Ex-council flat - buying concerns

unimaginativeusername_2

Hello folks,

In my search for my first home, I've come across an ex-council flat in a small block (I think comprising four flats) that ticks pretty much all the boxes with gusto, not least that I’d be able to buy without a mortgage. But I have a few concerns and queries which I was hoping someone would be able to help me with.

The big one is that its flat roof looks like it is due for major repair - there are signs of leakage in the flat itself (top floor), and other blocks down the road have had a pitched roof put on at some point within the last few years. I’ve read somewhere that a five year plan of works is available from councils on request - is this true for any passer-by (like me), or only for the occupants? Who should I be contacting to access this info? And, is there a way of determining how much the bill would likely run to, and maybe finding out what the bill was for the private tenants of the other blocks (without knocking on people’s doors and being horribly nosey)? For all I know, other major works I can’t detect from the roadside were carried out at the same time, and the bill would be even higher than I'm already wincingly imagining. And, since an equivalent flat in one of the re-roofed blocks was sold a year ago for the same as the current asking price on this one (though it might have been a wreck inside - no pictures), even putting in a low offer to try and account for some of this might lead to a lot of cash disappearing in a puff of smoke when it comes to reselling.

The other issue is the short lease - less than 80 years. The calculator on here suggests it’d cost about 5-6k to renew including legal fees, which I can build into the offer, but I just wanted to double check that the cost is likely to be around the same with the council as the freeholder as it would with a private freeholder? And again, is the actual figure something I could find out myself, rather than going through a solicitor?

There are other factors that are giving me pause - the difficulty of selling on again down the road being one of them (mortgage unfriendly non-standard construction, the fact that it’s been on the market ages this time with very little interest according to the estate agents themselves), and I’m sure plenty would advise me not to touch it with a ten foot barge pole. But then, it offers the kind of size/space/light that costs twice as much in non-council buildings in the area, and also has a really nice atmosphere/"feel" to it inside that nowhere else I've yet seen has, so it’s hard to turn my back on it at this stage when everything is, as yet, unknown (and therefore possibly magically ok??).

This is all new to me, so thanks much for your patience, and for any insights/advice anyone can share.

da_rule

You could ask the seller to provide you with a break down of planned works, which they can obtain from the freeholder/management agent. This obviously won't include unplanned/emergency works.

Where the freeholder is a local authority, there is a cap of £10,000 (outside of London) on some works to a leasehold property in a rolling 5 year period under The Social Landlords Mandatory Reduction of Service Charges (England) Directions 2014.

In terms of the extension, the fact the freeholder is a local authority makes no difference for the formal route as the calculations are laid out in statute. They may however be more friendly when it comes to an informal extension.

If you want to go down the formal route, you could ask a surveyor to calculate the extension value, this could be done alongside a standard valuation. If the current leaseholder has lived there for 2 years, they could start the extension process and then assign it to you as part of the sale, so you don't have to wait a further 2 years to start the process.

In terms of what the future holds, that's less certain. Having a longer lease may make it more marketable.

Owain_Moneysaver

You need to find out what the roof is made of. If it's concrete with felt over that's reasonably solid, but some buildings just had plywood and those roofs can have a very limited life with the roof (which includes your ceiling) having to be replaced at some point.

Some insurers won't cover all-flat-roof buildings, those that do will usually exclude damage from water ingress.

You can also expect high heating bills, and the noise of pigeons and heavy rain overhead.

da_rule

The insurance will, in all likelihood, not be an issue as it is generally the responsibility of the freeholder to ensure the building is insured (although the OP will be paying for it via his service charge).

unimaginativeusername_2

Thank you for the answers so far!

Re: the insurance, I was told by the agents that the service charge is a whopping £0 per year, so that does make me wonder whether the insurance IS a matter for the leaseholder in this case. (I'll also mention here that I haven't had it confirmed yet that the council is even still the freeholder, but the zero service charge and negligible ground rent would suggest so, as far as I can deduce?)

Is it possible to ring the council directly to confirm any of this stuff, rather than having it go back and forth through the chain of estate agent-seller-seller's solicitor, or is that much too simple?

da_rule

You could try the Council. However you are potentially asking about someone else's financial matters so they may refuse to answer.

Also, if you can, get a copy of the lease. This will tell you who is responsible for insuring etc. If the property is registered you should be able to get a copy from the Land Registry.

unimaginativeusername_2

Ok, thanks da_rule. I'll try to do this and see what I can find.

hazyjo

As far as I know, the council can just decide to do the works and let you know what your share will be. Lots of posts on here (and in my experience) of people surprised/angry at a large demand/bill out the blue. I'd be very wary about buying ex-LA for fear of a large bill turning up on my doormat. If they do give you warning, I don't know how far ahead they're legally obliged to let you know so check that out.


With no service charge, I'm guessing you should expect bills for random amounts for whatever they've done that month.


I presume there's no lift (unless maybe each is on top of the other instead of next to each other on 2 storeys). Always one to look out for with ex-LA flats.

AlexMac

I own two 2-bed Ex Council flats where the Local Authority are the freeholder, and you're doing the right thing to pose these questions.

The Council might, or might not answer questions "off-the -record" about future planned works.

Only their solicitor will give binding replies, and no other Council employee will give quotable info for fear of exceeding their authority. But it might just be worth a visit or call to the local Area Housing Mnagement Office to ask if they know or if they can refer you to the Housing Department's "Maintenance Surveyors" . "Housing Technical" team or similarly titled people in case you get someone prepared to generalise about future immprovements.

I did that 5 years ago when buying my second flat as a BTL, and got a helpful informal response. At the stage you have an offer accepted, then appoint a solicitor, the vendor will, as you know, have to give you any statutory notices sent by the freeholder concerning planned works and likely cost. And a decent solicitor won't trust these but will also formally ask the Council, so at that stage, having incurred only several hundered in fees, you could still back out.

You say it's a small block, which is good (no lifts or the extreme costs associated with tower blocks which I wouldn't touch), but also of "non-standard construction" which is bad. My two are also small (12 unit) blocks) of conventional brick walls and tile pitched roof construction with no lifts.

But even so, these of mine tend to incur one-off maintenance costs of £4-5k every 5-10 years; for external and communal aread decorations, replacemnt windows, balcont repairs, etc. And while these are fair and my Council are sensible, I have no choice or say. Some lenders won't lend on flat roofs whether or not it leaks, And if as you say the roof does leak, you'll want the pitched replacement which seems to be in the local Council's programme?

I'd guess that you'll be sharing the costs of this (as the Council will want to recharge leaseholders pro-rata) so expect a bill for£15-25k or more for your flat. Council contractors won't be cheap, even if they are not colluding to inflate tender prices (hush my mouth)!

It's usual for there to be no maintenence sinking fund, but I don't understand how there is no service charge? How is the freeholder covering the cost of insurance (£300+ per year in my experience, even shared over several flats), minor maintenance, caretaking or cleaning of communal areas, access ways and grounds, any shared lighting, etc?

I pay £600 -£900 per year for this for each flat, so overall, I anticipate £1.5-2k p.a averaged out over a ten year period for stuff like this and bigger periodic repairs. It would be more for a major scheme like external decs or wall insulation; most council flats in my area have had external insulating cladding and new windows in recent years.

Dunno if any of this helps? In summary, go for it with eyes open if you (and your lender) don't have a problem with unconventional construction or future major repairs or roof-replacement bills.

And as an afterthought, try google- your council my have good online access to any past Housing Committee rpeorts on budget and renovation programmes. And as you will be living there, you could also try asking the ward Councillors; they will be your elected representatives if you buy into their patch, and they may be aware of the Housing programme, or local schemes of improvement; find them via your town hall website; ours display their contact emails, telephones and surgery times .

Good luck

unimaginativeusername_2

AlexMac, thank you for weighing in, this is all very helpful indeed.

It's possible the no service charge might be incorrect, and I agree it sounds odd - I downloaded a copy of the title register today and it turns out the estate agents were wrong in the info they gave me about the length of lease (they were 15 years out), so maybe that's another thing they haven't got straight. But in terms of the outside maintenance that would usually be covered by this, it certainly *looked* like there hadn't been any in a while. Grubby stairwell (shared by only two flats) and generally a bit unkempt. I didn't check for external lights - maybe there are none? The little patches of lawn that are divvied up per flat seemed to be in various states of care too (I know, I'm making it sound like a dream home). At least this should be easier to find out.

15k is what I had about prepared for in my head, but as an upper limit of what would be acceptable. Alas, 25k doesn't sound unreasonable, either, but would mean it would be a bad buy either way - it's much too great a percentage of the value of the property, which I'd be unable to recover judging by the other re-roofed flat that was sold last year, even if the seller took as low an offer as I'd be making. It's a bit of a b*gger having to guess when the difference is so great. Hopefully I'll be able to come across some more info ringing and googling around this week (and thank you for your tips on that).

Quick question - can you confirm if you as the leaseholder foot a proportion of the bill for works carried out on the other flats that yours may not need doing? For example, new windows, re-wiring, new internal flooring, etc.? It seems a bum system where leaseholders have to pay for works that don't affect them, but I think from what I've read this is the case?

saajan_12

AlexMac wrote: »

You say it's a small block, which is good (no lifts or the extreme costs associated with tower blocks which I wouldn't touch)
..
But even so, these of mine tend to incur one-off maintenance costs of £4-5k every 5-10 years; for external and communal aread decorations, replacemnt windows, balcont repairs, etc.
..
I pay £600 -£900 per year for this for each flat, so overall, I anticipate £1.5-2k p.a averaged out over a ten year period for stuff like this and bigger periodic repairs.

Many insightful points from AlexMac, but the numbers do seem high to me. I pay ~£1000-1200 per year total in service charges covering major and minor works and
- 13 floor block complete with 3 lifts
- swimming pool & gym maintenance
- wages for 24/7 porters
- London zone 2 flat so higher cost of tradespeople
- includes sinking fund (can't remember the balance but it has covered all major/minor works to date)

Granted this is for a larger block so the costs are divided between many leaseholders, but thought I'd mention to balance out.. larger blocks aren't always super expensive as you might expect.