Is buying this flat a crazy risk?

AliceBanned

DVardysShadow wrote: »

I agree with lynzpower, you need to get the major works fixed. You will be better off with the price high and fixed than low and volatile. Is it only the journey to Kings Cross which makes the location attractive - or is there a college requiring student accommodation or any other aspect of the area?

Hi

It's on the edge of a market town in a pleasant enough part of Hertfordshire. It's a mix really. the estate it is on has a bad reputation but it is a mature estate with a mix of council and private housing built in the 60s and 70s. some of the ex council houses sell for £250k. I think the bad reputation is a mixture of snobbery and past problems, but it is a bit of a community. There is work in the area although like many towns, shops are closing down and the recession is showng a bit. There is a further education college nearby but the nearest university is 10 miles away and another one 20 miles away. Lots of people commute to London from here, but not so many from this estate I don't think. So it is hard to pin it down to a specific market. ?

I will ask some questions about the extra charges - I know this is a problem with lots of ex-council housing - people getting stung. thanks

AliceBanned

lynzpower wrote: »

I would recommend going to speak to a broker, about how easy it is to even get a mortgage on concrete builds. Even in peak market when I was an EA ( briefly) it was difficult to say the least.

It costs nothing to speak to a broker. i used these guys a few years ago and they were excellent all of market ( I used them to buy a SO flat- so not that straitforward and this was when SO was in relative infancy)
http://www.alexanderhall.co.uk/

Rest assured the minute the 5 years is up, you will get that major works bill. Selling with a major works outstanding can be a real turn off.

I also recommend you get a quote rather than an estimate- for example by suggesting that if you were to buy it you would want to pay for the major works asap to help with your budgeting yada yada. I have come accross major works being double what they are quoted, so it might make a difference to you.

What is the major works, is it windows and exteriors?

Thank you lynzpower. I have tried a few brokers in the past, the first one before the crash, and I had an offer from the then Abbey which was reasonable. Everything has changed since then of course and even then it was difficult with no other offer on the table for me.

I will contact the Housing Assoc about the estimated major works. I am not sure how much they will be able to move however, because I believe this is standard practice. Ihave spoken to a helpful lady there a few times so I will contact her again. The estimated major repairs:

external and communal decorations - £415
Paths and paving - £332
Access - £ £374
Brickwork repairs - £249
Stores (flat has two brick sheds) - £1247
roof repairs - £4575.

A few sundry things totally about £500; door entry etc.

So the roof is the main issue. It is fairly new - I can find out but I think it is under 5 years old.

It is a block of four, so whatever they charge me for they do the rest for the block as all the others are tenants. most of the street are tenants so I can't see them deliberately doing the work or overcharging for it as they pay the other share. What do you think? Thanks for your help.

lynzpower

Are the other tenants HA/LA tenants?

As far as IM aware, no they certainly dont pay any major works.

tommygirl3

I bought an ex-council flat off the open market in a few years ago in London, as was not in a position to purchase a 'proper' flat which would have cost nearly double.

Nothing wrong with the block of flats - mostly nice retired people with around 40% private ownership. Standard brick construction. So I didn't have a problem with mortgages.

Problems I soon discovered:

- Service charges increased from £1.2k pa to £1.7k pa from my first year living there. They blamed it on having to fix the lifts and employing another porter. I've heard from the local EA that the service charges for my flat is now nearer £3k a year.

- The remaining 60% of council tenants did not pay service charge or major works. The council's party line is that they apportion the charge based on the flat size. In reality, they stretch the total amount amongst leaseholders.

- Don't depend on the estimated major works bill. They always go over. I sold my flat once I heard rumours the council was going to re-do the roof, replace lifts, CCTVs, landscape the communal garden, replace windows, etc. Estimated bill was around £10k for my flat. Revised estimate is now up to around £22k and rising. Out of curiosity, I've been following the Residents' Association's campaign to enquire why the bill has risen and they suggested the council of giving the job to their mates and didn't invite other companies for competitive tender.

Obviously you'll have to weigh up the pros and cons. But if I was earning your wage and able to save up, then I'd wait to buy a non council flat.









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PasturesNew

£320/month is probably one of the cheapest rents in the country. I'd stick with renting it and saving. No need to buy at all, you could investigate other methods of investing and have the roof over your head assured - and as cheap as chips!!

getmore4less

£320pm on £57.5k is 6.7%

Thats more than a mortgage but you don't have the costs of ownership.

A 4% mortgage would be £192pm interest , so it only needs ownership costs of £128pm/£1536py and you are on the loosing end, at 5% thats down to £960.

AliceBanned

lynzpower wrote: »

Are the other tenants HA/LA tenants?

As far as IM aware, no they certainly dont pay any major works.

Thanks lynzpower - what I meant was the HA would pay for the other three flats. And they couldn't charge me more than 1/4 of the full cost so I doubt they would overcharge themselves. If that makes sense!

AliceBanned

tommygirl3 wrote: »

I bought an ex-council flat off the open market in a few years ago in London, as was not in a position to purchase a 'proper' flat which would have cost nearly double.

Nothing wrong with the block of flats - mostly nice retired people with around 40% private ownership. Standard brick construction. So I didn't have a problem with mortgages.

Problems I soon discovered:

- Service charges increased from £1.2k pa to £1.7k pa from my first year living there. They blamed it on having to fix the lifts and employing another porter. I've heard from the local EA that the service charges for my flat is now nearer £3k a year.

- The remaining 60% of council tenants did not pay service charge or major works. The council's party line is that they apportion the charge based on the flat size. In reality, they stretch the total amount amongst leaseholders.

- Don't depend on the estimated major works bill. They always go over. I sold my flat once I heard rumours the council was going to re-do the roof, replace lifts, CCTVs, landscape the communal garden, replace windows, etc. Estimated bill was around £10k for my flat. Revised estimate is now up to around £22k and rising. Out of curiosity, I've been following the Residents' Association's campaign to enquire why the bill has risen and they suggested the council of giving the job to their mates and didn't invite other companies for competitive tender.

Obviously you'll have to weigh up the pros and cons. But if I was earning your wage and able to save up, then I'd wait to buy a non council flat.

Thanks tommygirl3. this is looking more and more like my best option. The HA I'm with has hardly proven itself to me to be the most social of "social landlords" so far lol. so I wouldn't want to give them the benefit of the doubt. It's terrible that there is this loophole which allows councils and HAs to do this to leaseholders. I may wait and buy a small terraced house in a cheaper area in a year or two, hopefully freehold.

AliceBanned

PasturesNew wrote: »

£320/month is probably one of the cheapest rents in the country. I'd stick with renting it and saving. No need to buy at all, you could investigate other methods of investing and have the roof over your head assured - and as cheap as chips!!

Thanks PasturesNew. It is fairly good but I wish it were all rosey! I spend £250pm on train fares so the cheap rent is more or less cancelled out. Work nearer home generally pays a lot less than in London. I have found though that when I put my mind to it I can save £400 per month ie without much of a life so i can do this for a year or so and then see what I want to do. I think most of the messages on here make it clear that this flat is no bargain in reality. Thanks everyone.

AliceBanned

getmore4less wrote: »

£320pm on £57.5k is 6.7%

Thats more than a mortgage but you don't have the costs of ownership.

A 4% mortgage would be £192pm interest , so it only needs ownership costs of £128pm/£1536py and you are on the loosing end, at 5% thats down to £960.

Thanks getmore4less. The flat needs modernising in the kitchen and bathroom ideally as well. As a tenant I am not going to spend any more on it - I have spent £1.5k on it already to make it comfortable as HA flats always come stripped bare and totally unfurnished. But as a homeowner I wouldn't be happy with the condition it's in. I think I'd rather invest my money elsewhere - if I'm going to do up a place I want to have confidence in it first! Thanks