First time buyer purchasing an estate leasehold property.

samanthabrooke

A first time buyer here, in need of some advice and maybe 🤔 reassurance that she’s making the right decisions. 

Right! So my offer was accepted on this property a couple of weeks back ( I’ll include some pictures or links below)

However, I seem to be having some doubts (or maybe it’s just FTB nerves ). I absolutely love this property. Its in pretty good conditions - not much needs to be done, It  really is a case of moving in and I’ll be pretty much ready go. Offers were very competitive on this property and so I had to offer £10K more than asking price before my offer was accepted.

My first question is, is this 2 bedroom flat worth £200K in  Rochester Kent? Other flats in the same estate are going for around £160 - 170K. Granted, they are not as modern and refurbished but the neighbours in the opposite corridor sold their flat for £150K in Feb 2021. This flat will be the highest sold flat in the whole estate this makes me worry if this will be a profitable investment seeing as it already the highest in the whole estate? 

This property is located in Rochester, 20 mins walk to the train station. It Overlooks the river with a lease of 2 years, ground rent of £15 pa and roughly £240 service charge quarter. It’s really does have some great qualities but as this flat is on an estate, I’m a little worried about the stigma and valuation impact that may affect this investment in the future. 

Personally, I by no means look down on an estate in any way but I’d be lying to assume others don’t have their own stigma on an estate property . I personally grew up on an estate myself. My long term goal is to rent this property out in the future, potentially sell it after a long long time. 

My only worry is, will an estate property increase in significant value? Will others be reluctant to live there because it on an estate ? Will my rental yield be negativity affected because it on an estate? Is there anything else I need to look out for ? All of these questions keeps running through my mind. 

I know it probably makes no sense and no one may well have any concrete answers to my questions, but I just thought it worth posting this on the forum and getting everyone thoughts and opinions. 

samanthabrooke

Included some pictures for reference below  

london21

samanthabrooke said:

A first time buyer here, in need of some advice and maybe 🤔 reassurance that she’s making the right decisions. 

Right! So my offer was accepted on this property a couple of weeks back ( I’ll include some pictures or links below)

However, I seem to be having some doubts (or maybe it’s just FTB nerves ). I absolutely love this property. Its in pretty good conditions - not much needs to be done, It  really is a case of moving in and I’ll be pretty much ready go. Offers were very competitive on this property and so I had to offer £10K more than asking price before my offer was accepted.

My first question is, is this 2 bedroom flat worth £200K in  Rochester Kent? Other flats in the same estate are going for around £160 - 170K. Granted, they are not as modern and refurbished but the neighbours in the opposite corridor sold their flat for £150K in Feb 2021. This flat will be the highest sold flat in the whole estate this makes me worry if this will be a profitable investment seeing as it already the highest in the whole estate? 

This property is located in Rochester, 20 mins walk to the train station. It Overlooks the river with a lease of 2 years, ground rent of £15 pa and roughly £240 service charge quarter. It’s really does have some great qualities but as this flat is on an estate, I’m a little worried about the stigma and valuation impact that may affect this investment in the future. 

Personally, I by no means look down on an estate in any way but I’d be lying to assume others don’t have their own stigma on an estate property . I personally grew up on an estate myself. My long term goal is to rent this property out in the future, potentially sell it after a long long time. 

My only worry is, will an estate property increase in significant value? Will others be reluctant to live there because it on an estate ? Will my rental yield be negativity affected because it on an estate? Is there anything else I need to look out for ? All of these questions keeps running through my mind. 

I know it probably makes no sense and no one may well have any concrete answers to my questions, but I just thought it worth posting this on the forum and getting everyone thoughts and opinions. 

You mentioned rental yield, are you buying the flat to live in or for investment?

You mentioned the flat is the most expensive in the estate, are the others going for  £160 - 170K are not as modern and republished, do you know the lease left on those also?

Flats in the same area can go varying amount depending on the number of years  lease left on the lease etc.

Have you had the flat surveyed, did it come back with the price you offered? 

If you are not happy with your purchase, you can change your mind before exchange, but if not interested inform the seller and cut your losses.

samanthabrooke

Hey @london21,

My current plan is to live in the property for about 2-3 years and possibly change it to an investment property and then letting it out for monthly second income.

It is indeed most expensive in the estate and your are correct. From what I can see on Zoopla, its also the most modern and refurbished flat. I guess I did factor that into my offer initially - but just having FTB jitters. They've all had/have long leases similar my property. 

I haven't had the flat personally surveyed yet, the bank are doing this next week I believe and this might give me a good indication if I've overpriced for the property right?

Differently do not want to lose out on this property but just scared that an estate/local authority flat might not be the best investment decision especially with the stigma attached to them  

eddddy

It looks like an ex-local authority flat. That might be a little bit harder to get a mortgage on and/or difficult to get a high loan-to value mortgage.

You need to consider the risk that the local authority decide to do refurbs/upgrades to the buildings or estate, resulting in large bills to leaseholders.

Most leases require carpets to be laid - those hard floors may be a breach of the lease. If somebody complains to the freeholder, you might have to lay carpet.

The mortgage valuer might query the hard floors. If not, you need to decide whether to tell your solicitor and cause some hassle and delays. Or just keep quiet and hope that nobody complains - but be prepared to lay carpets, if they do.

Racky_Roo

It also looks to have a flat roof which will need replacing every so often.
The service charge seems quite low to include things I'd expect such as communal cleaning, window washing, buildings insurance and gardening so there may not be a big sinkage fund. That means when big works do need doing, you'd be expected to contribute.
I'd check A if the £240 a quarter is correct. B, what you're getting for that service charge and C if there is a sinkage fund and what the pot is worth

NameUnavailable

You say it has a lease of 2 years?????

Hopefully that's a mistake.

Have you had a mortage valuation and offer yet?

samanthabrooke

eddddy said:

It looks like an ex-local authority flat. That might be a little bit harder to get a mortgage on and/or difficult to get a high loan-to value mortgage.

You need to consider the risk that the local authority decide to do refurbs/upgrades to the buildings or estate, resulting in large bills to leaseholders.

Most leases require carpets to be laid - those hard floors may be a breach of the lease. If somebody complains to the freeholder, you might have to lay carpet.

The mortgage valuer might query the hard floors. If not, you need to decide whether to tell your solicitor and cause some hassle and delays. Or just keep quiet and hope that nobody complains - but be prepared to lay carpets, if they do.

Thanks for raising this, I’ll definitely keep this in mind when having a look at the contract or actually raise with the solicitor when they come back to me. 

I can’t imagine the current owners would intentionally lay hard floor knowing it breach in their contract. They’ve lived at this flat for 6 6years now - you can never be too sure with these things I guess.  

samanthabrooke

NameUnavailable said:

You say it has a lease of 2 years?????

Hopefully that's a mistake.

Have you had a mortage valuation and offer yet?

Ha! 92 years I mean 😭 

Haven’t had any of those yet, just waiting on the bank to make a decision if they believe it’s worth my offer price as it is an ex local authority property. Anxious 😬 

samanthabrooke

Racky_Roo said:

It also looks to have a flat roof which will need replacing every so often.
The service charge seems quite low to include things I'd expect such as communal cleaning, window washing, buildings insurance and gardening so there may not be a big sinkage fund. That means when big works do need doing, you'd be expected to contribute.
I'd check A if the £240 a quarter is correct. B, what you're getting for that service charge and C if there is a sinkage fund and what the pot is worth

Sorry if this question doesn’t even make sense but : what is the typical life expectancy of a standard flat roof? I know the seller did a full refurbished in 2016 and I take it that’s when the flat roof was done… does this mean it might be due replacing soon? It’s been a whole 6 years - could this be a red flag ? 

Ground round is about £1K annually and I believe it does cover all of the above point you mentioned but I think the current seller just get the choice to pay this every couple of months. But yes, I’ll will have a finer look into the coverage of the service charge and if there’s a sinkage pot. Thank you so much ☺️