Would you buy knowing a section 20 notice was attached to flat?

chloecc

I currently have a mortgage on a flat of £100k (bought for £117995) on a 97% LTV which I rent out as is only one bed.

I am thinking of selling up as my outgoings are more than my incoming currently and I have to top up the mortgage monthly as the rent does not cover it and also have to pay the management company fees.

Problem is, whilst I've been pondering, the leaseholders have all been served with a section 20 notice for structural repairs, which could and probably will cost thousands of pounds.

Would you be severely put off by this? I would imagine my flat would entice a BTL type buyer as I say, it's currently one bed but I have the whole of the roof space and was told when I bought in 2007 there was potential to extend upwards into the roof space, though I have never requested any authorisation to do so.

I am trying to lok at my options and wondering if I am going to be able to sell at all now this has been served or if I should explain my current situation to my mortgage lender and see if I can transfer to a lower mortgage payment ie on an interest only basis or something like that?

Any help or further questions would be appreciated

slopemaster

Yes it would put me off.

Do you have consent to let on a residential mortgage?
If so, moving to IO might not be that great, as BTL rates will be higher

Edited to add - they won't lend more than 80% on a BTL mortgage, so it appears that's a non-starter

AdrianC

Is there any hint of your share of the cost of the structural repairs?

I'd consider buying, but I'd be looking for that amount off the usual value.

AlexMac

The S20 will, as you know, be discovered in the course of any purchaser's solicitor's standard enquireis to the Council as freeholder. Having been in that position (I own two little ex-council BTLs) I would be hacked off if I suddenly discovered a big pending unknown bill, and thus, I would probably walk away at that stage, miffed over having lost a few hundred quid in legal and search fees. I'd have thought that while 'caveat emptor' applies, a large unknown ticking time bomb is something the vendor's agent should have mentioned?

So, given that it costs you nothing to put it on the market, why not chat to the estate agent, and make plain that you are prepared to swallow some of the as yet unknown costs- possibly via a 'retention' which your solicitor will hold against, say 75% or more of whatever the eventual bill is?

In a lesser parallel case, I was pleasantly surprised when I found that the vendors' solicitor had, unasked, held back a few hundred quid against the likelihood of an end-of-year council annual Service Charge adjustment when I bought in Feb/March, a month or so before the final bill was known.

propertyman

And as the works are likely apparent to nay buyer, that fact that it is being dealt with is reassuring.

As always there is a price for everything. realising the potential to extend/convert will increase your sale price and offset the cost of the works and its impact of the major works on the price.

chloecc

I've no idea but I'm guessing about £20k? Could be way over estimated but that's my worst case scenario of thinking currently.

I don't understand what you mean by a retention against it being held by the solicitor? I am pretty sure that I and also the other leaseholders wouldn't have that type of sum available to us to pay for the works and surely they wouldn't be undertaken until they had the money for it? So how would this usually work?