Ex-local authority flat and major works bill - HELP!

suljka

olly300 wrote: »

The reason to avoid buying with a lift particularly if it's ex-LA is the service charge is generally higher and the cost of works on the lift are expensive. Plus the people I know who have flats with lifts in them have managed to get trapped in their lift. :eek:

Though you can get high service charges even if the flat doesn't have a lift as the building could be listed and/or you have a porter and/or the grounds have really nice communal gardens.

There seems to be no logic whatsoever in the way service charge costs are calculated - I've seen bills for the buildings that don't have any of the "commodities" you mention above and their service charge is extremely high. I've also seen the ones that have lift, but the cost of yearly maintenance for the lift is only £60, about 5% of the entire service charge and much much lower than "administration cost" part of that same service charge?! The most curious one is a 15 floor tower block where lift maintenance is not even listed in the service charge?! Mind boggles :eek:

The bottom line is I suppose that one should be aware of it and make sure they know what they're buying into... lift or no lift :rotfl:

suljka

scooter_chick wrote: »

Hi Suljka,

I recently sold an ex-LA flat that was undergoing major works. As other posters have said, there is a prescribed process that the LA must go through if the cost to the leaseholder is going to be over £250. You need to find out if the Section 20 notice has been issued & see a copy of that before you can progress.

When I sold mine, the agreement was that the buyers put in an offer based on the works having been done & then paid for by me. So they paid 'full' price - what we negotiated the flat was worth with its new roof in place. The solicitors have then held over a retention to the value of the Section 20 notice. If the final bill is lower, I get the difference. If the final bill is higher, then the buyers make up the difference - as others have said, the bill belongs to the property (or the owner of the property on the day the bill arrives).

In my case, the leaseholders had joined forces to put up a bit of a fight, and the Council had verbally revised their estimate to about £2k below the Section 20 figure. So my buyers were reasonably confident that the risk they were taking of a higher bill than the retention was low. Also, the Council are giving resident leaseholders the option to pay over 5 years interest free, so if they do need to pay something, it should be manageable. Final bill is not in yet (works were completed back in the spring), so no idea where it'll end up.

Thanks scooter_chick - this is really valuable information :T and it is good to hear a first hand experience albeit from a different side of the fence (i.e. sellers perspective rather than buyers)



I gather that you have provided the info contained in Section 20 notice to your buyer freely, so that they were able to make informed decision on their purchase? The problem that we have is that our seller (via their agent, EA) doesn't seem to be so forthcoming with the info, even though they say they have received it in the past, apparently they no longer have it?!
As this is such an important information relating to this purchase, and the seller is taking this "hypothetical" cost in determining their asking price, we are very unhappy by their reluctance to provide the info or to understand our want for it... unless they are trying to hide something?

What you told me about the way the process works with a retainer held by solicitor makes it even more vital that we mus receive all the info about it, otherwise any price we'd potentially agree on could be totally disproportional, seeing our seller keeps referring to the major works cost in their pricing? Thank you for invaluable piece of information - it confirms that staying firm on this issue is a key for us.



Although I must say I am amazed by the arrangement, because it does seem a bit unfair to the buyer, no offense .

It is basically a win win situation for seller (good on you ) and a lose lose situation for the buyer, as buyer is the one who will most likely be worse off in the transaction. If you look at it this way - as the retainer is based on the estimate, then unless the final cost comes to the exact same amount as the estimate, buyer looses by either having to pay extra cost, or if the seller ends up getting a refund because estimate was too high, they are in effect getting reimbursement for something that never really paid for anyway, so to speak... if you see what I mean. Unless the buyer got a really, really good deal to start with...

But well, each person for themselves - world isn't a fair place... that is where solicitors come in place So good on you and here's to hope the cost will come to be less than estimate :T ... or at least break even



Many thanks for your help

scooter_chick

suljka wrote: »

I gather that you have provided the info contained in Section 20 notice to your buyer freely, so that they were able to make informed decision on their purchase?

Yes I did. As the Section 20 had been served, it would have come up in the conveyencing, what's the point in trying to hide it? Makes more sense to be honest & up front from the start!

suljka wrote: »

What you told me about the way the process works with a retainer held by solicitor makes it even more vital that we mus receive all the info about it, otherwise any price we'd potentially agree on could be totally disproportional, seeing our seller keeps referring to the major works cost in their pricing? Thank you for invaluable piece of information - it confirms that staying firm on this issue is a key for us.

That was the process we agreed for my sale. I suppose there's another way to do it - e.g. you take the cost of the works into account for your offer & then just pay the bill yourself when it arrives. However, the retention worked best for me & my buyers

suljka wrote: »

Although I must say I am amazed by the arrangement, because it does seem a bit unfair to the buyer, no offense .

It is basically a win win situation for seller (good on you ) and a lose lose situation for the buyer, as buyer is the one who will most likely be worse off in the transaction. If you look at it this way - as the retainer is based on the estimate, then unless the final cost comes to the exact same amount as the estimate, buyer looses by either having to pay extra cost

No offence taken But I assume the buyers took that risk into account when they were making their offer & made their offer accordingly. Like I say, I gave them all the info they needed.

And actually, I think I did lose out in some way. My buyers got a flat with a nice new roof etc. that I paid for & they get the benefit of. There's more than one way to look at it!

suljka

scooter_chick wrote: »

Yes I did. As the Section 20 had been served, it would have come up in the conveyencing, what's the point in trying to hide it? Makes more sense to be honest & up front from the start!

You'd be surprised. I looked at couple of properties since and there were some doubts about two of them having the notice served, but the sellers were incredibly secretive about it?! As you say it will come up in conveyancing, so why not be upfront about it? Unless their thinking is that because at that point we'd already have paid conveyancing fees we'd be more reluctant to pull out when we already incurred costs, surely people don't do that

No offence taken But I assume the buyers took that risk into account when they were making their offer & made their offer accordingly. Like I say, I gave them all the info they needed.

And actually, I think I did lose out in some way. My buyers got a flat with a nice new roof etc. that I paid for & they get the benefit of. There's more than one way to look at it!

Well yes, there're always more ways to look at things that's the beauty . And your case does seem slightly different as you seem so much more reasonable about it :A

In our case the seller (via EA) is insisting that the price they are asking (totally overblown!!) is a direct result of the major works bill, therefore in effect we'd be very much paying for that bill, only through our mortgage rather than directly, at least at this stage. And as that bill is only estimate and they didn't provide any documents to support the estimated figure, we'd be really opening ourselves up for some serious advantage taking on their behalf. They are also saying that the exact amount of the bill is not that important for us as they'd be paying the full amount of final bill, but as already outlined by few people here, that would be near impossible contract clause to enforce once the sale is completed... they'd be gone off into the sunset and we'd be left holding the bill :eek:
That is the win win situation for the seller I was referring to, as in our case it would be exactly that, i.e. seller says major works bill is £££ and demands £££ to be included in the purchase price, that is then kept as a retainer. If the final bill is ££ they get the money back and in effect we are paying them some more. If the final bill ends up as ££££ we have to pay again, so we end up overpaying again.
That is not a deal we'd be happy with, so we are walking away...
There will be other properties I'm sure, and other more reasonable and cooperative sellers I hope As for this one... what goes around, comes around...