Homebuyer's report on Garden Flat says damp, asbestos and fire damage - what to do?

runfaraway

I'm an FTB, buying a Share of Freehold ground floor flat in an old Victorian conversion (4 flats total in the building). It's a probate so info about the history, including when exactly it was converted/extended and last renovated, is non-existent. From the viewing I thought it needed a lot of cosmetic work, eg new kitchen, bathroom, flooring, and maybe a new flat roof over the living room, but otherwise wasn't in bad condition for something that looked like it hasn't been decorated since the 80s/90s. Also it felt liveable and worth the extra bit of work for the extended living room and garden.

However the survey has come back with significant damp in the walls (43.5 on some walls and 19 in the skirting), possible asbestos in the ceilings and kitchen floor, and the big kicker: The flat has a basement/coal cellar that no-one mentioned and which seems to have been on fire at some point. When I viewed the flat, what looked like a 5' high door to a cupboard in the kitchen and was locked turned out to be the basement door. Not sure how the surveyor even got into it as the EA didn't have a key.

The report says: "The property has a basement/cellar that extends beneath the communal hallway. Inspection of the sub floor timber indicated that there has been a fire at some stage and several timbers are burnt. These timbers will require replacing. Condition rating 3. These works should be carried out immediately" I've added the pics below fwiw.

Google results on buying a place with unfixed fire damage make it sound really bad. I'm not sure how much of the damaged timber is under my flat and how much is under common areas so would need all residents agreement to fix.

I definitely couldn't afford to fix everything on the survey marked "immediate fix" on the day I move in. It would need to be done over a few years .

With the fire damage plus the bad wall damp (no mention of damp in the basement weirdly) and some other more commonplace niggles like the extension is built over a sewer, gutters, soffits etc. are all knackered, should I see if I can get quotes to fix roof, damp, timbers and asbestos and negotiate some money off the price, or does it sound like altogether it's out of an FTB non-builder's league and time to cut losses and look for somewhere else?  

yksi

First of all: you aren't buying a "share of freehold ground floor flat". You are buying the leasehold of a ground floor flat, plus a (separate!) share of the freehold of the whole building/address. The distinction is important in regards to who is responsible for what.

As both the roof and the burnt joists are part of the building itself, it is likely that all four freeholders would be jointly responsible for the cost of the repairs. You need legal advice on the joists depending on whether they are wholly inside the area declared in your leasehold - it is entirely possible that the basement area is not part of your lease, in which case I would guess they are a joint responsibility as part of the fabric of the building, but either way it might be considered "inside" your lease boundary and therefore yours. Or it might be that a leaseholder caused the fire and is responsible for its repair... meaning you, if you take over this lease. But you need to know either way and it's a solicitor who will be able to find out.

This damage will significantly affect the value of your 25% share in the freehold, so keep that in mind. It is even possible that the cost of the damage would eclipse the value. You would need a quote for the repairs to determine this.

Lastly, and this is in no way a professional recommendation, but I would run a mile. I am part of a 7-part freeholder company for our building, and we've just had the roof replaced. It took more than three years of arguments and delays to get it done, and the whole time, water was coming in. If you can't get all three of the other owners to firstly agree on the repair and then cough up their share, you're essentially going to be stuck with the bill yourself or just forced to live with it. Worse, if anything collapsed (including the roof) your investments could all become worthless.

Point to ponder: in its current state it will be unmortgageable. That might not be a concern to you right now but it also makes it near-impossible to sell, should you suddenly need to, or even in five years time when you have a stunning property that you wish to market.

runfaraway

Thanks for taking the time to reply in such detail. The knackered flat roof is definitely inside my leasehold as it's only over my living room. The rest of the roof is the pitched roof on the original house.

The fire is definitely a concern though because I'm not a cash buyer and no hope to be in London. The mortgage was already approved, but obviously they didn't know about the fire damage. Even assuming it isn't fraud to withhold that info, I'll need to remortgage once my fix is up, and I'm guessing the buildings insurer will have an opinion on this, too.

From what you've said there's no hope for me here and it sounds like I need to drop out and start looking at other properties.  I was talking with my lawyer the other day about exchanging in a week or so if nothing came back on the survey. Has anyone else dropped out so close to exchange? Do you lose your mortgage approval and rate?  Should I call the EA and see if they have anything to say about this and why I wasn't shown or told about the basement on viewing?

TheJP

I think your profile name holds the answer here!

RS2OOO

Not a lot scares me but in this case I'd have to force myself to walk away and leave it for a developer to buy and sort out.

martindow

runfaraway said:

Thanks for taking the time to reply in such detail. The knackered flat roof is definitely inside my leasehold as it's only over my living room. The rest of the roof is the pitched roof on the original house.

The fire is definitely a concern though because I'm not a cash buyer and no hope to be in London. The mortgage was already approved, but obviously they didn't know about the fire damage. Even assuming it isn't fraud to withhold that info, I'll need to remortgage once my fix is up, and I'm guessing the buildings insurer will have an opinion on this, too.

From what you've said there's no hope for me here and it sounds like I need to drop out and start looking at other properties.  I was talking with my lawyer the other day about exchanging in a week or so if nothing came back on the survey. Has anyone else dropped out so close to exchange? Do you lose your mortgage approval and rate?  Should I call the EA and see if they have anything to say about this and why I wasn't shown or told about the basement on viewing?

You may be right about the flat roof, but that is not necessarily the case and you need to look at the lease to be sure of who is responsible for what.

It does seem academic in view of the fire damage - hats off to the surveyor for doing a thorough job!

runfaraway

Ok so I spoke to my lawyer about pulling out, they were very blasé saying they would pass the survey on to the lender if the lender is still happy to lend then I could just "take on the risk" that it would need to be fixed to be able to remortgage the property or sell. They suggested the best approach was to review the property and look at the basement myself and see how I feel and see if I can get someone in to quote on fixing the damage.

Lawyer said if I put any specific legal questions in writing they can look into them for me, but is that just throwing money into a pit? I was told apart from searches they'd only charge me on completion, but I'm guessing they can charge me anytime I don't complete.

I also called the EA out of courtesy to say I'd had a bad survey and they're going nuts now about me blowing up my mortgage offer and asking to reduce the offer after the mortgage company have already surveyed the property in person and "would've already seen all this". They called me back 30min later to ask where the entrance to the basement is after discovering no-one on the sale was aware there was a basement.

Need to speak to my broker and hopefully he's sane, reasonable and willing to help because I'm feeling a bit on my own here.

Also I looked at what's available in same area and there's hardly anything on the market in my budget now. Apart from a place I looked at that was right at the top of my budget which is still on but now 15k more expensive. It had water pooling on the floor in the living room and wet walls in the bedroom when I viewed it. Trying my best to not get emotional about this. Buying a home is brutal.

martindow

I would disregard the agent as they are only interested in collecting their fee and in any case they work for the vendor.

Have you spoken to the surveyor?  In a call they will be much more forthcoming  - what they write will always be more guarded.  I have called surveyors in the past and it has been very helpful in deciding whether to continue or to pull out.

You also need to see the lease to see which parts of the building you are responsible for, what maintenance and repairs would be shared amongst all of the leaseholders and the percentage that would be payable by you.

Please step back and consider this carefully, as the surveyor has picked up what could be a real and very expensive issue with this flat. 

runfaraway

I'm about to phone them. The EA is really playing hardball now and saying the seller has seen the photos (the ones in my post) and is disputing that there is any burnt wood in them. I'm going to view the property again just on the off chance that it was a mistake but sounds like the seller is gearing up to make all decisions for me. What a mess!

RS2OOO

The first photo clearly shows burnt wood.

The other photos not so much.

Whether it has burned enough to affect structural integrity will not be easy to determine since a lot of properties of that period are quite significantly over-engineered to begin with, but the wood will have almost certainly been weakened to some extent.

badger09

runfaraway said:

I'm about to phone them. The EA is really playing hardball now and saying the seller has seen the photos (the ones in my post) and is disputing that there is any burnt wood in them. I'm going to view the property again just on the off chance that it was a mistake but sounds like the seller is gearing up to make all decisions for me. What a mess!

The EA is working only for the vendor, and for their commission, obviously. DO NOT let either the EA or vendor bully you into making the most expensive purchase of your life. Especially, as in this case, it could turn into a money pit - literally! - and a complete nightmare. 

If you're still really keen on the flat, speak to the surveyor. However, in your shoes, I would walk away now.
Good luck