Selling Flat with major works

thelanky1

Just looking for some advice. We are currently in the process of trying to sell our shared ownership flat. There are current major works going on which was originally quoted at costing £10,000 per resident. This will be invoiced in September this year.

The works should cost significantly less as £9000 was quoted for scaffolding and they have managed to use a cherry picker.

We don’t want people to think we are trying to move because of the works as that’s not the reason and are being as open and honest about the work.

We are going to propose on leaving a £5000 retention. Now clearly this isn’t the full estimate, but we simply can’t afford to leave that much. If we were staying we would have to take a loan out to pay it anyway.

My question is if people think we are being reasonable? Anything else we can do?

Thanks 

davidmcn

So what are the works likely to cost for your flat? It's not clear from your post.

NameUnavailable

What are the major works for? Is it to do with cladding?

Put yourself in a buyers shoes. Why should they buy your flat with a yet to be determined bill due to land in September, compared to buying any other flat in the area that hasn't got any large bills due in a few months?

Of course if the £5K will cover the bill that's a different matter although there's still the risk that the costs end up higher.

Mildreds_Earrings

@thelanky1 Assuming the landlord is a housing association, ask them to provide a written estimate of the costs per leaseholder, since they have used a cherry picker and not scaffolding which costs considerably more.  You would have received S20 Consultation of Major Works documents, which will have the estimates but let them know that you are trying to sell the property and you need a more up to date estimate per property.  Depending upon who the housing association is, there may be a fee for providing this information because it is additional work.  Either way, once you get a Buyer, you will have to obtain the LPE1 form from the housing association and there will be a question about major works on the LPE1, and you will have to pay the housing association to complete the LPE1 form anyway.

thelanky1

Thanks for the replies.

A Section 20 process was completed and the estimated total cost in the region of £40,000. This is for cyclical redecoration and repairs on the outside. There is a sinking fund which has about £3000. The estimate was on the high side partly because there were a lot of reports that could have been worse when starting. However things haven’t been that bad. Plus the use of the cherry picker has helped reduce the cost.

Each resident is looking at an estimated bill of £10,000.

I am hoping that things will become clearer when a management pack is sent etc.

The valuation of our property was also lower because of the works and because it’s shared ownership we have to see for the valuation.  There are also no shared ownership properties in our area and so the housing are confident that our property will sell regardless. 

I am just going to try and be open with any potential buyers and see what happens. 

Thanks 

princeofpounds

Best thing is to be transparent about it. But honestly most people are going to budget for the 10k number until they see a different estimate from the leaseholder. Your 5k estimate for a retention isn't likely to cut it until then.

HampshireH

The Landlord is optimistic.

Shared ownership is deemed an affordable option. Adding a major works bill of between 5-10k within weeks of completion makes it far less affordable

Say cherry picker was £2k and your fund is £3k

So that's £8750 per flat give or take.

AnotherJoe

I think you may find it better to wait until the bill has been paid, or at least, is known for sure.   The trouble is, your flat has an expected bill of, say £10k, and you might say the price reflects that, and lets say it really does, trouble is many will still want to knock off £10k as well.
And then many buyers of a part ownership flat won't be in a position to pay an extra, say £5k and may well be worried the price comes out much higher than the £10k, and will avoid your place so at best the price is reduced more than it ought to be. 

Can you wait ?
if not, good luck let us know how it goes 

AdrianC

So there's four flats?

£40k - £9k scaff + £2k cherrypicker = £33k = £8,250/flat.
You're offering a £5k retention.
So the question is effectively whether the effect on saleability from that potential questionmark can be offset by reducing the price £3,250...

I'd say that it's worth paying the bill.

The bill's due in September. It's now April. Five months. It wouldn't even require a particularly major delay in the sale for the bill to fall due before completion.

GDB2222

Is the real problem that someone is going to have to stump up cash of between £8-12k soon? It can’t be added to the mortgage by the OP, and a reduction in the sale price does not help the buyer that much, as they would have to have the major work money on top of their deposit. 

So, the OP is saying that he only can afford £5k of the eventual amount. And, more or less by definition, buyers of shared ownership property do not have a spare £8-12k. 

I don’t see a solution.