Sunday, August 6, 2017

Real-Estate Tycoons?

What I was getting at yesterday, when I mentioned Dave and I debating whether to stay in our current flat, is that age-old question: Should we buy a place of our own?

We've been talking about it. We're committed to our current flat until next July, so there's no need to make a quick decision. But in my mind there are some barriers that have me thinking it's actually better to keep renting, at least for now.

One of them, as you all pointed out in comments yesterday, is the garden. We've put a lot of work into this space and we have some more ideas for things we'd like to do. And the simple fact is, wherever we buy in London, we would never be able to have a private garden this big -- not on our budget. This garden is immense by London standards, at least at our socio-economic level.

It's also very likely that as buyers, we'd have to move to another part of the city, which is perfectly feasible but not as convenient. It's nice to be able to walk to work. It's amazing to walk the dog to Hampstead Heath. I would hate to give those things up, but West Hampstead is a relatively expensive area.

There are the practical concerns -- as buyers we'd be responsible for maintaining a house, and given London's housing stock it would quite likely be 100 years old or more. We'd have to buy insurance. We'd have to budget for major repairs. We'd have to get a mortgage, and as two 50-year-olds, that could be a challenge, with our working lives abbreviated to the next two decades or less.

And finally, we'd have to put all our eggs in one basket. London housing prices are astronomical, and buying something here -- at least in our area -- would mean liquidating some or all of our stocks and other savings and pouring the money into a downpayment. Dave and I were looking online at half-a-million pound properties -- which, in theory, we could just barely afford -- and in our region that gets us a ground-level two-bedroom flat on a busy road. That is a hell of a lot of money to pay for something that is, frankly, uninspiring and not nearly as nice as where we live now.

Obviously, buying would be an investment and theoretically, at least, we would get all that money back and then some when we eventually sell -- whereas renting simply sends money down the drain. But when the real-estate options are as high-stakes as the ones in London, uncertainties rankle. What about, for example, Brexit? There's a lot of debate about whether London is poised to continue its international role when Britain exits the European Union in a couple of years. Is now a bad time to pour all our savings into London real estate?

Renting, on the other hand, gives us freedom. And we could say we're pouring our money away by renting -- or we could say we're buying that freedom. There is a purchase being made. By renting we can live in a convenient area in a house that we would otherwise never be able to afford. (If this place went on the market I'm guessing it would fetch, maybe, £900,000? Or more?) And we don't have children to educate or any need to build a "nest egg" to leave to the next generation. We only have to pay for our own retirement.

Dave is frustrated because the interior of our flat is showing some wear and tear -- not from us, but from previous tenants -- and trying to get anything repaired tends to be a time-consuming (if not entirely futile) process. But I think we should simply renew our pressure on the management company to fix what needs to be fixed -- and perhaps continue to overlook some of the cosmetic issues, like the cracked floor tiles in the bathroom and the fact that the bathtub's enamel has worn down to a dull coating that is frustrating as hell to clean.

Dave gets itchy for change. He likes to refresh and renew his surroundings. He wants to put more stuff on the walls and to paint, for example. I think we need to find ways to accommodate Dave's need for a fresher environment (which I, frankly, do not share) while staying put. Meanwhile we continue to build up some savings, we wait out Brexit, we enjoy our garden and we see where the future leads us.

But who knows. The discussion continues!

(Photos: From my walk with Olga in the cemetery yesterday. The middle picture is a common blue butterfly -- that's actually its name -- in the cemetery's butterfly meadow.)


  1. I understand your dilemma. London prices are absurd and I also worry about the Brexit effect - especially as my daughter and her boyfriend have just had an offer accepted on a two bedroom flat in Wood Green - £412,000. In Sheffield you could buy a four bedroom detached house with driveway and big garden for that.

    There are companies that re-enamel baths. We had ours done a few years back and it's still great. Couldn't you take photos of the bath, send them to the management company and say you will arrange the re-enamelling and deduct the cost from the next month's rent? Just a thought.

  2. Wow...I too see your dilemma...I think YP has a good suggestion...Good luck.

  3. Housing prices in some areas have become out of range for most people. As you pointed out , a down payment is big enough to take all savings. If housing prices were less I would know what to tell you in a heart beat. You have certainly done your homework on this one.

  4. does management not allow you to paint the walls or hang pictures? would rearranging the furniture satisfy Dave's need for change? that's what my son-in-law does. the kids would go to school and come home to find all the furniture rearranged (he worked nights).

  5. My Grandson lives in a flat in Bow in London, he works as an A&R man for Universal and so has to be right there. He would love to buy but as you say the property is so expensive, and old. He was saying that he would have to move out of the area and he so loves it there with Victoria Park just around the corner.
    We have rented our maisonette for 52 years and while others have bought and been spending money on repairs etc we have had to spend nothing.
    Its only in this country it seems that buying is thought to be such a good idea, on the continent renting is the norm.
    Your garden is worth everything, I know what I would do.

  6. If you are saving money while you are renting, then it's probably a good idea to stay. I agree with YP's suggestions. Housing prices are pretty crazy here in California. I'm not sure what's going on with housing economics anymore, but I worry about the next crash.

  7. Well, I fall on the rental side of the question. That money you spend on rent is NOT going down the drain. You are paying for services and for shelter and for that lovely garden and convenience and location AND yes, freedom. Home owning has done us well over the years- we've been lucky in that everything we've bought has gone up dramatically in price before we sold BUT, that's not always the case. Plus, there's so much work involved in home-owning.
    However, those are just my thoughts and I am not you nor am I Dave. We all have our own needs and that's what makes life interesting.

  8. I think you are in a better position by continuing to rent. I agree with all of Ms. Moons' reasons.
    Who knows what will happen to real estate post-Brexit.
    Continue to enjoy your lovely garden and the convenience of where you live. It is so much time out of your life to have a long commute to work.

  9. Wow, that gives you lots and lots to think about. These days, I feel like there are so many uncertainties in the world that making a major decision right now is quite difficult. I guess I tend to agree with Ms Moon too. I sold my house just weeks before the housing market went crazy. If I had waited a mere 45 days, I could have doubled me asking price. Consequently, trying to find a new place became impossible because prices had gone sky high and even though my real estate person told me I could get financing without any problem, my gut told me I couldn't afford that price range. So, I rented a place and enjoyed living there for many years. While all of this was going on, I had three different friends who lost houses because of the 2008 crash. I guess I'm not much of a gambler because I've been renting ever since.

  10. Your dilemma is well understood, though fifty is still young enough to buy a place to make your own. The prices in London are horrific, renting would be wiser if you are to stay there. Maybe , with Brexit, and Grenfell tower horror , the wealthy absentee owners being addressed somewhat...MAYBE it will all settle into more affordable housing. One never knows there are never any guarantees , are there. Since your flat is comfortable and OLGA likes it why rock the boat? Your garden would be very difficult to leave! Your neighborhood is so nice, that would be difficult to leave as well, as you say, location is perfect! I have used car polish on old tubs, it requires some elbow grease but makes a world of difference,

  11. I thought the butterfly was a blossom until I read otherwise! Very pretty thing.

    In the rent vs buy equation, have you considered a different rental, one where the management would be more responsive to requests? The company looking after your flat seems to be a bit difficult, judging from past issues you have written about, plus the ones in this post.

    I remember my first apartment after university; in direct contrast to your experience, I was permitted to paint whatever I wanted. Management supplied the paint and was very responsive to any other issues I had. The only negatives were that it was a third floor walk up and located next to a huge old church that rang the bells right outside my window at 10:45 every Sunday morning! It launched me a foot in the air the first Sunday I was there ... because I was a late sleeper on weekends ...

    Good luck with the decision; as you said, it's not a one-and-done conversation by any means.

  12. This is a subject of ongoing discussion at our house. We're currently living in a 40 foot RV, which we move north for the summer and south for the winter. But we're getting up there in age and we can't do this forever. We're thinking we'll buy, but then the question is where. We're high centered on where. Given how nice your garden is, that would be tough to leave.

  13. Buy if you find the perfect place. Otherwise that back garden is pretty hard to beat. I bet Olga agrees.

  14. Mike & I have always rented (out of necessity, mostly, because we had no nest egg). I have mostly enjoyed it, but I worry about our landlords deciding that they need to sell the place & us not being able to afford it & having to move. That's really the only uncertainty for us. Well, and I guess they could raise the rent out of our price range too!

    But I HATE moving! I would gladly stay somewhere forever, even if it didn't quite meet my needs :)