Getting seller to cover costs without reducing house price because of mortgage offer

CPFC_79

I am self-employed and made an offer on a flat in London in February. The offer was accepted and my mortgage offer was issued the week before lockdown. The survey took place at the beginning of March and I had a builder lined up to quote on works required. This was cancelled in the week prior to lockdown because the tenants were self-isolating. I was only able to get in 10 days ago once the tenants vacated and get a quote for the works. There are some significant works required which were not obvious on viewing the property but came up on the survey - a structural issue (involving missing party wall agreements) and it turns out the extension needs a new roof. There was one visible leak when I viewed it in Feb - when I went back in May there are now leaks in 3 areas (both the surveyor and the builders says the roof needs redoing and having seen it myself it does look like a botch job). The works required, party wall agreements and 2 indemnity policies required come to approx £10k which I want knocked off the price of the flat. However I have been advised by my broker that a reduction in the house price, will mean the bank having to reissue the mortgage, and as part of that they will almost definitely want to review my company bank statements again. Whilst I have had money coming in, it is nowhere near what it was pre-Covid and therefore there is a good chance they will either reduce their offer or retract it. I have confirmed work coming up so I'm not worried about paying the mortgage. I don't want to pull out of the sale but I am trying to think of alternative ways for the seller to cover the costs. The vendor wants this sale done asap, as do I, but the works can't happen until the builder is available which will be sometime in July. I am planning to stay in my rented accommodation until the flat is ready. I have asked my solicitor if the vendor could pay my solicitors fees, indemnities direct or part of the stamp duty as part of the agreement to cover the works, he said they couldn't pay for my legal fees, but he didn't seem that sure on the others (he appears quite junior so I have asked him to ask his colleagues for their ideas!). Does anyone have any good ideas on how we can work around this? And I am yet to inform the estate agent or vendor of this - ideally looking for a fairly concrete proposal of action before I go back to them.......

AdrianC

CPFC_79 said:

I am self-employed and made an offer on a flat in London in February. The offer was accepted and my mortgage offer was issued the week before lockdown.

The survey took place at the beginning of March and I had a builder lined up to quote on works required. This was cancelled in the week prior to lockdown because the tenants were self-isolating. I was only able to get in 10 days ago once the tenants vacated and get a quote for the works.

There are some significant works required which were not obvious on viewing the property but came up on the survey - a structural issue (involving missing party wall agreements) and it turns out the extension needs a new roof. There was one visible leak when I viewed it in Feb - when I went back in May there are now leaks in 3 areas (both the surveyor and the builders says the roof needs redoing and having seen it myself it does look like a botch job). The works required, party wall agreements and 2 indemnity policies required come to approx £10k which I want knocked off the price of the flat.

However I have been advised by my broker that a reduction in the house price, will mean the bank having to reissue the mortgage, and as part of that they will almost definitely want to review my company bank statements again. Whilst I have had money coming in, it is nowhere near what it was pre-Covid and therefore there is a good chance they will either reduce their offer or retract it. I have confirmed work coming up so I'm not worried about paying the mortgage. I don't want to pull out of the sale but I am trying to think of alternative ways for the seller to cover the costs.

The vendor wants this sale done asap, as do I, but the works can't happen until the builder is available which will be sometime in July. I am planning to stay in my rented accommodation until the flat is ready. I have asked my solicitor if the vendor could pay my solicitors fees, indemnities direct or part of the stamp duty as part of the agreement to cover the works, he said they couldn't pay for my legal fees, but he didn't seem that sure on the others (he appears quite junior so I have asked him to ask his colleagues for their ideas!).

Does anyone have any good ideas on how we can work around this? And I am yet to inform the estate agent or vendor of this - ideally looking for a fairly concrete proposal of action before I go back to them.......

Paragraphs added for readability.

I'm baffled.

You want to reduce your offer by £10k because of your plans for modifying the property, with the excuse of the survey showing that what you had grounds to suspect is a problem actually is one.

But you want to lie to your lender about the actual effective purchase price, by offsetting costs from you to the vendor for work done to your specification post-purchase, so that the lender don't twig that the income they based their original offer on is no longer there.

Now, I'm sure that I'm just missing something, and this isn't quite as the situation really stands, but...?

CPFC_79

I wouldn’t call it modifying, I’d call it rectifying. 

The previous owner before the vendor removed all the fireplaces in the flat as part of the conversion. We have subsequently found out that no support was installed, solicitors have found out there is no building approval docs for removal and no party wall agreements. I have also now been in the flat above and the hearth in the remaining fireplace above my prospective bedroom is cracked and falling through the floor. Absolutely no reason for me to suspect this would be a problem on my first viewing. 

 Equally I did not envisage a small leak meant an entire new roof - 2 months later thanks to subsequent leaks, it is apparent that, that is the case. 

I have more than enough money to pay the mortgage but as we all know, that often isn’t enough to satisfy the banks. 

Crashy_Time

In this climate you should probably be reducing a bit more than 10k IMO.

stevieboy308

Crashy_Time said:

In this climate you should probably be reducing a bit more than 10k IMO.

Keep talking it down!!!

greatcrested

If you want to pay £10K less than you are declaring as the purchase price to the lender, you are commiting fraud. Simple as that.

Either walk away, or reduce your offer once agreed with the seller inform your solicitor (if using one) and lender of the new price

ps - no requirement for a party wall agreement.

Sistergold

You could also just ask them to do and pay for the structural work before exchange and completion? Why buy such a big problem anyway?