Looking at buying an Ex-Council +5 storey Flat

jamesgreenspace

Hello new here, told this is the place to go for good advice...

Have a bit of a problem, I am looking at buying a 3 bedroom flat in a 5 storey ex council block. The flat has been been renovated to a really high spec. The block is in good condition and the square ft is twice anything else in the area.

Everything was running smoothly until right at the last step (signing) the mortgage manager noticed that the block was more than 5 storeys and they do not lend on anymore than 4 storeys. This was very annoying as we have been in conversation for a month about the mortgage and he was aware of all the details.

I then went to a broker which found one company which would do offer me a mortgage (the abbey).

Now I am worried that if there is only one company which would offer a mortgage on the property, is it going to be hard to sell on and will i lose money? Is this to much of a risk? Any advice / experience?

Thanks

James

princeofpounds

More than one will lend, otherwise all the newbuild blocks in London would be unsellable, but it is more restricted and it will be a little bit harder to sell as a result.

Given my experience of London I wouldn't worry too much, but if it is in an area where such housing is more unusual you might want to think a little more. It's obviously hard to quantify such a thing.

Richard_Webster

It will depend on the area etc but typically there would not ever be many of such properties on the market, and because of questionable mortgageability, values at any given time will be hard to determine.

Presumably it is much cheaper than anything comparable in a private block - and that's the reason why. However it would be dangerous to assume that because it is X% less than a similar private flat now it will always be X% less.

Because of these factors these kinds of flats will always be relatively cheaper and you simply have to decide whether the cheaper price now is worth the risk factor in the longer term.

jamesgreenspace

Hi guys, thanks for getting back to me. The area in question is London Fields, Hackney. Housing is in high demand at what ever level of economic crisis...

Owain_Moneysaver

If people want to buy the flats there will always be mortgage lenders wanting to lend.

How much of the rest of the block is private and (perhaps more important) owner-occupied? Private rented neighbours can drag a block down as their landlords aren't always as involved in the property as owner occupiers.

Esp in London, ex LA blocks can be sought after because they offer good value.

pimento

It was The Abbey (then Abbey National) who lent on our 10th (top) floor ex-council flat in 1989. I think their only stipulation was that it wasn't built using concrete slabs.

We sold it in 2000 and as far as I know our buyer didn't have any trouble arranging a mortgage.

pimento

Forgot to say, the only thing to bear in mind with a block is the possible capital works charges if the freeholder decides the block needs a new lift or the flats new windows.

jamesgreenspace

There is about a 70/30 split (council/private)

We are also aware of the charges, they have been done recently, and we are taking on about 8 grand left to pay which was built into the asking price of the flat.

pimento

When the manager from the Abbey National came to value the flat (well, we were only borrowing £15k) he did say that there would be a limited re-sale market but we had absolutely no problem selling it even though we were the first in the block to buy and by the time we sold, there were still only four leaseholders out of 44 flats.

Flats on the estate (in Bethnal Green) come up for sale all the time and seem to sell easily enough.