Buying an ex-local authority flat

jonnygee2

I have an offer in on an ex-local authority flat for about 350k in zone 2 East London. It's an 80 sq. meter maisonette. Tower Hamlets Council.

It's part of a four story block that was renovated last in the 90s, in total there are 18 properties on the estate in three identical blocks. Deck access, and a flat roof. No lifts and relatively new double glazing across the estate. In general the estate is in fairly good nick as far as I can tell. It's a relatively solid build for a council block. No rubbish etc, well kept.

I am particularly worried about the flat roof - it's pretty difficult to know what state it's in and I am worried about a section 20 notice cropping up to repair it.

What kind of survey should we get (if any)? Will a surveyor check things like the state of the roof or things not inside the flat itself? (how could they?). How worried about section 20 notices should I be? Can I check the history of them or the work done on the estate somewhere? I've read horror stories, but they tend to be to do with high rises or huge estates.

Given our budget ex-local authority is really the only option (HTB London on a new build is possible but I believe it would be a bad decision for me).

Lioness_Twinkletoes

I'll leave it for others to comment re the survey but I can advise you should be very worried about the roof and potential repairs. The borough I live in is currently replacing the flat roofs to all it's blocks. This entails, among other things, extensive scaffolding. The cost is astronomical and I have been sending out bills for circa £20 - £30k. Each.

Your solicitor should ask, as part of the Homebuyers pack, for details on planned works, but if it's not in the pipeline yet it doesn't mean it won't be further down the line.

As someone who has worked in Leaseholder Services for 11+ years, I wouldn't touch a LA block with the proverbial.

davidmcn

Even if the rest of it were acceptable, deck access is problematic for some lenders.

jonnygee2

The cost is astronomical and I have been sending out bills for circa £20 - £30k.

This is obviously the nightmare scenario I was talking about! I don't really have any option other than an LA flat (apart from help to buy on a new build, which I really don't want to do, or just a much smaller space somewhere).

How common are these kind of bills? What do the repayment plans generally look like?

Even if the rest of it were acceptable, deck access is problematic for some lenders.

We've already had the valuation survey. The lender (Barclays) okayed the deck access. This block looks a lot less council flat like than most, so we weren't too worried about this. We were told by our broker that a few more lenders would have lent too.

Smodlet

Obviously it is your choice, OP but, if you are renting your council flat now, you are almost certainly paying a fraction of what a private LL would charge so my advice would be to sit tight and save as much as you can. The last type of property I would ever buy is an ex local authority flat or maisonette; a freehold house, fine as you will only be responsible for the cost of your own repairs. I would even consider a leasehold house but only as a last resort.

The Debt Free Wannabe and Old Style Moneysaving boards are good places to start looking for ideas to reduce your outgoings, if you think that would help. Could you consider a second job, perhaps or other ways to increase your income?

If you buy this flat, you will always be living in dread of the kind of horrible charges Lioness Twinkletoes has described. If you are thinking of buying for peace of mind, you might want to consider the best way to achieve that. I wish you luck.

Lioness_Twinkletoes

jonnygee2 wrote: »

How common are these kind of bills? What do the repayment plans generally look like?

We send out quite a lot across the borough. Some are only £2k some are £32k.

Our payment plans aren't great - resident leaseholders get 2 years interest free and then up to 10 years interest bearing (3.5% for 2018/2019) on a sliding scale depending the bill. Repayments are capped at £300 per month.

Non-resident leaseholders get nothing and are expected to pay within 14 days of invoice.

Do bear in mind though, the leaseholders will receive an estimate of costs before the works commence. This is often 2 or so years before the invoice and we encourage our leaseholders to start making provision for the invoice at this stage.

Not all boroughs work the same though, so I'd suggest some research on the LA's website. It should lay out their repayment terms.

Still wouldn't buy an ex-LA flat though - in fact, if I was offered it for free I'd have to think pretty hard!

artyclarty

My friend and his wife own a shared equity (new build, 50% share) maisonette with decked access using HTB. The block is HA owned and has both HA tenants and Shared Equity owners (a covenant prevents private letting).

They are now coming to the end of the 5 year term in which they have to pay interest on their HTB and have been looking for a while (pretty much since around the time of Grenfell unfortunatley) are struggling to find someone who will remortgage because of the decking issue. Maybe lenders are less strict in London?

They have been lucky that as it is a new build, they have not been hit with any nasty bills for maintenance (yet!) and the prices in the area have risen (80k for 50% share, current market value is £200-220k for the flat as a whole). But there is a very real possibility that they may have to sell their 50% back to the HA.

The point is, if you already have a mortgage offer, great, you're one up on my friend! But be aware that this may not be the case in the future.
Ex local flat + difficulty obtaining mortgage may get you into issues if you wish to sell later down the line.

Either way, congratulations on being able to get to such a point to even be able to consider this in one of the most expensive cities in the world!

jonnygee2

Do bear in mind though, the leaseholders will receive an estimate of costs before the works commence. This is often 2 or so years before the invoice and we encourage our leaseholders to start making provision for the invoice at this stage.

Not all boroughs work the same though, so I'd suggest some research on the LA's website. It should lay out their repayment terms.

Thanks that's really good advice. I checked it out, they have 10 interest free year repayment plans. More importantly, we've also made a request to see the roof (going tomorrow) as it really does sound like that's the major potential issue here. The sellers say it was actually done about 10 years ago - if true that should be fairly obvious. (Taking my dad, he's a builder, so we'll be able to tell).

The point is, if you already have a mortgage offer, great, you're one up on my friend! But be aware that this may not be the case in the future.
Ex local flat + difficulty obtaining mortgage may get you into issues if you wish to sell later down the line.

Yes we thought about this too, it's a very good point. This is why the lender we went with was, according to the broker, the least likely to lend on the property after the survey. As that went through fine, we think we'll be okay. The broker was confident too, because it only has one level which is deck access and it's in a desirable area (not a big council estate).

I have read that lenders have very different rules for this in London, which makes sense, because buyers in London don't have the same kind of options as buyers outside.

Obviously it is your choice, OP but, if you are renting your council flat now, you are almost certainly paying a fraction of what a private LL would charge so my advice would be to sit tight and save as much as you can.

I'm not a council tenant. I already have an 15% deposit, the limiter at this point is my salary. I have five options:

1) Move out of the area I grew up in where all my friends and family live
2) Buy a very small flat that I wouldn't be happy living in
3) Keep renting privately until my salary rises significantly (could be never given what I do)
4) Get London help to buy or shared ownership, buy a large new build
5) Buy an ex local authority flat

I've ruled out options 1-4. So five is where I am going. All the options have downsides, this is just not a market that's friendly to someone on 33k a year. At this point I'm really just trying to mitigate the risks of option 5.

Owain_Moneysaver

Is the flat roof felt on wood or felt on concrete, or some other type of construction?

Felt on concrete will have a limited lifespan but the felt layer should be fairly cheaply renewable with little disruption to occupiers. (I really hope, I've got one!) Felt on wood may mean the whole rotten roof structure has to be replaced, possibly involving a decant of occupiers on the top floor and the associated costs.

The surveyor should be able to arrange access to the roof with the council (they will usually release a roof hatch key to a surveyor but not to an individual) or a drone or CCTV camera on a long pole can be used to get a look at the roof.

On the upside, ex-LA flats are usually good sized compared to private build and most councils are less evil than dealing with a commercial freeholder and managing agents.

Cakeguts

jonnygee2 wrote: »

Thanks that's really good advice. I checked it out, they have 10 interest free year repayment plans. More importantly, we've also made a request to see the roof (going tomorrow) as it really does sound like that's the major potential issue here. The sellers say it was actually done about 10 years ago - if true that should be fairly obvious. (Taking my dad, he's a builder, so we'll be able to tell).




Yes we thought about this too, it's a very good point. This is why the lender we went with was, according to the broker, the least likely to lend on the property after the survey. As that went through fine, we think we'll be okay. The broker was confident too, because it only has one level which is deck access and it's in a desirable area (not a big council estate).

I have read that lenders have very different rules for this in London, which makes sense, because buyers in London don't have the same kind of options as buyers outside.




I'm not a council tenant. I already have an 15% deposit, the limiter at this point is my salary. I have five options:

1) Move out of the area I grew up in where all my friends and family live
2) Buy a very small flat that I wouldn't be happy living in
3) Keep renting privately until my salary rises significantly (could be never given what I do)
4) Get London help to buy or shared ownership, buy a large new build
5) Buy an ex local authority flat

I've ruled out options 1-4. So five is where I am going. All the options have downsides, this is just not a market that's friendly to someone on 33k a year. At this point I'm really just trying to mitigate the risks of option 5.

I did no 1 twice. First time around 50 miles. 2nd time 200 miles. I have lots and lots of friends that I didn't grow up with. My nearest family member is 100 miles away from me and 100 miles away from where they grew up. The furthest is just under 5000 miles away. People move. True friends visit and you make new ones.

What you are doing at the moment is trying to fit where you buy with who you think you see a lot of but actually you probably don't see them as often as you think you do?

jonnygee2

What you are doing at the moment is trying to fit where you buy with who you think you see a lot of but actually you probably don't see them as often as you think you do?

We are all different. I appreciate your experience but it isn't mine. This area is my community and the source of all of my happiness. I also have secondary caring responsibilities for both my nan and my nephew who are nearby - I walk my nephew to school in the mornings for example. All this takes priority over my house buying decision.

Anyway the point of this thread is really to talk about option 5 and the risks of this option and how they can be mitigated, was my point, rather than have a load of people question options 1-4 with no context or background on why I've ruled them out. I appreciate your thoughts and that others would make different decisions, but I have made mine.

Felt on concrete will have a limited lifespan but the felt layer should be fairly cheaply renewable with little disruption to occupiers. (I really hope, I've got one!) Felt on wood may mean the whole rotten roof structure has to be replaced, possibly involving a decant of occupiers on the top floor and the associated costs.

The surveyor should be able to arrange access to the roof with the council (they will usually release a roof hatch key to a surveyor but not to an individual) or a drone or CCTV camera on a long pole can be used to get a look at the roof.

That's incredibly useful thank you. No idea if it's felt on wood or concrete, we will definitely check! What level/type of survey would this be do you know where they would do this? I'm sure the mortgage surveyor didn't check this (but we are about to schedule our own this weekend).