Stay or Sell?

Hotbunnycharlie

Hi all, 

looking for some advice please. My husband and I own a flat caught up in the cladding scandal. We’re very fortunate to not have to pay for waking watch, but are facing a £30k bill if we don’t get any money from the govt fund and a £6k bill if we do get some of the fund.

We had planned to live here for the next 4 years, save up and sell and move abroad. Our mortgage costs are low thanks to buying at the right time, and our DI is very high, so there was never an incentive to change our plan until the EWS1 issue came along. There is no chance the freeholder will not pass on the costs, so whatever action they have to take we will be footing the bill for. 

Now we’re facing a tough decision: Do we try and sell for cash, take a bit of a bath on what the flat is worth and buy somewhere more expensive but without a huge bill hanging over our heads. We can afford it even though our DI will take a big hit. We don’t have any savings now so would have to use any profit from the sale for deposit on the new house.  Or do we stay where we are and hope by some miracle we are fully funded, or there is some way to pay down the amount we won’t get funding for, and just wait out the next few years of the renovations etc? I could hope that the government will go the Australia route with supporting leaseholders but the indicators are showing that’s very unlikely.

We are absolutely flummoxed so some outside perspective would be greatly appreciated! 

Thanks in advance. 

Skiddaw1

For what it is worth, if I were in your position I think I'd prefer to get what I could for it and move on. I think the chances of a miracle are remote at best and there's no point in throwing good money after bad as it were. Just very sorry for you and everyone in the same boat. It's a scandal.

lookstraightahead

Skiddaw1 said:

For what it is worth, if I were in your position I think I'd prefer to get what I could for it and move on. I think the chances of a miracle are remote at best and there's no point in throwing good money after bad as it were. Just very sorry for you and everyone in the same boat. It's a scandal.

I agree with this. 

AdrianC

What is "DI"?

If you can possibly afford to cover the bill, do so, even if it involves extending your mortgage.

Selling an unmortgageable flat, at the peak of uncertainty, with the potential for a large bill, during the tail end of a pandemic that leaves many potential buyers uncertain of their plans is almost certain to involve a larger hit to the potential sale price than the eventual bill. In addition, you will be looking at either renting for the remaining time before your departure or a second set of purchase and sale costs.

Section62

AdrianC said:

Selling an unmortgageable flat, at the peak of uncertainty, with the potential for a large bill, during the tail end of a pandemic that leaves many potential buyers uncertain of their plans is almost certain to involve a larger hit to the potential sale price than the eventual bill. In addition, you will be looking at either renting for the remaining time before your departure or a second set of purchase and sale costs.

Completely agree. Any buyer with sense will factor the costs and uncertainty into what they are willing to pay, and then expect a big discount on top.

It is potentially the worst possible time to sell.

SDLT_Geek

AdrianC said:

What is "DI"?

Disposable Income at a guess.  Anyone else have any ideas?

Skiddaw1

But at least the OP would be freed from a potential millstone around their necks. I see where you're coming from, but it seems to me that sitting tight and hoping to ride things out is equally a gamble. Even when the cladding issue is resolved (and there's no timescale by the sound of it, even leaving aside the cost) there's still no guarantee that the flat will sell easily (I think many potential FTBs will be put off the whole idea of buying flats for a long time to come). If it were me I'd rather take the loss and run if it was feasible to do so.

GDB2222

Let me see if I have got this right. I'll invent some figures, for clarity.

Flat is worth £200k if there were no cladding issue.

Cladding will cost £30k. 

So, net value of the flat is £170k say.

Some cash buyer might buy it for what? £120k, maybe?



Why on earth is it better for the OP to sell for that and see their equity decimated?

Hotbunnycharlie

SDLT_Geek said:

AdrianC said:

What is "DI"?

Disposable Income at a guess.  Anyone else have any ideas?

It is disposable income,  sorry for confusion! 😊

AdrianC

GDB2222 said:

Let me see if I have got this right. I'll invent some figures, for clarity.

Flat is worth £200k if there were no cladding issue.

Cladding will cost £30k. 

So, net value of the flat is £170k say.

Some cash buyer might buy it for what? £120k, maybe?



Why on earth is it better for the OP to sell for that and see their equity decimated?

One minor correction...

Cladding might cost £6k, might cost £30k.

GDB2222

Hotbunnycharlie said:

SDLT_Geek said:

AdrianC said:

What is "DI"?

Disposable Income at a guess.  Anyone else have any ideas?

It is disposable income,  sorry for confusion! 😊

Hi. You've confused me, so I have a couple of questions.

You say that you have lots of disposable income, so how long will it take you to save up £30k? 

Do you have reasonable equity in the flat, and have you asked your existing lender whether they will lend you the £30k?  Perhaps it would clarify things if you set out what your mortgage is, and what the flat would be worth once the cladding is sorted