Reduction in property price?

sticko24

Hi everybody 
Long time follower of MSE, such great advice on here but first time poster please be gentle with me!

Looking for a bit of input really. I’ll try to put all the main details in here : 

I have a property up for sale currently, a 1 bed ground floor flat. Been on the market for just over 6 weeks, had I think 6 viewings, no offers. 

6 weeks not a long time at all, I know, but...

I’m told flats are really struggling in my area currently, Bedfordshire. And in general I think, most likely due to the covid situation but honestly not 100% sure what the reasoning is. Could be many factors I could think of. 

To complicate things there are 4 other identical / similar flats in my very same block all up for sale! They are currently listed at 175k at the highest, all the rest at 170k. All are with a different estate agent.
 

EA Valuation was 170 to 173k on mine. I went straight in at 170 when all the others were 175k. They have since all reduced. Only one is still holding out for 175k.

 The longest one has been up for sale since September last year with no offers either. Owner of this one is talking about reducing down to 165k. 

Similar nearby properties are also all the 170k mark with the odd one at 165 or 160k.

I have previously decorated mine with upgraded features and a new bathroom so it looks different to all the others. Albeit not going to be to everyone’s taste but its all fairly neutral except for the  bedroom that has 2 x black walls. EA says could be repainted, but not likely to be the difference between an offer or not. 

More than happy to do that if we think it will help in any way though. 

My partner and I have today had a tentative offer on a property accepted that itself has also not sold for in excess of 16 months.

so, I’m wondering whether to get ahead of the other sellers and reduce and see if we get an offer so that we can be on our merry way to the new place, or hold out a bit longer. 

Anyone had any experience with flats pre-pandemic? 

Is it possible we are all slightly over-priced or is it genuinely a case of covid / other factors complicating things for the flat market? 

Any advice greatly appreciated  

Slithery

Does your block have a current, acceptable EWS1 form completed?

If not then you're looking at cash buyers only.

sticko24

Hi Slithery 

Thanks for your reply. I do not know. Nobody has yet mentioned this to me. I believe this is in relation to fire safety / cladding etc? It is a small apartment block of only 4 stories and of brickwork with no cladding etc so unsure if it is required? 

niceguyed

As slithery alludes, the whole cladding scandal has created huge risk for flat purchases although it isn't true that flats without an acceptable EWS1 are not mortgageable in all cases. Some lenders still don't ask although they will be in the minority I'd expect. You've also got to factor in the general bad press leaseholds attract and service charge costs can put off BTL buyers (as well as plenty of landlords cashing out in the current environment). So your pool of buyers is more niche and is getting smaller. You've also got competition in your block to sell which is driving prices down. I'm surprised your offer was accepted if your purchase relies on your flat sale as you're not proceedable. I'd say your only option is to compete on price and hope an EWS1 is not requested or you're low enough on price to entice a cash buyer to take the risk. If an EWS1 is requested then that could potentially take years to come through.

sticko24

Thank you niceguyed

Surely even with the bad press of leaseholds etc... first time buyers etc still need somewhere affordable? A flat is almost always leasehold and so surely there should still be a market for such properties? 

Indeed this was definitely my only option as a first time buyer. 

My offer is tentative, and tentatively accepted. They’ll of course sell to a proceedable buyer, should one come along, over our offer and I understand this completely. 

But as of the last 16 months they are still on the market so I guess our tentative offer was better than zero offer at all for the time being. 

I’ve messaged the management company about this ESW1 form and I’ll be asking estate agent why it’s never yet been mentioned. Suddenly makes sense to me why 2 viewers asked when the building was completed. 

Thanks for the input so far 👍🏼

Crashy_Time

Go to 150k and hopefully draw  in a buyer, if mortgage rates rise flats are going to be even harder to shift IMO.

moneysavinghero

I'd drop the price now though if i were you. 

niceguyed

Your management company may well not be proactive on this issue or actually see the need if they believe there are no risks in your block. Not much point in raising this with your EA, frankly it's not their job, this is down to the freeholder/management company and you. Yes, people need somewhere to live and flats are usually very much in the sights of FTBs so it's not whether there is a market for leasehold, but if the property is mortgageable. 

numbercruncher8

Without seeing the place I think you're priced too high. 
If the flats are identical then the ground floor ones are probably the least desirable ones.
Checking Rightmove you can get a new one-bed for £170k with HTB 0.5m from Bedford station so I think thats where the buyers are going.
You could post a link and people might give more tailored advice.

Edit - sorry misread Bedfordshire as Bedford so the comparison probably isn't valid. 

nightingale101

I'm a FTB and I'm currently on the lookout for 1 bed flats but also unsure if I should proceed with all these cladding scandals. Not sure if all buyers are thinking the same but I've been seeing a cluster of unsold flats in development blocks (new builds less than 5 years old) on the market since last year April! This is in London though.

sticko24

Hi nightingale .
Thanks for your reply. This is a similar situation, they were built in 2015 and no cladding or balconies to speak of, but maybe people are still concerned. 

Numbercruncher8 spoke to EA today they stand by their valuation and advise against reducing for at least 2 / 3 weeks so 🤷🏼‍♀️

They also have sold a 2 bed one in the identical block next door and say EWS1 has not been requested by the lender. 

Regards the ground floor / layouts. Not quite identical. Mine and one other are bigger and have x2 additional windows. 

Estate agent seem to think ground are the most desirable as they have little garden spaces. I guess they are thinking regards to lockdowns etc.
when I was buying I absolutely didn’t want an upper floor one, I wanted the little garden bit so guess it’s just whatever people’s preference may be. 

Crashytime unfortunately a 20k drop is too high for all of us selling. Nobody would then be able to move forward to their next step up on the property ladder. I could accept 160 as I’m fortunately moving into a much lower cost area, but 150 would be pushing it. 

To further complicate things, it is subject to a second charge as it was purchased using the help to buy scheme. So if I went too low and RICS surveyor valued higher than I sold it for HCA can refuse to release their 20% of the property. 

I guess I just have to monitor the situation and hope for the best.

Thanks for your input everybody.