings
Roll up, roll up, a white British woman is about to complain about owning a property! Come get a programme to this never-before-heard chronicle of woe! Before I launch into this story (promise I’ll spare you the dreary details and try to squeeze in some jokes at my expense), I just want to start by acknowledging that I’m well aware it comes from a place of privilege. While I have cried many a tear over some of the experiences, I need no sympathy. I’ve got a roof over my head, it’s a very nice rented one. Instead of serving up a sob-story, it is my intention here to provide a cautionary tale which might just stop someone from making the same mistakes we did, or else offer the comfort of an in-the-same-boat companion for others who recognize its sentiments all too well. It is embarrassing to fuck things up in life, but the truth is we all do it at some point.
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Moreover, just because you pass through the gates of a certain level of financial security, it doesn’t, or in my mind it shouldn’t, mean you turn your back on everyone else still reeling from the perpetual boot in the face. No matter where I end up living, I will always rail against our systemic housing issues, everyone should be doing the same. I know, I know, here she goes again: Red Katherine. I get it, but I’d prefer to be a fizzy socialist than a turncoat, but you may, as always, feel free to disagree.
I’m also not suggesting that my story is representative of the one in five England households that don’t own their homes (outside of social housing; more than double than at the 2001 census). As one of 4.6 million private renters, how I got here in my 40th year is just a dot on the spectrum. But I haven’t read many admissions of totally ballsing it up. Property ownership is meant to be a silver bullet and I hope to be a voice for anyone considering entering the gauntlet. Ok, longest preface ever. I’m sure it won’t stop people from finding offence in my words (if the state of the comments sections on other pieces I’ve written in this vein are anything to go by, property is an extremely touchy subject). To anyone not familiar with the British housing market, I apologise for the nomenclature. To anyone considering buying who needs anything clarifying, please do email me, or comment below and I’ll do my best to explain. Here we go.
To this date, I have organized 183 viewings on a 50m2 flat that my boyfriend and I purchased the week of the Brexit vote in 2016 and have been trying to sell since summer 2019. We put it on the market for its cost price plus the stamp and agency fees; there was never any crazy greed or speculation, we just wanted to sell it to release the equity to buy a family home. It is in immaculate condition, in zone two and less than three minutes’ ambling walk to the tube. It’s small, but then so is everything in its price bracket. It has everything that we thought would make it a great investment, but financially and emotionally, it has been the very opposite of that. While we will have some more money in the pot than we had seven years ago, there’s no doubt we could have done much better by putting our savings into an ISA. How the F did this happen? Investing in a London property was supposed to be the gold, triple A standard. You can’t go wrong, right?
Our story is one of both bad luck and timing, naivety and a system which seems, at times, tailormade for mental torture. I wince when I think of the mistakes we made; we were certainly fools. Equally, received wisdom in this realm is very much out of date. Families like mine would have been soaring up the ladder in any other time, but first Brexit, then Covid and the now increase in interest rates have squeezed a whole generation of first time property owners, many of whom have like us, stepped off the ladder entirely and gone back to private renting which as many of you will know has its own set of unique challenges.
So, a bit of context. Up to the age of 31, I was consistently in manageable debt. After my ex-husband left overnight, I was left in a financial quagmire, with nothing but our wedding crockery to show for the near decade of cohabitation; as two journalists around 30, we had no assets to divide. There were court summons and threats of bailiffs, I found it terrifying. Because of that time, as my heart healed, I wanted to establish financial control of my life. I quit the job I loved as an editor at Grazia and took on a well-paid role in a different industry which I didn’t. I saved obsessively for three years and with my now-fiancé reached the stage where we could afford a deposit on a little flat in Kilburn. So far, so socially mobile.
Three years later, when I became pregnant with our second child, a daughter who never made it earthside, we decided that the second floor, garden-free flat which had been perfect for two professionals who lived to eat, drink and be merry outside of the home, wasn’t going to work for a family of four. I know people do it; very few consider it to be ideal. In my addled pre-kids mind, I’d thought the flat had room to grow as it had a tiny, single bed sized second bedroom. I must have been on crack (mistake number one). However much you love urban life, squashing the energy of even one wall-bouncing baby mentalist into a bijou flat of that size is unsustainable if you own any actual goods which need storing. Like a cot for example.
When the initial valuations came in from various agents, there was a discrepancy of over £100k. If we had gone with the lowest valuation, we would have lost every penny which we’d saved for the deposit as well as all of the equity. We were stunned, especially considering we had purchased the flat for £25k under asking (we had thought we’d got a bargain, lol). There were several factors at play. Firstly, we’d only been living there for a relatively short period, although obviously in recent times, this would have been enough to recoup your stamp duty through an increase in property value. Secondly, we hadn’t fully understood how tiny the geographical area of comparative value was. When you try to sell a flat, an agent (and savvy buyer) will look at the cost per square footage of the other flats on your road, and maybe one or two either side and use that to set a sale price. For flats, especially in London, especially when they are small, the decorative finish often adds very little to its value. As long as it’s habitable and not totally rank, 50 square metres on a street is 50 square metres on a street. What’s more, even if a buyer accepts your price, a bank’s surveyor (the person who decides whether a mortgage is sound) might come back and say that it is over-valued if it can’t find similarly priced square footage in the closest two streets. We had been looking five or six streets away and the flat we chose, just slightly further south into the city, was cheaper and better finished than anything else we’d seen. We were wowed by its look and feel like total idiots. What we should have been doing was researching all the sale prices on the exact street on Rightmove and dividing by the square footage to get a proper sense of market value, then trying to find a property which had scope to add square footage. Just getting 5 or even 10% off the asking price isn’t enough to provide insulation—you need to be buying as far under the top sale price per square foot as you possibly can. Don’t get sucked in by solid wooden floors, nice marble bathrooms or original sash windows (these all start to matter when you’re talking about larger properties, but have very little impact on mini homes). If you are buying a flat you might want to sell at some point in the not too distant future, keep your eye on the prize, not the brass fittings.
Obviously, our timing was also hideously off. No-one knew what Brexit would do to our economy, but we should absolutely have pulled out and sat tight. I think that part of the reason we didn’t was that I was under the misapprehension that as first-time buyers we were somehow less than ideal candidates. Because we were young (well Haden was) and didn’t have any mortgage credit history, I’d internalized that we were low down the pecking list of potential buyers. But this attitude was all wrong. As a first-time buyer, you are an ideal candidate as you’re chain-free. Aside from competition with cash buyers, you are at the top of the tree and that gives you the power to be picky. Having spent so much time with estate agents over the past four years, many of them try to put you psychologically on the back foot at all times. Their entire spiel is about creating demand, often where it may not truly exist. Don’t fall for any of it. Stand firm, remember you are the one with the money and keep your eye on the trophy (price per square footage, if you had forgotten). There will always be another flat and losing out on a purchase is nothing in comparison to losing tens of thousands of pounds on making a mistake.
In terms of my own psychology, I also felt so lucky that we had finally got there. My parents were born in council houses, I was born in a rental. My (at that moment imaginary) kids were going to come home to a property their parents owned. It felt massive to me, a huge milestone achievement. I hadn’t ever analysed my drive and desire to buy bricks and mortar, it was just, as far as I could glean, an unquestionable route to success. This mindset led me to believe we should carry on with the sale no matter what, because even if there was to be a blip, I believed the wisdom that the housing market only goes up.
As for our initial bash at selling, the first hundred viewings happened between summer 2019 and January 2020. Over six months, I tidied my house, hiding nearly every trace of the fact we were bursting at the seams 100 times like some kind of deranged Hausfrau. We had several offers which fell through at various stages, but it wasn’t until just before Christmas that any progressed. Long term followers will remember me packing up the whole flat and putting boxes into storage, when on the day of exchange/completion (the buyer had requested these to be on the same day, never agree to this), the offer was withdrawn due to the developing Covid crisis. In the interim, we had also lost the baby and I tremble when I think about that time, I know that many of you will remember it. Everything had felt so close, the lovely home where we would have the space we so craved, the boy and girl. It had all felt like it was happening. But instead of moving into a red brick Edwardian in Harlesden, I spent the early stages of the pandemic unpacking boxes. And of course, no-one wanted to view the flat.
One of the biggest overarching issues we struggled with is that suitability for a mortgage stops you from making professional changes. My fiancé had been desperately unhappy in his job, but he had to stay put, because if he left, we wouldn’t be mortgagable. That’s ok for a few months, but when you start pushing into the years, it creates such an immense pressure. Being stuck in a property means you are stuck in a job, because underwriters won’t offer you a mortgage until you’ve done an ever-increasingly long stint at your new gig. If you want to start a business, you’re talking at least two years of being basically unmortgagable. Not being able to sell for whatever reason makes you feel you can’t expand your family, pivot professionally, or move forward in so many arenas of your life. The emotional toll had a knock-on impact on our relationship. It felt like the sword of Damocles was hanging permanently above our head.
In terms of the energy and time cost, I organized every single one of those 183 viewings on top of at least 50 cancellations, on top of responding to every single email from agents (we instructed four different agencies over the years) and solicitors. It’s hard enough to keep on top of your diary when you’re a working parent and some weeks I was making and cancelling 20 appointments a week while keeping the space presentable, just in case the next buyer was the one. It became a part-time job, and I lost my head with it. It’s been a hidden drain, constantly at the back of my mind adding to my emotional load with the power to send me into full-scale panic attack. They certainly don’t advertise anything like this in the sales brochure.
Six months pregnant again, now with my youngest son Ripley and having spent the majority of the year locked down in the flat, we reached the end of the rope. Now both working from home, stuck in total limbo, in the home which constantly reminded me of the hardest times of our life, we broke free and decided to rent a larger home further out while installing a single friend as a tenant. In many ways, this has been additionally ruinous. The rent we charged didn’t cover the mortgage and on top of that, there was the service charge, ground rent and all that business, meaning every month savings leaked away. We’ve also been renting in London for two and a half years, which is obviously more like turning the money tap onto full-piss.
We put the flat back on the market last summer and after another 83 viewings, we finally accepted a substantially lower offer in November. We were ready to exchange before Christmas but settled on 1st Feb and gave our tenant notice. Unfortunately, our fixed rate mortgage ended right in the eye of the storm and as we were under offer, we had no choice but to go with a variable in order to escape early repayment charges. Again, timing came into play, with the massive shift in interest rates leading to a staggering increase of 82% in our monthly mortgage payments. As a comparison, we pay the same in rent for a four-bedroom family home with over three times the square footage in a leafy area of West London.
For the past two months the flat has been empty as our exchange date has been pushed further and further back by endless, endless issues. I’m hardly a go-with-the-flow kind of woman anyway, but for the 22 weeks we’ve been under offer, I’ve been refreshing my emails and keeping my phone on loud every day, petrified that the buyer would pull out again. Our system, which allows a purchaser to put literally zero money or skin into this process for months and months on end, is so desperately in need of revision. In England, a third of all property sales fall through which means you live in PEAK ANXIETY until an exchange actually happens. And no matter which party reneges on the deal, you are forced to cover any costs incurred (like thousands of pounds of solicitor’s fees. There are no-win, no-fee options, but they come with a range of disadvantages). You could spend all the time, energy and cash and come away with absolutely nothing to show for it. Of course, you can also be gazumped (when the seller accepts a higher offer months down the road) or gazundered (or ‘chipped’) when a buyer lowers their offer at the very last minute. The whole thing is a national disgrace (one which Scotland, with a far more professional system does not share), and it’s hard to see who profits from it. A government working group was set up in 2018 to look at reforms, as of yet, nothing has changed.
We finally exchanged this week with completion to come later this month. We sold for a 1.8% profit, but when you minus the stamp duty, the solicitors fees (twice), the money lost from the rental shortfall (every month for two and a half years and more dramatically over the delayed exchange date), the estate agent’s fees and of course the years of rent, the balance sheet does not look good. It’s best not to do the sums. Again, to reiterate, I don’t need violins, I know that having any savings at all makes me fortunate and we had options which we chose not to take. We could have persisted with living in the flat or moved further out for cheaper rent (not doing so was the price of keeping our dreams alive, I understand that many people can’t understand what it means to us). I just want to admit that getting on the ladder didn’t mean we went anywhere up it. We’ve all been raised to believe it is the way, I’m suggesting we should all scrutinize this more. Finally, tread carefully, don’t rely on advice from anyone who has never bought in your circumstances (or in the past 10 years) and think far more about the longer term than turning a quick buck.
For us personally, there is no use crying over spilt milk; it’s an expensive lesson learnt. As for the future, we still have two and a half years on our rental contract. For sure, we won’t be buying anywhere to try to make money and trade up as this experience has shown it’s too much of a gamble in all senses. So we’ll have to wait until we can afford a home we want to live in forever, which may very well be never. Reaching a point of comfort with that is a WIP and I have to not think about how close we once were. In my heart of hearts, I do think we will work it out in the end, but I have been proven to be delusional about all kinds of things, so let’s check in seven years from now.
There are however, also many positives to the story. When we moved, Hade finally quit his job and set up his own business—giving up on being a mortgage candidate created the space for him to build something extraordinary. For me, the move into a rental house led to reconnecting with skills I learnt as a child and as a by-product, my career has pivoted into interiors and décor and inspiring other people to make their rentals into homes. The sky is the limit for where squeezing the lemons might go for both of us. Progress in life can be read in so many different ways, not just on paper or in bank statements. We are now both so exponentially happier and anchored both geographically and mentally. We are better partners, better parents, more content and fulfilled in our careers.
It hasn’t yet sunk in that we have our financial freedom back and that my job as a document courier, PA, estate agent wrangler, cajoler and disciplinarian is over. As with everything in life, not everyone can win and it’s all about the bigger picture. For so long everything was blocked, so I try to see the setbacks as the cost of clearing the way onwards. Property ownership is so central to the British character and our national identity, but the truth is it’s been in decline since 2002. The last time houses were this expensive in comparison to earnings was apparently 1876. If we don’t make it any time soon, it doesn’t mean we’re losers in mid-life. It’s just a sign of the times.
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