Am I being to hasty??? Subsidence on leasehold flat in nice area.

albmoney

I'm nearing the end of a property purchase for a flat in a nice part of London. The property had a short lease so I'm getting a discount already and will have to find 11k to update the lease.

However, I have just found out that there was a claim for subsidence about 5 yrs ago. The problem was remedied and there is a certificate to prove its ok etc... However it's freaked me out and I said to my solicitor I want to withdraw my offer.

The flat is leasehold and the subsidence and insurance stuff is done by the freeholder. So in some ways its not my problem but I think it will affect the value going forward and make the flat harder to sell on.

The bank are happy to lend even with that claim and the estate agent thinks I'm mad because property prices are shooting up and I wont get something like this again but I'm not sure.

I didnt do a full structual survey just a normal one and I only found out because my solictor asked the freeholders solictors if anything like that had happened. So I doubt I would have known otherwise.

The estate agent has asked if I'm interested in a price reduction. I dont know if I should touch this flat anymore?

Am I going nuts by pulling out?
(its cost me alot already in solictors fees so I'm a bit gutted).

hazyjo

Are they extending the lease as part of the buying process? If not, expect that figure of £11k to go up!

Yes, it probably will make it harder to sell. I would run a mile, although others on here would take the risk.

See if it's insurable first.

Don't listen to anything the EA says! He just wants a sale.

Doubt you'd have been able to do a full structural survey as it's a flat. Did you just have a valuation, or a homebuyer's report? (Not sure what you mean by 'a normal one'.

Think of the solicitor's fees/other costs as money well spent if it's uncovered something that might seriously devalue the flat. That's what you're paying for.

Jx

BitterAndTwisted

If the subsidence problem was remedied and any possible future problems will be the responsibility of the freeholders and their insurers what's the issue?

Don't listen to the agent: all they are interested in is securing their fee from the vendor. If the bank are prepared to lend on it, why are you making such a big deal out of this?

I wouldn't be deterred if it were me

albmoney

I had standard valuation that the bank requires. Its a small flat in a block of 3 other flats so I didnt think about a whole structual survey. I understand that this is the freeholders problem in terms of insurance etc... but it could be my problem in terms of the stigma attached to properties that have the word 'subsidance' attached to them.

At the end of the day I dont want to live there forever so I will be selling on in 3-5yrs. Will a buyer just run away when they hear the dreaded word even if insurance wise its not their problem?

I think I can get a discount, maybe 10-20k but I'm thinking does that really matter if no one will buy it of you? its in a great location so maybe some people will overlook it. I'm so confused now... I cant believe this is happening. :-(

suestew

albmoney wrote: »

I didnt do a full structual survey just a normal one and I only found out because my solictor asked the freeholders solictors if anything like that had happened. So I doubt I would have known otherwise.

somebody correct me if I am wrong, but when you sell it in the future I am not sure that you have to say anything about the subsidence as it was before you bought it?
It sounds like you can get a discount so I would definitely go for that.
As you have said, it's the freeholders responsibility if there is anything wrong in the future but sounds like it has been dealt with so you should not worry.

zzzLazyDaisy

I would be more worried about the cost of extending the lease, in fact I would want it doing as part of the sale, as the cost in two years time could be considerably more.

Have you checked out the MSE calculator?

http://www.moneysavingexpert.com/mortgages/extend-your-lease

The other thing I would be concerned about is the monthly maintenance cost. While it is true that it is the freeholder's job to insure the building, that cost is passed onto the flat owners. Many insurers will not insure buildings previously affected by subsidence, so the freeholder will have restricted opportunity to shop around and the insurer will have the freeholder (and therefore you) over a barrel in terms of raising premiums.

albmoney

suestew wrote: »

somebody correct me if I am wrong, but when you sell it in the future I am not sure that you have to say anything about the subsidence as it was before you bought it?
It sounds like you can get a discount so I would definitely go for that.
As you have said, it's the freeholders responsibility if there is anything wrong in the future but sounds like it has been dealt with so you should not worry.

It's all weird. I think it's the freeholders responsibility so the vendor doesnt have to say anything on the questionnaire. Either the vendor wasnt aware of the work done or its not their responsibility. I dont know.

I'm more worried about whether it devalues the price of the flat, not so much if the issue comes back.

albmoney

zzzLazyDaisy wrote: »

I would be more worried about the cost of extending the lease, in fact I would want it doing as part of the sale, as the cost in two years time could be considerably more.

Have you checked out the MSE calculator?

http://www.moneysavingexpert.com/mortgages/extend-your-lease

The other thing I would be concerned about is the monthly maintenance cost. While it is true that it is the freeholder's job to insure the building, that cost is passed onto the flat owners. Many insurers will not insure buildings previously affected by subsidence, so the freeholder will have restricted opportunity to shop around and the insurer will have the freeholder (and therefore you) over a barrel in terms of raising premiums.

I've sorted out the lease thing so thats ok. I've got a deal done so I buy the lease extension on completion.

I suppose the freeholder has an existing insurer in place as their are 3 other flats in the block. The service charge / gound rent is fixed for a while and is fairly low I think.

hazyjo

Don't 'suppose' or 'think'. And don't ask the EA. Get your solicitor to find out the correct current service charge and check it includes buildings insurance. If not, see what they charge for that each year as they might not be including it as part of the service charge.

Maybe the freeholder's problem in obtaining the insurance, but your problem when it comes to paying for it.

Jx

albmoney

hazyjo wrote: »

Don't 'suppose' or 'think'. And don't ask the EA. Get your solicitor to find out the correct current service charge and check it includes buildings insurance. If not, see what they charge for that each year as they might not be including it as part of the service charge.

Maybe the freeholder's problem in obtaining the insurance, but your problem when it comes to paying for it.

Jx

The service charge has been £300 for the last few years. I'll check to see if that includes insurance. Thanks.

Do you think its normal to buy a leasehold property with a previous subsidance claim, regardless of the severity of the issue?

neverdespairgirl

BitterAndTwisted wrote: »

If the subsidence problem was remedied and any possible future problems will be the responsibility of the freeholders and their insurers what's the issue?

The issue is - almost certainly, the OP has to pay for the insurance, as part of the service charge. So if it's very, very expensive, she has to pay for it.