FTB: Is a Leasehold Towerblock flat a bad idea?

adhara

First post! I've googled this forum so much as a guest, I figured I'd finally make an account and ask and answer questions properly

I live in Birmingham, right in the centre, and right now I'm comfortable staying in the same area for 10+ years timeframe. I'm young (early 20s), no intention of ever having kids (in the same timeframe) and since I rent in a high rise block, am pretty happy continuing to live in a block.

I understand the animosity towards leaseholds, but you don't get much of a choice with big tower flats? And the only house choice in my location is pretty grotty and clear from photos that it's a def. fixer upper.

As long as the lease has been gone over with a fine tooth comb, my solicitor has found out everything necessary and everything looks ok.... would there be a reason to recommend not purchasing leasehold?

EDIT:
I think I better clarify what I mean by Tower block, as I don't necessarily mean specifically council flats or ex-council flats. It's just that a lot of the flat questions I searched on MSE seemed to be regarding flat conversions (where there was less than 10 flats in one building), in which case the answer always seemed to be create a share of freehold with the other leaseholders. This answer is not exactly feasible when you know there are 100+ flats in one building!

Thank you in advance!

silvercar

Problems arise when the landlord of the block intends spending £££ on the block and the leaseholders get large bills. There are also issues with getting mortgages on tower blocks.

jbainbridge

As silvercar says the main worry would be a bill for major works e.g. the lift needs replacing (mega bucks in a tower block). Also if it is council owned and they decide on a major refurb e.g. replace all the windows. Any leaseholders pretty much get fleeced as you have no choice but to pay.

I would proceed with caution and do some more research.

Cautious_Optimist

Don't do it.

adhara

silvercar wrote: »

Problems arise when the landlord of the block intends spending £££ on the block and the leaseholders get large bills. There are also issues with getting mortgages on tower blocks.

jbainbridge wrote: »

I would proceed with caution and do some more research.

Completely agree, I will definitely be looking into the Freeholder/Management company's spending habits well before suggesting my interest in any property.

(I'm (incredibly) lucky that my family will gift me the money for the purchase, which adds another tasty layer of worry about investing 'appropriately')

Bluebonnie

Look out for a block where the freeholder is a company in which all leaseholders have shares. Thus, freeholder is not the council, and not some outsider (eg major property firm, or even its original developer).

Also, a look for a block managed as in the first option above, where there is a sinking fund, so there is (a) planned maintenance, and (b) a buffer against nasty surprises. The freeholder may employ a managing agent, to act on its instructions, but decisions rest with the freeholder.

It's not true that nobody lends on flats in tower blocks. Money grabbing banks quite often don't. A large building society probably will.

You will need a solicitor to look carefully at the lease and the freeholder's accounts, and then to advise you.

StumpyPumpy

I've posted this before on another thread but I think it stands repeating for anyone looking to buy a leasehold in a tower block.

The residents of a development around here, built in the 1960's, have each been presented with a demand for £80k+ for essential maintenance. This is about 1/3 of the current market value of their properties. Their lease is such that they will forfeit it if they don't/can't pay. It really is necessary maintenance and has been in the pipeline for quite some time, but the quotes given to the residents were in the region of £35k and they now have 2 months to find the difference. Cue a lot of panicking leaseholders. It is still in progress, so there is no conclusion to the story but I know the Management Company already have lawyers on standby to enforce it.

Since I posted that there has been quite a bit of extra panic and eventually the MC have agreed to put the work out for tender again, effectively giving the Leaseholders a 6 month reprise before they need to find the money.

There is no guarantee that new quotes will come in lower even though they are cutting corners with the specifications as the building market has taken off around here and not many companies appear to be particularly interested in picking up the job. But the work does need doing otherwise the blocks will start crumbling, so they will be forced to pay whatever the best tender is this time around.

Because of all this uncertainty the flats are currently virtually unmortgageable leaving the Leaseholders trapped and anxiously waiting to see whether they will lose their home or be able to find a cash buyer with £250k+ in his pocket and potentially £80k+ extra for the refurb.

In essence, if you want to buy in a block, you need to make sure that any upcoming maintenance has been done, and tread very carefully before you commit to buy.

SP

Jagraf

Ten years is a big timeframe, anything could happen. My mum had a friend who lived in something similar to what you described. It was gorgeous inside and the views were amazing. He spent thousands on it. However when he came to sell, he just couldn't.

I would invest that fab gift in something with a bit lower risk.

Just my opinion though.

catoutthebag

adhara wrote: »

Completely agree, I will definitely be looking into the Freeholder/Management company's spending habits well before suggesting my interest in any property.

(I'm (incredibly) lucky that my family will gift me the money for the purchase, which adds another tasty layer of worry about investing 'appropriately')

Are you in central brum?

adhara

Bluebonnie wrote: »

Look out for a block where the freeholder is a company in which all leaseholders have shares. Thus, freeholder is not the council, and not some outsider (eg major property firm, or even its original developer).

In the sense of Share of freehold or do you mean something else? Either way, it's a better option (with its own pitfalls!) than standard leasehold. And 'sinking funds?' and 'Who is the managing agent?' has been written down in my notepad

StumpyPumpy wrote: »

In essence, if you want to buy in a block, you need to make sure that any upcoming maintenance has been done, and tread very carefully before you commit to buy.

You've been most helpful SP, I'll have a hunt around for that thread later. That's definitely something to keep in mind, it has gone onto my notepad.

Jagraf: I know I'd really love to have the lower risk, but I don't want to find a place too far out of the city (neither my OH or I drive, so a lovely semi detached in a nice area is out, y'know?)

catoutthebag: Yep!

dirty_magic

I wouldn't do it. I think you'll really struggle to sell a tower block flat. This one not far from Birmingham has been on the market for ages and it's not selling!

http://www.rightmove.co.uk/property-for-sale/property-30526305.html

Renting and buying are completely different; I'd wait till you have more money personally.