Buying Flat - Rejected Retention for Sudden Roof Repairs

yona

My partner and I had our offer for the purchase of a flat in London accepted end of February. At the time, we felt we got a really good deal but now that the property market has collapsed due to Covid-19 the price we got is good but less so. Nonetheless, we never asked the seller for a discount on the purchase price even though we may be able to get a better offer elsewhere. From our initial viewing onward, we frequently asked the estate agent whether any significant work to the building was planned (specifically mentioning the roof) and were assured that there wasn't. In the past month we were suddenly told that there are leaks in the roof and that our share would be 4,500 GBP. The landlord and tenant organisation have already sought quotes and a section 20 works notice has been issued. The quotes vary greatly from only 2000 to 40,000 GBP shared between the flats. As they haven't made a decision yet on the extent of the work they want to execute, our solicitor asked for a retention for the 4,500 GBP from the purchase price. That means that the costs of the work would be taken off of our purchase price and the seller would get the remainder of the money should the works be less than 4,500 GBP. The first retention request was rejected by the seller's solicitor and our estate agent said that retention is normally only agreed if the work is already scheduled. Considering the collapse of the housing market and the other costs we need to put in the flat (incl. leasehold extension, completion of unfinished second bathroom, secondary glazing etc), we think it is unreasonable that they are rejecting our retention request, especially as we are willing to negotiate the amount of money. Is it indeed unusual to get a retention in this situation?

Wkmg

Why not just reduce your offer?

princeofpounds

"our estate agent said that retention is normally only agreed if the work is already scheduled"

You mean the vendor's estate agent? They don't work for you. Of course they're going to tell you not to worry about it.

It's not officially scheduled, but it sure is going to happen if they are already getting quotes - those leaks don't fix themselves.

davidmcn

Retentions are messy, especially if nobody's sure if/when the work will actually be done. Much cleaner just to agree a suitable price which reflects the current state of the roof.

eddddy

FWIW, the estate agent will be telling you that you're being unreasonable asking for a retention... 
... and the estate agent will also be telling the seller that they're being unreasonable by refusing to agree to a retention.

The estate agent just wants one (or both) sides to give in. Based on what you say, your request seems reasonable - but it's all down to negotiation. 

Who will give in first? Would the seller really walk away, rather than agree a £4.5k retention? Or would you walk away, if you can't get a £4.5k retention?

It's all part of the fun of buying and selling property.

AdrianC

When was the s20 issued, and when did the EA "assure" you there had been no s20s issued...? EAs are a lot of things, but they're rarely psychic. And they are, of course, always reliant on the vendor to tell them the truth, too...

That apart, anything and everything up to exchange is a matter of negotiation. You ask for a retention. They can disagree. If they disagree, you can choose to walk away. What other people might or might not agree to is irrelevant. This is between you and the vendor, via your solicitors.

Splatfoot

Also, there is no collapse of the housing market. You've been reading too much media without actually looking at the real situation. 

Slithery

yona said:
...but now that the property market has collapsed...

It hasn't...

AlexMac

AdrianC said:

When was the s20 issued, and when did the EA "assure" you there had been no s20s issued...? EAs are... rarely psychic. ...that apart, anything and everything up to exchange is a matter of negotiation. You ask for a retention. They can disagree. If they disagree, you can choose to walk away...

As Adrian says, that's it really. Unless the Vendor or their agent actively misled you by concealing known pending repairs, you can't really blame them.   But if they have an active Tenant organisation, you could maliciously wonder if this really did come out of the blue with no prior warning before the S20 notice?   Either way, I understand that the vendor may be reluctant to chip in, as you, rather than they, will benefit from the new roof!

So how about negotiating a mid-way position; either a retention or a price-cut eqauivalent to half the likely damage?  

I got a bung of a few hundred quid on retention and few months after my last leasehold purchase -  an ex local authority flat  - when the end of year  service charge adjustment  turned out to exceed the start year estimate.  My solicitor had asked for a retention witout me even asking.  But that was for "past"  - not future expense...  Good luck

yona

Thanks everyone for your responses, and useful to see the emphasis on it being a negotiation.

To be clear - my main question is whether it is really totally unusual to ask for (and agree) a retention if the work is already scheduled. Of course each negotiation is unique, but contextual knowledge could help us to refute this specific point. In response to some of the questions:

• We're still trying to get the date of when the s20 notice was issued, but believe it was in April or earlier (I realise this is vague - can update if we find out more).
• Two quotes were obtained in early and mid-May. We have reason to believe that work would start very soon given the on-going issues with leaks.
• Of course we could reduce the offer - we've suggested a retention as a solution that's in the interest of both sides (and presumably more amenable to the vendor), but could reconsider this. Thanks a lot for the advice regarding retentions being quite messy.

Splatfoot said:

Also, there is no collapse of the housing market. You've been reading too much media without actually looking at the real situation. 

You're of course right to say that collapse is overblown - but there has been a noticeable drop (the fastest since 2009) and that also shows in the area we are looking. In any case I merely set it out as relevant context, so let's not get into a pointless debate about house prices or whether anybody reads 'too much media' without looking at the 'real situation'. 

Splatfoot

yona said:

Thanks everyone for your responses, and useful to see the emphasis on it being a negotiation.

To be clear - my main question is whether it is really totally unusual to ask for (and agree) a retention if the work is already scheduled. Of course each negotiation is unique, but contextual knowledge could help us to refute this specific point. In response to some of the questions:

• We're still trying to get the date of when the s20 notice was issued, but believe it was in April or earlier (I realise this is vague - can update if we find out more).
• Two quotes were obtained in early and mid-May. We have reason to believe that work would start very soon given the on-going issues with leaks.
• Of course we could reduce the offer - we've suggested a retention as a solution that's in the interest of both sides (and presumably more amenable to the vendor), but could reconsider this. Thanks a lot for the advice regarding retentions being quite messy.

Splatfoot said:

Also, there is no collapse of the housing market. You've been reading too much media without actually looking at the real situation. 

You're of course right to say that collapse is overblown - but there has been a noticeable drop (the fastest since 2009) and that also shows in the area we are looking. In any case I merely set it out as relevant context, so let's not get into a pointless debate about house prices or whether anybody reads 'too much media' without looking at the 'real situation'. 

Yes, let's not get into a 'pointless debate'. I was merely correcting you.