House buying - Getting allowance from vendors for repairs

BigAdd

Hi all,

In a nut shell I've had an offer accepted upon a house and a survey shows that it's in need of some work that the vendor is negotiable in paying towards (if not in full).

My solicitor mentioned asking the vendors for an allowance to complete the repairs so that we could move in sooner, rather than delaying the purchase.

So for example they effectively sell the house to me for £250k and give me £10k back.

Is this possible / legal ? How would it work ?

If I were to ask the vendor to undertake these repairs before we complete this would delay things significantly. If I reduce my offer not only will I have to go through mortgage application again but I'll need to raise the money to undertake the repairs.

Another problem I have is that I've just sold my house so will be staying at my parents with my family. The mortgage company will hold my current mortgage offer from my old house for only 3 months and I'm not wanting to lose that deal (base rate tracker).

Any advice would be appreciated.

Fire_Fox

Welcome! What does your solicitor mean by an allowance, a reduction in price or did he specifically suggest the £10K deal? You buy the house for £240K otherwise you are risking being accused of mortgage fraud. You should not need to reapply for the mortgage, just contact the lender to amend the purchase price, that's standard practice. Have you asked your lender about all this?

Don't ask the vendor to complete the works, they have no vested interest in getting quality contractors, just quick and cheap ones. You will need to raise the money for repairs, do you have rainy day funds? Could you get 0% credit cards?

BigAdd

Hi Fire Fox,

My solicitor inferred that there may be some legally acceptable way of the vendors assigning a sum of money post completion that would need to be used to perform any repairs.

I know there's some legal aspect where you're only allowed to give ~£3k before it becomes taxable, but I'm not sure whether there's a solution that would allow a larger sum of money be allocated.

The house is valued more than the purchase price, and I'm certainly not wanting to commit fraud but if they were open to paying for the repairs (and this was legally agreed) would this be able to be undertaken post completion rather than having to delay the purchase until they had all the work resolved?

As for rainy day cash.....I'm using that to pay for the sale and purchase of the move....and that's heading towards the £10k mark

Fire_Fox

We are working in the dark here. Maybe go back to your solicitor and ask straight out what exactly they were implying? Then ask your lender whether they find such a scheme acceptable? The system you are suggesting sounds very similar to a scam for some people to get a 95% or 100% mortgage by artificially inflating the purchase price - lenders take a dim view of that. But perhaps your solicitor knows a lender-friendly variation.

Rainy day cash should be available AFTER you have paid out for your deposit and all the costs of buying. If you don't have three months mortgage payments, a general contingency in case your boiler blows up the first winter, money for mini renovations such as new shelving then IMO you are overstretching yourself. Please think carefully about this house - if you fall ill or injured and cannot work, are made redundant unexpectedly the state will not pay your mortgage for the first three months. You cannot run your own home on £70 a week JSA/ ESA (assuming you are 25+).

One option is to take in a lodger for extra income to complete the works, depending of course if the house is safe and the works are not too noisy or dirty. The income is tax free up to around £4K a year IIRC. Could you put a smaller deposit down or would you have to reapply for your mortgage? Do you need to exchange contracts or to complete to hold onto your mortgage? Could you have a longer time between exchange and completion where the work is done?

BigAdd

Hi,

Yea ...certainly does sound like a scam doesn't it...but there is a degree of plausibility to the solicitors suggestion....I guess it's just knowing the legal aspects and as to whether anythings feasible from that perspective.

Thanks for the comments regarding my finances .. I don't have any worries there, no debt and cash tied up that I can get to immediate is need be. The £10k was purely for cost of moving and I have more than adequate insurance should anything happen. :A

The mortgage company will hold the rate from the time I complete my sale for 3 months before I have to use their standard market rate. Ideally I'll need to complete on the purchase of the new house within that time frame.

I'll ask my solicitor again as to whether there are any legal solutions to getting the repairs undertaken.... I just thought someone may have gone through a similar situation.

Certainly appreciate your input though...it all helps

withabix

Just pay £240k for the house and pay £10k less deposit.

Then you've got the £10k for repairs left from your deposit.

vegasbaby100

Hi

We sold one of our houses and it became it was apparent that there was some damp that needed dealing with and the buyers were in a rush to move in so, we came to an agreement that I organised the work with the builder and paid them up front for the works to be carried out after complettion.

I am lucky though that i am in the construction trade so new who I could and could not trust.

HappyMJ

withabix wrote: »

Just pay £240k for the house and pay £10k less deposit.

Then you've got the £10k for repairs left from your deposit.

It probably won't work like that....they may be paying £250,000 with a 10% deposit. If they were to buy it for £240,000 they would only have £1,000 in cash for the repairs but the mortgage would be £9,000 less.

Fire_Fox

BigAdd wrote: »

Hi,

Yea ...certainly does sound like a scam doesn't it...but there is a degree of plausibility to the solicitors suggestion....I guess it's just knowing the legal aspects and as to whether anythings feasible from that perspective.

I'll ask my solicitor again as to whether there are any legal solutions to getting the repairs undertaken.... I just thought someone may have gone through a similar situation.

Certainly appreciate your input though...it all helps

It's definitely worth exploring. A scam proposed by an unqualified estate agent who only gets paid by the vendor if a house sells will hopefully be different to a scheme proposed by a professional solicitor working for you.