Buyer drops offer by £27k

leeshowes

Hi

I have a leasehold property in london that i placed on the martket in January. In February i accepted an offer for £197K.

In March my solicitor requested a sales pack from the Freeholder (A Housing Association). When the sales pack was sent to the buyer solicitor there were a few questions raised. One question was regarding a Fire Risk Assesment for the communal parts of the building. After 4 months of emails phone calls and complaints it came to light that the building did not have a Fire Risk Assesment (breach of Fire Safety Regs) and the leaseholders officer had been fobbing off my solicitor. When i raised the issue with the Housing Associations senior management the assesment was carried out immedeiately and sent to my solicitors.

Anyway, due to the incompetence of the Housing Association and the drop in property market the buyer has informed my estate agent that they are no longer willing to pay the original price for the property and are only willing to offer £170K.

Whilst i understand they buyer position i question whether the market has dropped that much in London. I also want to know if i have a case against the Hosuing Association for their incompetence? I am not desparate to sell i just could not be bothered letting the property. I have another property that i live at with my partner. This was my flat before we met and is now surplus to requirement so to speak.

I am considering re-mortgaging the property on a buy to let for a couple of years until the market stablises again.

mr.broderick

leeshowes wrote: »

Hi

I have a leasehold property in london that i placed on the martket in January. In February i accepted an offer for £197K.

In March my solicitor requested a sales pack from the Freeholder (A Housing Association). When the sales pack was sent to the buyer solicitor there were a few questions raised. One question was regarding a Fire Risk Assesment for the communal parts of the building. After 4 months of emails phone calls and complaints it came to light that the building did not have a Fire Risk Assesment (breach of Fire Safety Regs) and the leaseholders officer had been fobbing off my solicitor. When i raised the issue with the Housing Associations senior management the assesment was carried out immedeiately and sent to my solicitors.

Anyway, due to the incompetence of the Housing Association and the drop in property market the buyer has informed my estate agent that they are no longer willing to pay the original price for the property and are only willing to offer £170K.

Whilst i understand they buyer position i question whether the market has dropped that much in London. I also want to know if i have a case against the Hosuing Association for their incompetence? I am not desparate to sell i just could not be bothered letting the property. I have another property that i live at with my partner. This was my flat before we met and is now surplus to requirement so to speak.

I am considering re-mortgaging the property on a buy to let for a couple of years until the market stablises again.

Do whatever you want....

keeprenting

leeshowes wrote: »

I am considering re-mortgaging the property on a buy to let for a couple of years until the market stablises again.

Before everyone piles it to say it, here goes... It seems that you are assuming the property market is going to "stabilise" at a point somewhere near current prices, and this is a risky assumption to make. The property derivatives market is predicting an inflation adjusted fall of 50%. Shares in the major housebuilders have lost over 90% of their value - as I understand, several have lost up to 99% of their value. House prices are falling faster than at any time since the Great Depression. Very few people expect the market to "stabilise" in the sense that I think you are using the word "stabilise."

lynzpower

Yes, 27k is at least the drop one can expect in london on flats, my next door neighbour ( ex) fetched about 30k less than I did and I sold a year ago.

Im quite surprised that you are letting out a flat without your lender consenting, personally I would be phoning the bank and asking permission NOW, its so irresponsible that you are letting with incorrect finance in place.

kingkano

lynzpower wrote: »

Yes, 27k is at least the drop one can expect in london on flats, my next door neighbour ( ex) fetched about 30k less than I did and I sold a year ago.

Im quite surprised that you are letting out a flat without your lender consenting, personally I would be phoning the bank and asking permission NOW, its so irresponsible that you are letting with incorrect finance in place.

It's either too early for you or your having difficulty reading :rolleyes: - said in the kindest possible way of course! (I can't see anywhere the OP says they are letting the property - they say they MAY let it on a BTL mortgage though).

purch

which property derivatives market is this!?!?

Monopoly ??

oldMcDonald

If you decide to rent it out be sure the Housing Association will allow it. You will be sub-leasing your leasehold and all the HAs in my area will not allow this.

beer_tins

chucky wrote: »

and which property derivatives market is this!?!? please tell...

hahaha - let's just make things up and exaggerate

Also, all derivatives markets are priced in real terms, never "inflation adjusted". Let's be honest, no one knows how much the markets are going to fall by, for how long or when they will rise again and by how much! If the OP can afford to sit tight maybe BTL isn't such a bad idea in his case.

A derivatives market would maybe be a good idea though, it would provide liquidity, (which is the main cause of the current problems). It would also allow owners to hedge against losses to minimise the gamble of house prices. On the other hand, it will allow speculators in which may cause sharp rises and falls.

beer_tins

chucky wrote: »

a derivatives market would give people the benefit of locking in their losses in the event of a reversal. However the CDS market is used as an 'insurance' against default or hedges in most cases, the more extreme cases are when they are used as punts as the losses indirectly affect liquidity and de-stabilise positions in organisations.

but i love the fact that a previous post stated the comment about THE Property Derivative Market was in reverse as if one existed - what a clown!!!

Agreed! I'm sure there would have been some news about this fabulous market! In reality it would be very difficult to set up. If you think about it, you couldn't hedge against the value of "your" home as that would mean millions of financial instruments and be unmanageable. At best, you could have contracts based on many indices covering different property types and areas (as there are many property "markets", not a single one) and even then, unless it was done to at least a "postcode" level of detail, hedging would be difficult. On the flipside, the problem with this is that unless there is a fair volume of sales, the indices won't be very accurate. Say only 3 flats sell in one month and only 1 mansion the next month, the index would show a steep price increase!

Given the amount of investment in property in this country, I'm sure such a market would already exist if it wasn't so complicated!

JayZed

leeshowes, I'm no lawyer but I suspect you'd have a hard time making a case against the Housing Association. I would focus on what to do with your property.

You certainly don't want to accept the revised offer from your buyer. S/he was willing to pay £197 in February, and has now dropped the offer by 13.7% in a period when London house prices have declined by at most 5%. If £197 was a realistic price in February, if you put the flat back on the market now you may be still be able to get £180-185. That's a guess, though - I haven't seen the flat!

If you're in no hurry to sell, keeping the flat and letting it out may well be a better option, especially in the current market. The question of whether prices will fall in the short to medium term is irrelevant. The issue is not one of capital value but of yield - can you make enough by renting the place to get a return of at least 7% after mortgage interest payments, tax and other expenses?

If you don't think you'll need to sell the place for at least the next couple of years, I would look into this option. BTL mortgages are quite expensive at the moment, and you won't get one in this climate unless you have a deposit of at least 15% and the rental value is at least 125% of the mortgage interest payments. However, if you can meet those criteria, and if you can keep your costs down (e.g. by managing the property yourself), then you should be able to get a decent yield on the place, especially as I believe that London rents will rise over the next couple of years. Don't be unrealistic in calculating your costs, though, and budget for some unexpected expenses.

Sir_Humphrey

JayZed wrote: »

You certainly don't want to accept the revised offer from your buyer. S/he was willing to pay £197 in February, and has now dropped the offer by 13.7% in a period when London house prices have declined by at most 5%. If £197 was a realistic price in February, if you put the flat back on the market now you may be still be able to get £180-185. That's a guess, though - I haven't seen the flat!

Whatever you decide to do, this is complete balls. You need to undercut your rivals to avoid chasing the market down.

Even if you got a higher offer from a dumb buyer, I doubt the valuer would agree a month down the line.