Nightmare Scenario - Help/Advice/Suggestions Please

rob_kzk

Hi All,

I'll try to be brief but there's quite a bit to explain!

To give you the background; I own a leasehold flat which is on the ground floor of a converted victorian terrace house and which I thought was sold until today when the buyer pulled out, this is after survey etc. and very close to exchange. The reason that she pulled out was that my flat has a double cellar underneath and the buyer was going to convert this into another room. However, the buyers solicitors have today revealed that the cellar isn't in the title deeds of the flat and therefore I do not own it although the only access to it is through the kitchen in my flat. This is the reason that she pulled out and tomorrow I will be doing a lot of chasing to discover who actually owns my cellar (there was no issue made of this when I bought the flat).

The problem is me and my girlfriend wanted to buy a house together (thus the reason for selling the flat) and we have found the house of our dreams.

We really want this house and we thought everything was going smoothly until today. The current owners of the house that we want buy informed us at the start of March that they hoped to complete on the 28th April (there are two people above them in the chain, and effectively we would have been the bottom had the flat sold this week). However, we haven't heard anything from them since then, and we have been concentrating on selling the flat.

Now comes the dilema; we need to sell the flat to have the deposit for the house but we've got this thing with the cellar hanging over our heads now and we really need a quick sale to convince the sellers of the house that we are serious about it all.

Tonight we still want the house but we don't know how to do this. We've got a mortgage offer in place which is dependent on us getting the deposit of £35k from the sale of the flat and also getting rid of the mortgage for the flat (which we would have had we sold). Is there anyway that we can get around this? We've not got too much money to play with but we're willing to try anything to keep the house.

My girlfriend earns just over £25k, would she be able to get a mortgage anywhere to buy the house (£149K) on her own or is that asking too much?

One idea I had was to re-mortgage the flat for around £40K and then get a mortgage for the whole of the £149K for the house and then rent out the flat. Would this work and would we be able to get two mortgages between us (I earn just over £18K)?

Any ideas/advice/help would be much appreciated as we don't want to lose this house.

Thank you very much.

Rob

Doozergirl

What was your flat selling for? Do you know what would it rent for per month?

Wickedkitten

would it not say in your title deeds if you own the cellar or not?

rob_kzk

Doozergirl - flat was selling for £85K and I think it would get between £300 - £400 a month in rent.

Wickedkitten - all it says in the title deeds is that I own the ground floor flat. I also own the garden and I am the only one with access but it doesn't specify this. I would have thought that logic would say if the only access to the cellar is through my flat I would own it. What would be the point in the freeholder (who owns the first floor flat) owning the cellar when he hasn't got access and has never asked for it in the 8 years that I've been there?

Cheers

Rob

F_T_Buyer

I would speak to your solicitor and find out what you can and can't do with the flat. Then, either contact the original buyer to see if they are interested with a discount of some sort, or remarket the place.

If you remarket the place you need to make sure the viewers know what can and can't be done with the flat. If your after a quick sale, reduce the price. But if you are going to reduce the price, try contacting the original buyer first.

If your looking at renting it out, you need to look at all the financies - potential rent etc. Personally I wouldn't rent out the flat, it's more hassel than it's worth and the rent is unlikely to cover the interest on the mortgage.

I would avoid a bridging loan too, you could be stuck with two properties. This is a big no no as the risks are very high.

Edit:
The yield at £300 a month would be 4.2%. £400 = 5.6%. Hardly worth it IMHO after you take into acount voids and maintenance. The rent probably won't cover the interest on a mortgage, and any deposit you have would earn more money in a savings account.

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On a seperate issue, HIPs would have been good here. The buyer would have know the issues from the outset, so there would be no heartache today!

Doozergirl

It's not going to bring you enough rent to warrant a BTL I'm afraid.

How long did it take you to find your buyer? An aggressive remarket might pull someone in for you in time; don't forget that your vendor has to find someone too. It'll be a bit of a race, but if you're prepared to take a hit on the price then you may be able to sell quickly, especially as you're not expensive, so a few grand would make a big difference to a potential buyer. It would be the less risky option, and probably the cheaper option to bridging, BTL, second mortgage etc.

Maybe ask if your vendor would drop a couple of thousand to help you market lower too? Worth a try

Debt_Free_Chick

Replied on the other thread

BobProperty

rob_kzk wrote:

....What would be the point in the freeholder (who owns the first floor flat) owning the cellar when he hasn't got access and has never asked for it in the 8 years that I've been there?

I can answer that because I've almost been in that situation. When the flats were converted it was not economic to either create a basement flat or to turn it into habitable rooms as part of the ground floor flat. So the owner sold the part you have to you or your predecessor, and that's how it was divided up on the details that went to the land registry.