FTB: Is a Leasehold Towerblock flat a bad idea?

Snakey

My block has nine floors and is ex-council.

You have to go in to it with your eyes open, because council blocks don't have sinking funds where they save up for known expenses as they go along, instead they come round with the tin as and when they need it and if you don't do your homework then I guess you get a shock. I knew before I bought that there is a £20k capital contribution coming up for new windows, for instance. And after that I'm going to be trying to set aside £1-2k a year for the next big ask, even though there's nothing else in the pipeline that I know of. I think of it as an extra service charge, with the difference that this money is in my pocket so if I sell up five years before the next big hit then I walk away with that cash instead of leaving it in the communal pot.

The main thing with ex-council is resaleability. I have no worries on that score because of the location (central London) but I wouldn't buy on some dodgy estate just because it's cheap or even just because it's "home" to you (assuming you don't want to live there until you die). It could be that nobody else will buy it at any price and you will be waiting for a very specific buyer i.e. someone just like you.

Even though you personally don't need a mortgage, you have to be clear on how hard it might be to get one because your eventual buyer almost certainly will. Ex-council reduces your mortgage options, as does buying above a certain floor (5th I think), and also watch out for the length of the lease.

adhara

dirty_magic: Do you know Birmingham quite well? TBH, totally not surprised about that flat. The general area is not great (and that's being kind), and I know where it is; far away from everything but a heavy traffic main road (from a walking viewpoint). Plus potential stereotype neighbours...

Snakey wrote: »

The main thing with ex-council is resaleability. I have no worries on that score because of the location (central London) but I wouldn't buy on some dodgy estate just because it's cheap or even just because it's "home" to you (assuming you don't want to live there until you die). It could be that nobody else will buy it at any price and you will be waiting for a very specific buyer i.e. someone just like you.

Even though you personally don't need a mortgage, you have to be clear on how hard it might be to get one because your eventual buyer almost certainly will. Ex-council reduces your mortgage options, as does buying above a certain floor (5th I think), and also watch out for the length of the lease.

I hadn't thought of that, will definitely look into mortgage potentiality.

arlybarly

Adhara, the area is not great but its better than the dumpy crime ridden tower blocks in central birmingham. Donot touch with a bargepole.

AlexMac

I'm not going to repeat the excellent advice, above, but I'd repeat the cautions, based on my own experience of owning both freehold houses and several leasehold flats (some with 'shared freeholds' where we as members of the Freehold Company owned the block collectively, gave ourselves individual leases and managed maintenance, insurance, levels of service charge and sinking funds ourselves).

I still own 2 BTL flats, each in a low-rise, 3 storey block of 12 flats, where I don't control maintenance or charges, and have to pay for whatever the freeholder (who happens to be the Council) decides to do.

That has been highly satisfactory, and my service charges have been fair and reasonable at around £500-800 pa; even the replacement windows which the freeholder decided were necessary only cost me £4,500 which again, was a fair price.

I would be very cautious about a tower block, because of the potential for future costs associated with the greater maintenance challenges. Case in point; when the freeholder last decorated the estate one of my flats in on, they batched our little block with the adjacent high-rise one for tendering and contacting purposes. Instead of our bill being the few hundred quid you'd expect for a one-12th share of painting a few railings and communal areas, it was many thousands of pounds; reflecting the incredibly high costs of scaffolding the tower block. We kicked up and got it waived, but if I'd been in the tower...!

If the blocks you're contemplating are relatively new, there may be no great costs due, but how long before they are? There is also the potential that the freeholder and their managing agent may regard the service charge as an income stream and charge chunky admin fees. Friends who have a flat in a new-build development of several hundred properties face annual service-charge bills of £3,000 from the agent (more than I pay in mortgage) but as many of the flats are sub-let, they can't get enough other residents on board to mount a 'Right to Manage' challenge: https://www.gov.uk/leasehold-property/right-to-manage-and-management-disputes

I walked away from one similar leasehold purchase - even though it was a low-rise block - when I discovered what the freeholder, management agent and maintenance arrangements were.

So be cautious

Cautious_Optimist

Snakey wrote: »

buying above a certain floor (5th I think),
.

Why are mortgage lenders reluctant?

dirty_magic

Yes I do know it's not the best area, but the other houses in Bartley Green are selling, so I think it is the fact that it's a tower block. I also agree with arlybarly that central Birmingham isn't great either!

Snakey

CO - I don't know. You'd think they'd be a bit better informed than the usual "ooooh, all the lifts will always be vandalised" stuff (I've been in my flat for seven months now and neither of the two lifts has ever been out of service that I've seen), but I suspect it comes down to resaleability in one form or another.

I remember reading an article, a good few years ago now, about people who'd bought their 15th or 17th floor flats under the Right To Buy scheme thinking they were making a great investment until they came to try to sell. (I didn't know as much about property then as I do now and it's possible there were other reasons like concrete construction, dodgy estate, high percentage of council occupiers etc.)

I think there's a lot to be said for living higher up - less noise from the street, better natural light, better view - but apparently a lot of buyers won't go above second as they like the idea that they don't have to get the lift if they don't want to. Plus many council blocks are deck-access and a surprising number of people don't like heights.

I bought on the first floor in the end, so I didn't need to get into the detail.

adhara

arlybarly & dirty_magic : *shrug* It really really does depends on where in central Brum you live. Where I live is marginally better than Bartley, Aston or Digbeth (not hard, but there you go!), so I'm used to mildly dumpy, crime ridden areas Ah, youth.

dirty_magic

I agree that some parts are ok but I still wouldn't buy in a tower block as I'm 99% certain that it would take forever to sell! If it doesn't bother you and you're happy living there then do it, but don't do it if you will want to move in a few years. The only place I think a tower block flat would sell is London.

arlybarly

adhara wrote: »

arlybarly & dirty_magic : *shrug* It really really does depends on where in central Brum you live. Where I live is marginally better than Bartley, Aston or Digbeth (not hard, but there you go!), so I'm used to mildly dumpy, crime ridden areas Ah, youth.

Lol funniest thing ive heard all day,