Buying studio flat but worried about future value

by Readers Question

11:50 AM, 2nd November 2015
About 3 years ago

Buying studio flat but worried about future value

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Buying studio flat but worried about future value

I am buying studio flat in Southampton for my son as he has just join the university over there.slaeability

The location of the flat is amazing just cross the road from the campus. The flat is 28 square meters and has its own separate kitchen & bathroom.

The Living/bed room is about 15 square meters with two windows. Has its allocated off road car park.

The flat is not mortgagable as it is under 30 Sq.m. I had it surveyed and put an accepted offer of £78.500.

I need an advice of whether it is sound investment after my son finished his Uni. as I am worried about saleability in future.

Many thanks

Mohammed

 



Comments

Neil Patterson

11:55 AM, 2nd November 2015
About 3 years ago

Hi Mohammed,

Some lenders minimum criteria on pure BTL is a minimum of 30 square metres and some I believe are 25 and then you can add commercial loans on top of that at an increased cost normally.

Yes a studio flat is always harder to find a mortgage for, but not impossible depending on other criteria. This will have an effect on value as it limits demand, but it is not the only factor so there may be positives that are greater than the negatives.

I know student accommodation is very popular at the moment.

Si G

13:25 PM, 2nd November 2015
About 3 years ago

Mohammed, id look at costs for ground rent and service charges as these may be disproportionately high but should be good for letting out but for onsale in that location may only attract b2let investors in the future (if there are any) as not suitable for ftb ers.

money manager

14:02 PM, 2nd November 2015
About 3 years ago

The price per sqm certainly doesn't make it cheap. In terms of the financials is it likely that a tenant would want the car space, could you let it out to a non-tenant?

mohammed diab

16:29 PM, 2nd November 2015
About 3 years ago

Reply to the comment left by "Simon " at "02/11/2015 - 13:25":

Simon
Thx. You are correct it is relatively high £100 GR and £650 SC/year that makes it £62/month

mohammed diab

16:30 PM, 2nd November 2015
About 3 years ago

Reply to the comment left by "money manager" at "02/11/2015 - 14:02":

You can rent the car park for non tenant provided the tenant does not need it. May generate £60/month

money manager

17:34 PM, 2nd November 2015
About 3 years ago

In my city centre location I get rent of around £14/sqm which would imply a rent of around £400 pcm. How does that compare to market (what ratio do you use)? If it is in line, the question as to future saleability is really one of the ability to find another cash buyer rather than value per se.

Claire Smith

17:35 PM, 2nd November 2015
About 3 years ago

Have you checked out the university website and spareroom to see what sort of rents are being achieved? Remember to factor in the changes to tax for mortgage interest. Generally students tend to share with friends, so a studio is probably only going to appeal to post grads.

Jonathan Clarke

23:39 PM, 2nd November 2015
About 3 years ago

I own studios. They are a niche property type for all the reasons already stated . The way i see it is for all the valid reasons you have decided to buy a studio now then in 3 or 23 years when you may decide to sell it there will be a clone of you who will want to buy it for the same similar reasons. So I wouldn't worry too much.

One of my studios I sold for asking price. Another I have just sold for a client investor for asking price. If the price is right someone will buy it. Capital values will always have a ceiling perhaps but they yield well.

Ive bought 3 properties for my 3 daughters and never regretted it. There is the added emotional aspect too as its an investment in property yes but perhaps more so an investment in your sons future. The latter is of course far more important and due to its excellent location will help him in ways which will be hard to measure in financial terms .Your investment is sound for those reasons alone
.


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