Renegotiating price after valuation

spoooon

Hello all. I need advice on my purchase of a leasehold flat. I had an offer accepted on a repossessed flat for 450k which was also the asking price. I outbid one other in a sealed bids process. The vendor is the appointed receiver for a company that owns the freehold for the block of eleven flats. My solicitor is in the process of carrying out searches. HSBC turned me down for a BTL mortgage which I was half expecting since I have no income. I will now pay in cash. I had Countrywide carry out a HomeBuyers Survey and that came back with a 425k valuation although the report itself is ok. Having spoken to neighbors and managing agents it does appear 425k is closer to the mark. I have also discovered that 5 other repossessions in the block will be hitting the market soon (as soon as they become vacant). I have also found out that the receiver has done away with the managing agents for the block. They plan to sell the freehold to the leaseholders once they have disposed of the 6 flats (this could take a while). I now wish to renegotiate the price lower to 425k.

1. Is it best to do this via the a) estate agent, b) solicitor, or c) vendor?

2. Should I be sharing the HomeBuyers report with any of above?

3. Any negotiating tips or thoughts given above circumstances?

Thanks!

G_M

1) any or all

2) it will add weight to your claim the property is worth less

3) Just reduce your offer and wait.

Thrugelmir

spoooon wrote: »

3. Any negotiating tips or thoughts given above circumstances?

Why did you make a sealed bid of £450k if you had no intention of honouring your offer?

Fire_Fox

I wouldn't purchase a flat in a block where 50% are repossessions and there is are no managing agents in place. Who is organising the repairs and maintenance? Who is paying for them? Which phantom gullible leaseholders are they thinking of dumping the freehold on? Do you know anything about collective enfranchisement and running a management company?

spoooon

Thrugelmir wrote: »

Why did you make a sealed bid of £450k if you had no intention of honouring your offer?

I had every intention, but hard to just expunge a 25k difference from one's mind. I want to buy at the fair price. Sealed bids, like any bids are subject to survey.

spoooon

Fire_Fox wrote: »

I wouldn't purchase a flat in a block where 50% are repossessions and there is are no managing agents in place. Who is organising the repairs and maintenance? Who is paying for them? Which phantom gullible leaseholders are they thinking of dumping the freehold on? Do you know anything about collective enfranchisement and running a management company?

Why do you say phantom gullible leaseholders? The 6 flats they are selling were part of the freehold, and they are writing new leases on these to match the other 5 which are already individually owned. I guess they need 11 leases in place before offering the freehold? I was thinking of bidding for the freehold if cheap enough. Don't get me wrong, i welcome your post, being told where you are going wrong is far more useful than being told what you're doing right!

Fire_Fox

spoooon wrote: »

Why do you say phantom gullible leaseholders? The 6 flats they are selling were part of the freehold, and they are writing new leases on these to match the other 5 which are already individually owned. I guess they need 11 leases in place before offering the freehold? I was thinking of bidding for the freehold if cheap enough. Don't get me wrong, i welcome your post, being told where you are going wrong is far more useful than being told what you're doing right!

I would be wary of believing what the neighbours say, check land registry or check with your solicitor. The six flats may have been owned by the freeholder but that does not necessarily make them part of the freehold title. At the moment half of the flats belong to a company who doesn't give a monkeys what repairs and maintenance are done and want to pay as little as possible. If they sell they will belong to BTL landlords who want to pay as little as possible, or FTBs who want to pay as little as possible. That's assuming buyers don't pull out when they learn the freehold is in receivership.

The freehold must be offered to the leaseholders if it is offered for sale, they can nominate one person/ company or a small group to represent them. I live in a block full of BTLs, collective enfranchisement is impossible. The whole process of offering is slow, meanwhile you don't have proper management in place. Are you aware that the freeholder has to do repairs and maintenance even if the leaseholders do not pay their service charges? There is an enormous amount of legislation to negotiate and it is a thankless task, leaseholders won't bother to find out what they are paying for they will just whinge.

spoooon

Thanks again for your post. As a prospective leaseholder, I am indeed concerned that no managing agents are in place. Selling all 6 flats could take a very long while, perhaps years even. The 2nd flat has been on the market for 6 weeks already. Things could get very messy in the building during that time. I am banking on things being sorted out eventually. Apart from the obvious neglect are there any other problems in buying a leasehold from a bankrupt freeholder? The draft contract has both the freeholder's name and the receiver.

Are you saying that if i buy the freehold, the leaseholders can refuse to pay service charge and there is nothing i could do about that? I was thinking of negotiating a deal to take over the freehold in the future once all flats are sold at a price agreed today.

Fire_Fox

"That's assuming buyers don't pull out when they learn the freehold is in receivership." Lenders and conveyancers don't like messy maintenance arrangements. You don't think the neglect is a massive problem?? If it goes on long enough it could make the flats unsaleable to anyone but a cash buyer! The new freeholder would them either have to fix anything dangerous/ urgent out of his own pocket (after applying for special dispensation from the LVT) then claim it back from the leaseholders. Anything not dangerous or urgent costing over £250 per flat the freeholder would have to formally consult on over a period of months.

I didn't say nor intimate there is nothing a freeholder can do, read what I post not what you think I mean. You can take legal action against non payers usually via the LVT then have their lender pay the debt, PITA and in the mean time you will still be have bills to pay.

You can't just randomly negotiate to purchase the freehold. "The freehold must be offered to the leaseholders if it is offered for sale, they can nominate one person/ company or a small group to represent them." As I asked do you know anything about collective enfranchisement?

Really you need to research this yourself, not get all your information from an unqualified stranger on a forum. Any (prospective) owner of a leasehold flat should know a lot more than you do about the rights and responsibilities associated with that. You certainly should not be spending approaching half a million pounds on one overpriced flat.

spoooon

I know that collective enfranchisement is where the leaseholders can get together and give notice to the freeholder that they intend to take over the freehold. There are rules in place that determine whether the leaseholders and building qualify for this type of action. Surely anyone is free to buy the freehold as long as the current leaseholders have right of first refusal?