Down-valuation on new build flat

ashnelson34

poolboy said:

If the managing agent is peverel or first port as they now call themselves, I would try and get out of the deal.  Their service charges are a lot higher than they should be.  If they are hard coded into the lease you can't get rid of them and they know it.  A central block will have a highish percentage of renters in so if they aren't hard coded in the lease, you will need I think half of fellow owners to get a change, in my block of c100 flats I got 5 fellow owners to try to get a change.
The service charges on my flat are eye watering, which impacts on the resale.  When I bought 15 years ago they were c 1500gbp pa, about average for a 2 bed with lift.we are having remedial works so I have paid 6k, 4k, 3k in the last 3 years. Conversely, I own a neighbouring flat which is  really well managed, no lift, but I pay 900 pa service charge.  You obviously cannot recover high service chrges from tenants so it is your cost.

Regarding your purchase, if it were me and hindsight is a wonderful thing, I would buy a house.

The developer is called strawberry star, and the lettings agency will be also under strawberry star so neither of the above that you've mentioned. The service charge is currently set at £2.50 per sq.ft which for me comes out at about £1250pa, for the upkeep of the grounds inc. private rooftop gardens, 24/7 concierge amongst other niceties i don't think this is too bad considering.

Thankyou for your advice

AdrianC

You say you can afford to cover the downvaluation... So you CAN buy it.

The question is whether you want to or not.

Is this purely down to somebody saying "We're not sure it's worth that"?
Do YOU still think it's worth that?

Have to admit, I think more than a quarter of a million quid for a one bed flat sandwiched in between a retail park, a car factory, a railway line, a motorway link road, and an airport sounds... optimistic.

eddddy

Just to be clear - you won't be any better off as a result of pulling out. The developer will almost certainly claim all their losses from you - because you've breached the contract.

So for example:

• You've contractually agreed to pay £260.5k 
• If you back out and they resell at the best price they can reasonably get for the property - which might be £230k....
• They will claim £30.5k from you - plus their costs of reselling.

So they'll keep your £26k and sue you for the rest.

ashnelson34

eddddy said:

Just to be clear - you won't be any better off as a result of pulling out. The developer will almost certainly claim all their losses from you - because you've breached the contract.

So for example:

• You've contractually agreed to pay £260.5k 
• If you back out and they resell at the best price they can reasonably get for the property - which might be £230k....
• They will claim £30.5k from you - plus their costs of reselling.

So they'll keep your £26k and sue you for the rest.

Thanks for clearing this up for me, losing £26k + sued for loss of value and resale costs is not what I want or can afford. I feel like I've ultimately found my answer... stick with and try and push for a discount. Failing that, hope the appeal of flats/apartments goes back to pre-covid times.

Crashy_Time

You will eventually lose more by sticking IMO, walk away and cut your losses.

Crashy_Time

ashnelson34 said:

eddddy said:

Just to be clear - you won't be any better off as a result of pulling out. The developer will almost certainly claim all their losses from you - because you've breached the contract.

So for example:

• You've contractually agreed to pay £260.5k 
• If you back out and they resell at the best price they can reasonably get for the property - which might be £230k....
• They will claim £30.5k from you - plus their costs of reselling.

So they'll keep your £26k and sue you for the rest.

Thanks for clearing this up for me, losing £26k + sued for loss of value and resale costs is not what I want or can afford. I feel like I've ultimately found my answer... stick with and try and push for a discount. Failing that, hope the appeal of flats/apartments goes back to pre-covid times.

In that case push for a discount.

GDB2222

ashnelson34 said:

poolboy said:

If the managing agent is peverel or first port as they now call themselves, I would try and get out of the deal.  Their service charges are a lot higher than they should be.  If they are hard coded into the lease you can't get rid of them and they know it.  A central block will have a highish percentage of renters in so if they aren't hard coded in the lease, you will need I think half of fellow owners to get a change, in my block of c100 flats I got 5 fellow owners to try to get a change.
The service charges on my flat are eye watering, which impacts on the resale.  When I bought 15 years ago they were c 1500gbp pa, about average for a 2 bed with lift.we are having remedial works so I have paid 6k, 4k, 3k in the last 3 years. Conversely, I own a neighbouring flat which is  really well managed, no lift, but I pay 900 pa service charge.  You obviously cannot recover high service chrges from tenants so it is your cost.

Regarding your purchase, if it were me and hindsight is a wonderful thing, I would buy a house.

The developer is called strawberry star, and the lettings agency will be also under strawberry star so neither of the above that you've mentioned. The service charge is currently set at £2.50 per sq.ft which for me comes out at about £1250pa, for the upkeep of the grounds inc. private rooftop gardens, 24/7 concierge amongst other niceties i don't think this is too bad considering.

Thankyou for your advice

Nobody knows what the service charges will be. That depends on the actual costs, and the developer has simply estimated a figure for now. It's pretty much plucked out of the air, as the flats are not even built yet.

Putting yourself in the position of a developer, trying to sell flats, you'd estimate on the low side, wouldn't you?  Very, very low side, if you have any sense. 

You might even subsidise the service charge fund for a year or two, until all the flats are sold. It's just part of the marketing budget.

Crashy_Time

AdrianC said:

You say you can afford to cover the downvaluation... So you CAN buy it.

The question is whether you want to or not.

Is this purely down to somebody saying "We're not sure it's worth that"?
Do YOU still think it's worth that?

Have to admit, I think more than a quarter of a million quid for a one bed flat sandwiched in between a retail park, a car factory, a railway line, a motorway link road, and an airport sounds... optimistic.

Sounds laughable to me, but unfortunately many many people have been duped into believing this sort of thing represents value, national scandal really......

Crashy_Time

GDB2222 said:

ashnelson34 said:

poolboy said:

If the managing agent is peverel or first port as they now call themselves, I would try and get out of the deal.  Their service charges are a lot higher than they should be.  If they are hard coded into the lease you can't get rid of them and they know it.  A central block will have a highish percentage of renters in so if they aren't hard coded in the lease, you will need I think half of fellow owners to get a change, in my block of c100 flats I got 5 fellow owners to try to get a change.
The service charges on my flat are eye watering, which impacts on the resale.  When I bought 15 years ago they were c 1500gbp pa, about average for a 2 bed with lift.we are having remedial works so I have paid 6k, 4k, 3k in the last 3 years. Conversely, I own a neighbouring flat which is  really well managed, no lift, but I pay 900 pa service charge.  You obviously cannot recover high service chrges from tenants so it is your cost.

Regarding your purchase, if it were me and hindsight is a wonderful thing, I would buy a house.

The developer is called strawberry star, and the lettings agency will be also under strawberry star so neither of the above that you've mentioned. The service charge is currently set at £2.50 per sq.ft which for me comes out at about £1250pa, for the upkeep of the grounds inc. private rooftop gardens, 24/7 concierge amongst other niceties i don't think this is too bad considering.

Thankyou for your advice

Nobody knows what the service charges will be. That depends on the actual costs, and the developer has simply estimated a figure for now. It's pretty much plucked out of the air, as the flats are not even built yet.

Putting yourself in the position of a developer, trying to sell flats, you'd estimate on the low side, wouldn't you?  Very, very low side, if you have any sense. 

You might even subsidise the service charge fund for a year or two, until all the flats are sold. It's just part of the marketing budget.

Yep, it is amazing that people still fall for it.

aoleks

The future investment idea doesn’t sound very plausible, that area is not in high demand and it probably won’t change anytime soon, not with a flat anyway. Luton has quite a bad reputation as a city and living next to an airport that relied on freedom of movement for its traffic doesn’t bode well after brexit, but that’s me.

inwould try to negotiate it down in first instance…