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    • Mimitigger
    • By Mimitigger 7th Dec 17, 2:40 PM
    • 2Posts
    • 0Thanks
    Mimitigger
    Advice please - FTB buying ex LA flat
    • #1
    • 7th Dec 17, 2:40 PM
    Advice please - FTB buying ex LA flat 7th Dec 17 at 2:40 PM
    Hello!

    Looking for advice please- I recently lost both my parents so am now in a position to buy in london but without any parental advice.
    Currently looking at a 6th floor ex council flat, the block is a fairly well known Modernist block in E2. It is architecturally admired although not as solid as the Barbican or Alexandra Road and unlikely to be listed. I know the area well and I think it is on its way up (despite there being those laughing gas canisters littered everywhere!) and crime for this part is relatively low and mostly confined to gangs (not ideal but London for you)
    My misgivings are whether there is still a stigma attached to ex council flats (most threads seem to be five years ago or more which is like 20 years in London property terms!) and so therefore is it a bad investment? I plan to live in it for the foresee future so if I have to wait for it to appreciate I can but is it better to buy further out ?
    And my other concern is whether I will very be able to sell it, sixth floor is not impossible to mortgage but can be trickier (due to my situation I am a cash buyer) so I wondered if any of you had your ear to the ground with regards to mortgage providers becoming more lenient about this?

    Essentially now that Right to Buy has mellowed and matured do any of you possess clairvoyance and have any clues about how the tide will turn??
Page 1
    • aneary
    • By aneary 7th Dec 17, 2:45 PM
    • 803 Posts
    • 699 Thanks
    aneary
    • #2
    • 7th Dec 17, 2:45 PM
    • #2
    • 7th Dec 17, 2:45 PM
    If the LA is the freeholder expect large repair bills.

    Also not sure you can get a mortgage on ex LA blocks...
    • burtbot1
    • By burtbot1 7th Dec 17, 2:54 PM
    • 4 Posts
    • 5 Thanks
    burtbot1
    • #3
    • 7th Dec 17, 2:54 PM
    • #3
    • 7th Dec 17, 2:54 PM
    Loads of people I know own ex-LA properties in London. I don't think it's got the same stigma as it would elsewhere in country. I also know people who have sold said flats really easily, so don't think that will be a problem either.

    Definitely check how mortgageable it will be though, with it being on the 6th floor. I understand you are a cash buyer, but you may not find it easy to sell on. Also - how many flats are in the block? If not many then that should be OK, but if there are loads, then you might get stung with a big repair bill if the council decide to make blanket repairs to the whole block.

    Also- does it have a lift? If so this may result in higher management fees. Smaller blocks with stairs are far cheaper to manage.
    • gingercordial
    • By gingercordial 7th Dec 17, 3:08 PM
    • 1,041 Posts
    • 1,026 Thanks
    gingercordial
    • #4
    • 7th Dec 17, 3:08 PM
    • #4
    • 7th Dec 17, 3:08 PM
    Hello!

    Looking for advice please- I recently lost both my parents so am now in a position to buy in london but without any parental advice.
    Currently looking at a 6th floor ex council flat, the block is a fairly well known Modernist block in E2. It is architecturally admired although not as solid as the Barbican or Alexandra Road and unlikely to be listed. I know the area well and I think it is on its way up (despite there being those laughing gas canisters littered everywhere!) and crime for this part is relatively low and mostly confined to gangs (not ideal but London for you)
    My misgivings are whether there is still a stigma attached to ex council flats (most threads seem to be five years ago or more which is like 20 years in London property terms!) and so therefore is it a bad investment? I plan to live in it for the foresee future so if I have to wait for it to appreciate I can but is it better to buy further out ?
    And my other concern is whether I will very be able to sell it, sixth floor is not impossible to mortgage but can be trickier (due to my situation I am a cash buyer) so I wondered if any of you had your ear to the ground with regards to mortgage providers becoming more lenient about this?

    Essentially now that Right to Buy has mellowed and matured do any of you possess clairvoyance and have any clues about how the tide will turn??
    Originally posted by Mimitigger

    First of all, sorry for the loss of your parents.

    I've been trying to think of architecturally admired/noted, modernist blocks in E2 and all I'm coming up with is Keeling House which is Grade II* listed. I would not buy due to the potential for enormous repair costs for lifts, cladding etc.
    • JoJo1978
    • By JoJo1978 7th Dec 17, 3:14 PM
    • 180 Posts
    • 172 Thanks
    JoJo1978
    • #5
    • 7th Dec 17, 3:14 PM
    • #5
    • 7th Dec 17, 3:14 PM
    I'm in ex LA (house) on an estate where it's probably 50/50 owners and tenants. You'd be hard pushed to tell which was which. Was slow to sell but no slower than others in my area that are not ex LA. Price was no lower either than non ex LA properties. So on the stigma point it's less of a thing now in my experience. Can't offer advice on your prospect being a flat though.
    Hamster in the wheel (London) 1999-2017
    Mortgage free since 2015; Pension pot sorted 2017
    Second career (what TBD!) 2018
    • Mimitigger
    • By Mimitigger 7th Dec 17, 3:39 PM
    • 2 Posts
    • 0 Thanks
    Mimitigger
    • #6
    • 7th Dec 17, 3:39 PM
    • #6
    • 7th Dec 17, 3:39 PM
    @gingercordial wow your knowledge is niche and thorough! It's the Mace Street estate, designed by Lubetkin, and is part of London Open House annually, but wouldn't be everyone's idea of beauty!
    Jojo are you in London? That is promising news.
    There is a lift and post-Grenfell there are fire safety works planned and a bill for that but either the vendor or EA is keeping mum about future and past works although they have been honest about the cost of the bill.

    How does it work out usually - do the private tenants foot the bill for works and the social tenants don't?
    • bouicca21
    • By bouicca21 7th Dec 17, 3:48 PM
    • 3,288 Posts
    • 4,100 Thanks
    bouicca21
    • #7
    • 7th Dec 17, 3:48 PM
    • #7
    • 7th Dec 17, 3:48 PM
    Have a talk with some lenders. Apart from the potential for high repair bills, we were told that only brick built blocks 4 storeys or less were mortgageable. But that was a few years ago and it may not be the same now or on your side of the River.
    • JoJo1978
    • By JoJo1978 7th Dec 17, 3:50 PM
    • 180 Posts
    • 172 Thanks
    JoJo1978
    • #8
    • 7th Dec 17, 3:50 PM
    • #8
    • 7th Dec 17, 3:50 PM
    Yes Mimi, I'm zone 3 so a bit out of town. Opp side of river but east side where you're looking. Consider future medium and long term planned transport improvements, that will either give you a resale bump or at least mitigate prices falling too far. Regardless of property type
    Hamster in the wheel (London) 1999-2017
    Mortgage free since 2015; Pension pot sorted 2017
    Second career (what TBD!) 2018
    • 00ec25
    • By 00ec25 7th Dec 17, 4:06 PM
    • 5,557 Posts
    • 4,948 Thanks
    00ec25
    • #9
    • 7th Dec 17, 4:06 PM
    • #9
    • 7th Dec 17, 4:06 PM
    you seem to have ignored the warnings from others. Comments from an ex LA house owner apply to a house, not to a 6th floor flat in what will remain an ongoing council tenanted tower block

    if you have cash because of an inheritance then check very careful whether someone will be able to buy from you in the future because ex council flats in tower blocks above a certain floor number are simply unmortgageable as no lender will touch them with a bargepole. Unless this is somewhere you intend to live for the rest of your life it would be foolish to buy a place you cannot sell!

    as for repairs, how it works is:
    the council selects the contractor who will do the work
    the contractor will have priced the job on the basis that the council is paying, so it will be a high cost

    the council then splits the bill between itself and the private owners. The bill could be for an enormous amount of money and your share of it could bankrupt you if you cannot borrow the money to pay it. How about £10,000 as your share towards the lift replacement? Councils will give you some payments terms, but they won't be anywhere as generous as mortgage terms would be and you can't control when the works are done. If the council decides the works will be this year, then this year they will be, and you will have to find the money this year.

    read:
    http://www.thisismoney.co.uk/money/mortgageshome/article-3640827/Why-buyers-struggle-mortgage-high-rise-homes.html

    http://www.telegraph.co.uk/personal-banking/mortgages/ex-local-authority-flats-spacious-trendy-and--40pc-cheaper---but/
    Last edited by 00ec25; 07-12-2017 at 4:14 PM.
    • LdnFtB
    • By LdnFtB 7th Dec 17, 4:08 PM
    • 93 Posts
    • 94 Thanks
    LdnFtB
    There's no stigma attached by buyers but mortgage lenders are quite conservative in this area, although they do differentiate between a tower block in Hackney and one in Hull. A lift makes a big difference in the mortgageabiity of a flat in a block over four storeys tall.

    I think the days of making big money on London property are over - if you're interested in getting a return on investment then perhaps you should consider getting a small mortgage and using some of the cash you would have used to buy to invest in another asset (equities, commodities etc).
    • AlexMac
    • By AlexMac 7th Dec 17, 5:29 PM
    • 1,963 Posts
    • 1,723 Thanks
    AlexMac
    OOec25 has pinpointed the major likely problem; the sheer cost of repairs in a multi-story block; not just lift repairs, but the massive cost of scaffolding for any external work.

    Until I read your line about "6th storey" I was about to make reassuring noises as I don't think much stigma attaches to leaseholds in LA blocks; at least as long as the area is half-desirable and assuming the estate isn't a total dump.

    I base this on having owned two local authority flats in an inner SE London borough; one for 20 years, the other for almost six. During which time, annual Service Charges have been very reasonable; £500-700 each p,a. on average, and , as there tends not to be a "sinking fund" for Council freeholds, not bad costs for cyclical repairs or one-off improvements. In my case, these works have been tendered out and supervised by the LA, an admin fee added and the total split by the number of flats in the block, with the Council covering their share for the public housing tenants, and leaseholders who have flats payinng their individual flat's %.

    In my case, costs have not been excessive, nor tenders rigged in a corrupt way (as used to be alleged). So, on avearge, I've had a bill of £5k or so every 5-10 years for things like window and door replacements, external decorations and balcony renewals. In my case, the Council even let me spread this over a year or more by DD; although they could have asked for it all up front.

    But- and it's a big but, I only bought because these were low rise; 3-4 storeys, with no lifts, constructed conventionally of brick (rather than system-built or panels) with pitched tiled roofs. I wouldn't touch a tower block or a flat-roofed block with a bargepole! And not just because of Ronan Point (google it) or Grenfell; but because of the likely costs.

    Early on in one ownership, the Council batched our 12-unit, 4 level block in with the adjacent Tower Block when pricing an external decor job. The consequent inclusion of their tall scaffolding sent the price sky high, so a tiny amount of painting to balconies and stairwells would have cost us £5-6k or so. Luckily, the 5 leaseholders were so aggravated that the Council backed down, but presumably that took the unit cost in the tower block even higher?

    So think long and hard about long-term bills. The LA should have formally consulted the current owner (who is obliged to declare this) about any planned work, and your solicitor will also check this with the freeholder. But these might only be declared when firmly scheduled; so you'll cop the cost of your flat's share of the Grenfell works and any other future improvements. (yes- the social tenats don't). And you may only discover these costs after spending a few hundred quid of solicitor and search fees.

    I've also enjoyed astronomical capital gains; several hundred % in the case of the 20-year-old purchase; but also, near-doubling of the value one bought 5-6 years ago. Prices have boomed and stabilised locally so that won't happen again in my case, but might on mace St, if, as you say, the area's still on the up. But with prices already in the £350-400k range, how much more can they inflate? Crystal ball...?

    Good luck with your decision - I guess you've already looked at Zoopla's calculator of inflation rates for flats on the estate over the past 1,5,10 and 20 years:
    https://www.zoopla.co.uk/house-prices/london/mace-street/
    Last edited by AlexMac; 07-12-2017 at 5:34 PM. Reason: writer's cramp
    • Lysimache
    • By Lysimache 8th Dec 17, 9:04 PM
    • 87 Posts
    • 38 Thanks
    Lysimache
    I did a Google search for the Mace estate. Wikipedia(!) says:

    'In June 2017, after the Grenfell Tower fire, further fire risk assessments on the high-rise buildings in the estate were conducted and the tower blocks deemed to be a 'high/substantial fire risk'.'

    You might want to worry about future renovation costs arriving all of a sudden.

    Edit: Sorry, just saw your later reply where you say there is a bill for this...
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