Short lease flat with issues

40ish

I have posted about this before, but since I have the situation has developed:

I was/am in the process of buying a flat with a very short lease (57 years). I hasten to add I was naive going into this purchase and didn’t realize this initially. I am a cash buyer (with inheritance funds). As the purchase was via an auction house (“I am sold”) I was required to pay a reservation fee of £6k to the auctioneers.

Since paying this, I have established via my solicitors, that there has been a subsidence claim on the flat and subsequent remedial works carried out. There is a certificate of structural adequacy. The agents are claiming to have had no knowledge of the subsidence claim and have advised that they would have made me aware had they have known!

Then I was made aware that the Freeholder is now transferring the freehold interests to the residents of the block at nil cost (barring legal fees).

Is this worrying? I.e. Are they transferring this to remove their liability because they are concerned re future subsidence? Why else would they do this?

Do I have any come back to try and get my fee back, due to the fact that I was not aware of the subsidence?

Do I walk away now & cut my losses & lose my £6k (plus solicitors fees)?

Would the flat ever be re-sellable?

Please help. I’m really stuck and not sure what to do??

Thank you in advance.

need_an_answer

A link to your previous thread so posters don't duplicate advice given and can clearly read the background to you purchase

https://forums.moneysavingexpert.com/discussion/5944256/buying-a-flat-with-a-short-lease

Plus

Put some numbers into:
https://www.lease-advice.org/calculator/

Play around with the length of the lease remaining, seeing how the costs increase as time goes on.

Can you envisage being able to afford that kind of money for a lease extension?
You would have a wider market with a long lease, as the flat would then be mortgageable.

ProDave

So IF all the leaseholders now jointly own (or will shortly) the freehold, can they not extend all the leases for free? or at least just for the legal fees?

davidmcn

40ish wrote: »

Do I have any come back to try and get my fee back, due to the fact that I was not aware of the subsidence?

I very much doubt it. That's the point of getting surveys done before handing over money. But we haven't seen your auction contract, so maybe ask your solicitor for their view.

AdrianC

40ish wrote: »

I was/am in the process of buying a flat with a very short lease (57 years). I hasten to add I was naive going into this purchase and didn’t realize this initially. I am a cash buyer (with inheritance funds). As the purchase was via an auction house

And now you know why it was being auctioned, not sold normally.

I was required to pay a reservation fee of £6k to the auctioneers.

Do you mean a "reservation fee", or do you mean the (usually 10%) deposit on the purchase?

Since paying this, I have established via my solicitors, that there has been a subsidence claim on the flat and subsequent remedial works carried out. There is a certificate of structural adequacy. The agents are claiming to have had no knowledge of the subsidence claim and have advised that they would have made me aware had they have known!

Auctions are caveat emptor - you do your due diligence up front. You exchange legally binding contracts at hammer fall, and usually have 28 days to complete.

Then I was made aware that the Freeholder is now transferring the freehold interests to the residents of the block at nil cost (barring legal fees).

Is this worrying? I.e. Are they transferring this to remove their liability because they are concerned re future subsidence? Why else would they do this?

They aren't "liable" - the cost would simply be passed on to the leaseholders either way. What they are doing is passing over the responsibility for decision making and arranging the repairs. This is a good thing.

Do I have any come back to try and get my fee back, due to the fact that I was not aware of the subsidence?

Perhaps - if you can prove you were actively misled. Which is going to be difficult...

Do I walk away now & cut my losses & lose my £6k (plus solicitors fees)?

Perhaps that's a good plan. Your call. Do the numbers.

Would the flat ever be re-sellable?

EVERYTHING is sellable. At the right price.

How good a deal did this look? What would you expect a long-lease, structurally unproblematic price for the flat to be, and how much did you pay? What share of the freehold will you have? What share of maintenance costs? How much are the subsidence repairs expected to cost? At the very worst, what would the plot be worth as a development plot with the existing building demolished?

You could always shove it in an auction, and hope some bid-happy mug comes along... <grin> Sorry - too soon...?

financegeek

what did you buy the flat for? is it your forever home? or do you intend to sell it shortly for a profit?

the leaseholders are being transferred ownership of the freehold ( i assume you're included as a part owner?) then this works in your favour as there should be little cost involved in extending the lease.

in terms of whether to proceed due to the subsidence, how much did you pay for the flat compared to what it would be had there been a long lease / no structural issues?

it might be worth speaking to local agents to see if they've sold anything similar recently with subsidence. if they did and it was for more than you've paid, i'd be tempted to continue rather than throw 6k away.

eddddy

AdrianC wrote: »

Do you mean a "reservation fee", or do you mean the (usually 10%) deposit on the purchase?

Auctions are caveat emptor - you do your due diligence up front. You exchange legally binding contracts at hammer fall, and usually have 28 days to complete.

This was a conditional auction - so it will be a reservation fee.

With conditional auctions, contracts aren't exchanged when the hammer falls, that happens a few weeks later.

So the OP can walk away with just a £6k loss, if that's what they want to do.

Tom99

financegeek wrote: »

the leaseholders are being transferred ownership of the freehold ( i assume you're included as a part owner?) then this works in your favour as there should be little cost involved in extending the lease.

Only if all the other leases have 57yrs remaining which is very doubtful. If all the other leaseholders have already paid £000's to extend their lease then the OP will not get a free one.
The fact the freeholder is transferring the freehold for nothing seems to indicate there is not a vast amount of lease extension premiums lurking.

Soundgirlrocks

Tom99 wrote: »

Only if all the other leases have 57yrs remaining which is very doubtful. If all the other leaseholders have already paid £000's to extend their lease then the OP will not get a free one.
The fact the freeholder is transferring the freehold for nothing seems to indicate there is not a vast amount of lease extension premiums lurking.

It is fairly easy for the OP to check on land registry to see if that is the case

Tom99

Soundgirlrocks wrote: »

It is fairly easy for the OP to check on land registry to see if that is the case

Yes the freehold title might list the individual leases or might not be up to date re any recent lease extensions granted.