Mortgage trapped due to repairs needed

Rosemary7391

pinkshoes wrote: »

£20k each for 9 flats?? That's £180,000!!!

Given they are only worth £50k each when the work is finished, so £450k in total (assuming all similar) then this would appear to be a ridiculous amount of work!!

Is the building falling down?? Is there not a yearly fee you pay that is supposed to build up a buffer to pay for repairs??

(I lived in a block of 16 flats, and was a 'director' of the management. We estimated what repair work would need doing and when, roughly how much it might cost, and tried to include this in the yearly fee.)

I would want to know why such major work hasn't been budgeted for, and insist on seeing all the quotes for the work to be done!

There are some old buildings in Scotland that have been neglected for a long time. The value of the flat doesn't change much about how much it costs to maintain it. I know my factor isn't allowed to create a sinking fund as it isn't in the deeds. I can really sympathise with the OP here - I can also see myself being in a similar situation although hopefully without the added problem of it being worth significantly less than I paid. OP, I'm glad the other owners are now on board - I really don't think you'll manage to sell it without the repairs being done. Not sure about renting - how much hassle do you anticipate the repairs being?

jorpati

hazyjo wrote: »

Was the flat horrendously overpriced when you bought? What were similar nearby flats going for at that time? I looked at several addresses in Scotland on Zoopla in obscure areas (not like Edinburgh or Glasgow) and they all seem to have risen at least 25-75% since around 2008. Are prices in your area really around 35% less than in say 2008?! G_M may have a point lol!


Something somewhere has gone very wrong with the price of your flat, or the area, am struggling to see how it can be worth less than what it was nearly 10 years ago (even with the repairs).


What area is this? Has something happened there that's made the area less desirable?


Jx

I was thinking same.. how can there be such a huge price drop for a property over just 5 years...
Quick research tells worst house price drop has happened in East Lothian and it is about 7%...

I would have thought after full repair of the house you would make some profit on your initial investment..

hazyjo

Also, did you get a 100% mortgage and was it for 25 years? In around 9 years, I'd have expected to clear a chunk. How much negative equity do you reckon you're actually in (ie how much would be outstanding if you sold minus what's remaining on the mortgage).


Jx

lmurray33

I think slightly too much was paid for it at the time. Plus prices have gone down. And the property has become less owner occupied and more landlord/rentals, reducing value more. Plus the repairs. It all add up.
Renting is difficult as the whole building will need to be empty for 18+weeks of repairs.

marksoton

lmurray33 wrote: »

Renting is difficult as the whole building will need to be empty for 18+weeks of repairs.

You what?

Unless the place is literally collapsing that's ridiculous......

tomtontom

Was no Homebuyer's Report done when you purchased? I don't know a great deal about Scottish conveyancing, but would assume it was the norm for buying a part of any building of age.

moneyistooshorttomention

marksoton wrote: »

You what?

Unless the place is literally collapsing that's ridiculous......

There was mention of rot being one of the problems and comment about floorboards.

I'm assuming that the building has got dry rot (amongst other things).

There are some pretty nasty chemicals involved in the way most people treat dryrot - and I certainly wouldnt want to stick around whilst they were being used for one.

davidmcn

moneyistooshorttomention wrote: »

There was mention of rot being one of the problems and comment about floorboards.

I'm assuming that the building has got dry rot (amongst other things).

There are some pretty nasty chemicals involved in the way most people treat dryrot - and I certainly wouldnt want to stick around whilst they were being used for one.

Yes, I've encountered a similar scenario where a whole block had to be decanted while they replaced floors, replastered, etc. In theory you might be able to work around residents, but in practice it's going to be safer and quicker if everybody gets out.

lmurray33

There was a standard survey done at time of purchase and showed no signs of what would happen. It has been described by one of the professional as 'the breaking of a cracker/biscuit' - a cracker can be bent and bent and up until a point it will look like it will not break, after it gets past that point it will break very quickly. Think we have been caught out and bought just before the breaking point.
And yes it must be empty. The whole place will be affected with external and internal walls being repaired, floorboards up for rot work and roof work etc.
I know it must seem strange but telling the truth and just trying to get any new ideas or advise I can. Thanks again.

glasgowdan

marksoton wrote: »

I'm sorry but these numbers make no sense whatsoever.

It's quite clear, do you need it explained? Property was bought for £78k. Market value in fair condition is now £50k. There are also £20k of necessary repairs to be done, which would have to be taken into consideration if anyone wanted to buy it, or taken out of the owners pocket leaving them with only £30k towards paying off the mortgage if they sell.