Buying flat with section 20 notice

Shortypie89

Hi all. I'm a FTB with terrible luck!

I put an offer in on a flat around three months ago and we were just getting ready to exchange when I received new info from the freeholder. The flats in the building had been issued with a section 20 notice in October for major external works at a cost of £140,000. My flat's share would be about £20,000 :eek:. The works were scheduled to start in the summer and last a few months.

I naturally don't have a spare £20,000 to pay for these unexpected costs and have asked for a reduction in price. This is particularly upsetting as I am already paying £18,000 over the bank's valuation of the price of the property. (also I've previously lost two other properties after paying for surveys and mortgages and solicitors and brokers ).

I am guessing the vendors will say no and the sale will fall through. However, on the off chance that they agree to reduce - should I be wary of the flat anyway?! £140,000 seems like a LOT of money for repairs (it's a Victorian building made up of 7 flats). Could this figure be reasonable/justified, in anyone's experience, or is it a warning that there's a dodgy freeholder out to make money, and even if I could get the flat at a reduced cost, charges would be piled on me while I was living there?

Thanks!

marksoton

I'd be very wary. Is the freeholder a council or HA per chance?

What work are they carrying out?

AnotherJoe

Shortypie89 wrote: »

. Could this figure be reasonable/justified, in anyone's experience, or is it a warning that there's a dodgy freeholder out to make money, and even if I could get the flat at a reduced cost, charges would be piled on me while I was living there?

Thanks!

I dont see how anyone can possibly know. Of course it could be justified. Or it might be much more expensive than it needs be just due to the way they've contracted for it rather than out and out fraud. Cant say I'd want the hassle even with a reduction, IME one big bill often leads to another as its a sign of things to come.

In your place I'd be very grateful I found out beforehand, and add on the fact you think you are already paying more than its worth, isn't it obvious what you should do?

eddddy

Section 20 requires that leaseholders are consulted, and competitive quotes are obtained. In short, if the leaseholders show an interest, they should be able to ensure that the work done is sensible and the eventual cost is sensible.


If you are concerned about future costs, you could instruct a surveyor to look at the Section 20 schedule of works and to survey the building, to assess whether other expensive repairs are likely in the foreseeable future. (i.e. you want them to survey the building - not the flat you are buying.)


One possible negotiating route is to ask for a £25k retention from the seller. i.e. Your solicitor holds on to £25k of the purchase money. When the bill for the work comes in, your solicitor pays it out of the £25k and hands what's left over to the seller.

(Asking for a retention seems slightly less aggressive than reducing your offer - although the outcome is very similar.)