Offer on suspect defective bungalow

Superfuse

https://www.rightmove.co.uk/properties/105062762?utm_campaign=property-details&utm_content=buying&utm_medium=sharing&utm_source=copytoclipboard#/&channel=RES_BUY

We've viewed the above 1970's property and suspect that it's a 'Woolaway' PRC prefabricated concrete bungalow. There are cracks at regular intervals along the outside concrete render. I don't think it's ever had a PRC repair and suspect it's come to the end of it's life. I've seen that people prop up the roof and replace the walls. Others demolish and rebuild. I therefore suspect that it is unmortgageable. It is listed as non-standard construction and the previous buyer pulled out due to mortgage issues.

Note that it also has an Agricultural Occupancy Condition. A certificate is in place which grants exemption from this. Getting the agri tie removed is probably not likely as a planning application to remove it was submitted and later withdrawn.

We made an offer, taking into account the work required to replace the walls and the agri tie. It was rejected, with no counter offer or comments.

I'm opening up the question to the floor; around what figure would you expect to pay?! We're happy to replace the walls but don't want to end up paying more than the final product is worth! House has been on market for 4 months.

theartfullodger

Whatever you wish to offer.  What you end up paying is a different matter (both purchase and repairs).

user1977

Also this:

"Reservation Of Development Rights - The property is subject to a reservation of development rights whereby any permission granted for any additional development the vendor retains 40% of the uplift for a period of 30 years. Full details will be set out in the contract of sale."

What constitutes "additional development"? Hopefully not demolishing the existing house and building a replacement? May in any event make it difficult to mortgage, even once you've got rid of the non-standard construction and the planning issue.

Superfuse

user1977 said:

Also this:

"Reservation Of Development Rights - The property is subject to a reservation of development rights whereby any permission granted for any additional development the vendor retains 40% of the uplift for a period of 30 years. Full details will be set out in the contract of sale."

What constitutes "additional development"? Hopefully not demolishing the existing house and building a replacement? May in any event make it difficult to mortgage, even once you've got rid of the non-standard construction and the planning issue.

Sorry. The vendor confirmed prior to our first offer that he would remove the claw back. Any offers would be subject to that not being in place.

ProDave

The Lawful Development Certificate basically means they got away with breaking the Agricultural tie for long enough that it could no longer be enforced so to all practical purposes the tie would seem to be gone.

As a knock down and rebuild I would be trying for 2 houses on that plot.

If it is unmortgagable, the agents are doing the vendor a great dis service by not mentioning that as they will get a string of hopeful buyers who then pull out when they get the survey and mortgage refusal.  Hopes raised and then dashed for all parties again and again.

On the other hand, for a cash buyer there is no reason it won't make a good home, I doubt it is about to fall down any time soon.

AdrianC

The perennial question of "What would it be worth otherwise?"

This in the same village suggests it's overpriced, even ignoring the construction and tie issues.
https://www.rightmove.co.uk/properties/107359487#/

Superfuse

ProDave said:

The Lawful Development Certificate basically means they got away with breaking the Agricultural tie for long enough that it could no longer be enforced so to all practical purposes the tie would seem to be gone.

As a knock down and rebuild I would be trying for 2 houses on that plot.

If it is unmortgagable, the agents are doing the vendor a great dis service by not mentioning that as they will get a string of hopeful buyers who then pull out when they get the survey and mortgage refusal.  Hopes raised and then dashed for all parties again and again.

On the other hand, for a cash buyer there is no reason it won't make a good home, I doubt it is about to fall down any time soon.

I understand that if an agricultural worker occupies the dwelling, the AOC is reactivated and the dwelling will be instantly worth a considerable amount less. So, the condition will pose a risk to a mortgage company. This I guess would translate into a lower value.

The agents probably did not anticipate the mortgage refusals. They advised me that it was timber frame construction initially and have presumably valued it as such. I suggested that I thought it was PRC as part of my cash offer, but have had no reply. I guess they're going to wait for a £425k cash buyer. Will be interesting to see if anyone comes forwards. It probably won't collapse but the single skin walls and practically non-existent insulation would be an issue.

Gavin83

In answer to your question I’d pay up to £10k. At that price it’s worth the risk. Anything more I’d rather buy a house that was less hassle.

Superfuse

Gavin83 said:

In answer to your question I’d pay up to £10k. At that price it’s worth the risk. Anything more I’d rather buy a house that was less hassle.

Thanks for putting a figure on it! Makes my offer appear less offensive! 

teachfast

I would offer £60k maximum, and only if I had the means to rebuild in the near(ish) future.

Superfuse

teachfast said:

I would offer £60k maximum, and only if I had the means to rebuild in the near(ish) future.

I offered over 3x that...