FTB: Last minute finding out about roof replacement, negotiate?

misskismet

I am a FTB in the process of purchasing a flat. This has been going on for four months even though there is no chain. Currently in temporary accommodation and desperate to get out. 

Supposed to be exchanging and completing by the end of this month (which seems unlikely). A few days ago I got a pack of paperwork from the solicitors, including the revelation major works are due on the building - a new roof. Costs to be shared amongst the leaseholders (there are 12), but there is no estimate of cost, and calling the council hasn't helped. I was so looking forward to moving in and having my own place but feel really disappointed (and annoyed that this has been kept from me for so long.)

Can anyone help me with estimating at least a rough figure of what a pitched roof might cost on a low rise block? And am I now in a position to negotiate on the price I am paying? This is a big unexpected cost that I will face and as I am already paying over the asking price, I would like to reduce my offer. Just not quite sure how to go about this. I am a solo buyer and doing this on my own is hard and stressful. 

macman

What's the approx floor area of the block (not the flat)? How many flats per floor? 4x3, 3x4, 2x6? Of course you are in a position to negotiate, since you haven't yet exchanged.
Is there any sinking fund in place to cover this sort of major expenditure? Is the LA the freeholder?
It hasn't been 'kept from you'. It's come up in the searches, and the conveyancers have done their job. At the point that you viewed and made your offer, the work may not have been ongoing, since there had apparently been no roof. survey and no quote for the work.

eddddy

As above, it's possible that the seller didn't know about the planned works, but it's also possible that the seller knew but didn't say anything to the EA or you.

You mention negotiating / reducing your offer - but you will also need to think about whether you have enough ready-cash to pay for the roof repair? (Although some council freeholders allow you to pay in installments.)

For example, let's say:

• You offered £200k for the flat, and you have £20k savings, so...
• 90% mortgage = £180k
• 10% deposit = £20k 

• The roof repairs cost £10k, so you reduce your offer to £190k (and you still have £20k savings)
• 90% mortgage = £171k
• 10% deposit = £19k

So you have £1k savings left over - but you'll be getting a bill for £10k for roof repairs. So you're stuck.

misskismet

The sellers did know about this as the letters from the leaseholder (local authority) are from last year (a few months before it was put up for sale, interestingly). There were also two other sales but each fell through. I was told believable reasons for this but now have my suspicions. 

I am a cash buyer. I do have extra savings but need those to furnish the flat, put carpets in (sellers ripped half of them out), get boiler serviced, various things fixed. I was willing to let those things slide as I was keen to get in, but the roof issue is a much larger issue. 

There are 12 homes, each with two floors, with a total of four floors (one flat on top of another). I am not sure of the total length of the building. Maybe 50-60 metres? 

GDB2222

How long is a piece of string? Local authority freeholders are notorious for incredibly high costs of any works. It's quite likely, based on my experience, that you will get a bill for £10-20k

It's not just this major works bill that is likely to be high, but all the bills in future. There's a reason why LA flats tend to be sold for a fraction of private sector flats.  You said that you're a cash purchaser. Are you sure that this flat is mortgageable? If not, you'll only be able to sell to a cash buyer, at a major discount.

Personally, I'd steer clear.

misskismet

Thank you. How do I know if a place is mortgageable or not? 

There is no lift or anything so not sure what other communal works could take place. 2/3rds of the building is other leaseholders. 

I am in two minds at the moment. The price of the flat is reasonable. If I pull out now, it will cost me up to £10,000 when fees and rent for (at least) the next six months are taken into account. So am trying to weigh everything up and get some clarity before talking to the agent and making a final decision. 

misskismet

I have just read through this and none of these apply: https://www.propertyinvestmentsuk.co.uk/unmortgageable/
I wouldn't be planning on selling and moving before the roof work had been done.