Right to buy - is this a lemon ? Sec 125 estimated repairs

densol_2

I'm helping my friend think about whether to go ahead and try and buy her maisonette.

It's ex council in a block of 14. 4 stories high - so a two story on top of a 2 story. It's East London, an area which is seeing regeneration but it's a way away yet from completion. Only 2 other people own in the block so far. One lets his out. So low ratio of home owners.

Maisonette valued at £250,000 almost max discount of £102,700 applied - so can buy for £147k . I think the value is quite good considering what others nearby have sold for. It's very close to Jubilee tube.

Sec 125 notice says estimated service charges about £950 per annum. Standard 125 year lease with £10 ground rent.

The worrier though is the estimated maintenance and major repair at £6500 for her share for next 5 years. List suggests they are almost completely refurbishing block. Do they mention everything on the 125 notice just so they cover themselves as that is the max she has to pay out - or is that a genuine figure ? As said they are regenerating the area. Plans are afoot to demolish some vacant blocks close by. Rest of area is reasonable for East London. A close by huge estate of mostly private flats and townhouses are selling for £200-£600k

Before she tries for mortgage - any views on whether this is a lemon ?

Cheers

stator

I don't really support RTB, but the sensible approach surely would be to wait until the council have completed the refurbishment.
Personally I wouldn't consider buying a flat in a council owned block. If they replaced the roof you could be hit with a huge bill.
Are there any lifts in the building? They can be the cause of a huge bill too.
I suppose with such a huge discount she could always remortgage to cover any large bills.

4 storeys is the max many lenders will agree to, so it could be more difficult to get a mortgage in the future if lending criteria change.

m0t

Totally agree with stator - I had a friend who was one of 3 owners in a similarly sized council block. She had to take out a £30k loan to cover off her share off the roof and lift replacements costs, plus complete internal redecoration.

The council didn't take into account the circumstances of the people who owned in the block they just decided that was what they were doing and appointed their significantly overpriced contractors.

libf

If your friend plans on staying there long term then it would seem to make sense to wait until after the works are done, if they genuinely are imminent.

Angie_B

It certainly won't be a guarantee of maximum payment necessary. As stator says, if the lift breaks or the roof is damaged, leaseholders will be charged for their share.

I have just sold an ex-LA flat in SW London which has about £25k of major works planned over the next few years.

To be honest, if they are getting a £103k discount and cannot afford to budget for £6.5k over the next few years then it doesn't sound to me as though home ownership is really in their best interests. What if their boiler breaks as well? That's another £3k without even trying.

Why not stick to the secure tenancy they have in which the council pays for anything which goes wrong? Broken boiler, no problem. New roof - not their problem to worry about.

You can almost guarantee those service charges will go up over the years as well.

carefullycautious

What is the timescale for reselling without paying back discount? If it is 5 years then the 6,500 does not seem too bad to pay before she is able to sell up.


However, if she has to stay any longer I would not touch with a barge pole even with that discount.


Has she thought about exchanging into a house and then buying?