FTB: How much should we offer for a flat with (potential) flaws?

NaeClue

Hi everyone,

My partner and I are FTB in London and have come across a house that we really like but have been debating how much (if at all) we should offer for it for a good week and a half now. Hoping that people with more experience than us might be able to either talk us out of it (totally fine), or give an indication if we're being too cautious and making the potential flaws a bigger deal than they are.

Bit of background:
We've been looking for a flat to buy for about 2 months at this point. We're not overly in a rush but have gone to see a couple of places, none of which have really blown us away so far. That is until the estate agent took us to a flat in a good location that I had seen on the market a couple of weeks prior and that back then was completely out of reach for us price wise. By now, the price had dropped to 475k for 49sqm from initially 500k (which I always thought was too ambitious) with the information that the sellers are trying to sell as quickly as possible (so room for negotiation for sure). 

The pros for the property include:
- Beautiful big private garden
- Flat mostly ready to move in apart from some redecorating
- High ceilings
- Beautifully bright
- Fab location not far to walk to the next rain station in SW London

The cons:
- Leasehold (we were more keen for a freehold) that needs to be extended, current owners are happy to kick off the process and have already negotiated cost with the freeholder
- Japanese knotweed in the shared garden behind the private garden, more than 12 meters from the property. Treatment plan with insurance is in place (treatment until 2023, after that another 5 years of insurance)
- Potentially a bit smaller than we'd have liked (the second bedroom is more of a study)

Now, the flat is so nice that none of the cons have put us off entirely and it is hands down the most beautiful flat we've seen so far. However, we are worried that the Japanese knotweed might make it harder for us to sell the flat in the future. We were sent the treatment plan and over the last 4 years there was no further growth, but I am worried about this in the long run if we're looking to sell on in say 3-5 years time. Are we making this a bigger deal than it is, or is this something we should stay clear from entirely? And if we were to put in an offer, how much of a discount, if any, would be appropriate? We are currently thinking of offering 10% below current asking price as we'd have to factor in paying for the lease extension (approx. 10-12k). 

New to the board so if I've missed out any important info let me know.

Many thanks for any thoughts you might have

[Deleted User]

What length of lease is it currently? I wouldn't have thought either the Japanese Knotweed or the lease are deal breakers individually but I would guess that the combination of the two could make it harder. I'd consult a good mortgage broker first to see their thought. @K_S is excellent and has great knowledge! I don't think JK is quite the issue it used to be but could still make life tough.

In terms of the value - I would imagine these issues have already been factored in to the cost, hence the price reduction as well so I'm not sure offering 10% below on these grounds would stack up but you can always try! How does it look in comparison to local value?

Sarah1Mitty2

The issues you mention are making it hard to sell, you should look elsewhere really.

macman

Sarah1Mitty2 said:

The issues you mention are making it hard to sell, you should look elsewhere really.

Why? The only issue that cannot be resolved by the time it's next sold is the smaller second bedroom.

NaeClue

@Deleted_User lease is down to 88 years now and would be extended by 90 through the statutory process. There's a freehold going one road down, also with garden albeit slightly smaller (45sqm, that's including a 5sqm shed though) - went on the market for 395k today. Price per sqm with the shed would value the property we're interested in at about 425k, without the shed at 475k but that doesn't take into account that the other one is a freehold. 

Bendy_House

None of these issues would put me off. They obviously need taking into account, yes, but actually stop me proceeding if the price was right? No.

Knotweed - a seemingly-successful treatment which is keeping it away, backed by insurance for a further 5 years after completion. Any idea how much this cost, should it need to be redone? (I presume that, currently, it's the communal garden's owners who are paying for this?) Yes, this will many people off - it's 'emotive-scary', but in reality is treatable.

Lease length. I trust it will be extended BEFORE completion? Shame it isn't 999 years, but hey... 

Bedroom size. Only you can decide how significant this is.

Based on what you've said about the other flat, tho', it does still seem expensive, but I suspect this comes down to each flat's individual appeal; you just WANT to be in THIS one? Are there any more directly-comparable flats sold recently, even in the same house/block?

Yes, I'd try the lower offer first - why not?

eddddy

NaeClue said:

- Leasehold (we were more keen for a freehold) that needs to be extended, current owners are happy to kick off the process and have already negotiated cost with the freeholder

NaeClue said:

@Deleted_User lease is down to 88 years now and would be extended by 90 through the statutory process. 

Something doesn't sound right.

If the seller has agreed a lease extension cost with the freeholder - why are they going through the statutory process?

• In simple terms, you go through the statutory process when you can't agree cost and terms with the freeholder.

• In any case, you can't know for sure how much a statutory lease extension will cost at the outset.

• You'll have to pay fees of £2k to £4k (or maybe more) on top on the lease extension cost

It sounds like somebody has misunderstood and/or somebody is talking nonsense. (It could be the freeholder has been talking nonsense to the current owner, or the current owner / EA has been talking nonsense to you.)

In the worst case, it could be that the freeholder is playing games - because they don't really want the lease extension to succeed. (I've seen similar things happen before.) You could be left to pay fees of £2k/£4k with no lease extension. But it might just be that people are talking about things they don't understand.


TBH, with 88 years left on the lease, a lease extension isn't urgent. If you plan to own the flat for at least 2 years, maybe leave that for the moment.

Bendy_House

eddddy said:

TBH, with 88 years left on the lease, a lease extension isn't urgent. If you plan to own the flat for at least 2 years, maybe leave that for the moment.

That's interesting. Is it because the statutory process should protect you if/when you apply for a lease extension?

Normally, the shorter the lease the greater the concern?

And, if the OP were happy to proceed without a lease extension, I presume they should expect a significant discount?

bouicca21

TBH with 88 years left on the lease I’d be inclined to leave the question of the extension - unless OP knows just what the terms of the extension are (are the vendors agreeing to a change in ground rent? It’s not clear if they are doing a statutory extension or not).

Presumably the ‘freehold flat’ is a share of freehold.  This can be great but can also be a nightmare because getting others to agree on expenditure can be a major problem, especially if some of the other lessees are absentee landlords.  There’s a block virtually identical to mine nearby.  It went share of freehold some 30 years ago and I don’t think they’ve decorated the communal areas for at least 20 years. Conversely DD was in a block where the management committee were constantly doing expensive works because they wanted to be compliant with every single applicable change in building regs.

eddddy

Bendy_House said:

eddddy said:

TBH, with 88 years left on the lease, a lease extension isn't urgent. If you plan to own the flat for at least 2 years, maybe leave that for the moment.

That's interesting. Is it because the statutory process should protect you if/when you apply for a lease extension?

Normally, the shorter the lease the greater the concern?

And, if the OP were happy to proceed without a lease extension, I presume they should expect a significant discount?

Currently, you have to own the flat for 2 years before you can do a statutory lease extension - i.e. compulsorily purchase a lease extension.

Before 2 years, you can potentially negotiate an informal lease extension with your leaseholder - but the freeholder can refuse, if they want, or they can ask for a stupidly high price and/or ask for unfavourable terms.

martindow

Do you have figure for the lease extension, which I you will have to pay.  This would colour what I was willing to offer.

Possibly the current owner is suggesting that they start the lease extension process to save you the two year wait once you have bought it.