Undisclosed major works needed to flat, how much should I reduce my offer?

vlw2121

Hi everyone, 

First time buyer here so not sure what's the protocol. 

I'm buying a flat. When I made my offer on this place I asked how much the service charge was, if there were any major works planned and whether there were any contributions required to the sinking fund for works in the short term. I was quoted £1800 for the service charge and told no major works and no sinking fund contributions required. 

Flash forward 6 months, purchase is going slowly (issues the sellers end) but surely. We're meant to be exchanging/completing soon. We spot some massive charges in the sellers service charge documents, end up asking the management company for the flat directly about them. Takes about two weeks of digging but we now find out that: 

1. If I buy the flat I will have to pay £5k of repairs next financial year (April 2024). 
2. If I buy the flat in 2028 I will have to pay £32k for repairs (so will every flat in the building). 
3. The service charge is £2000 more a year than I had previously been told, and this has been the case for at least 2 years. 

The seller didn't disclose any of this, I caught a stray line in the management pack which referred to a 10 year plan and managed to get it off the management company. I'm quite angry/upset as the seller clearly knew a lot of this information. I don't know exactly what he did/didn't know but there's no way he was clueless about the charges and I feel I've been actively lied too. It would have been entirely possible for me to buy this flat without ever finding out about the 2028 plans or the £5k of repairs.  

The money obviously drastically changes the affordability of the flat, the service charge alone is an extra £160 a month.

I've asked for a 10% reduction given the amount of work and the massive affordability issues but the seller is pushing back saying that he can't afford his onward purchase if I do that. I think he's lucky I'm offering to progress with the sale at all and am considering pulling out altogether. Do you think 10% is unreasonable given the works? I know with any purchase I would have to pay for some repairs, but £32,000 for a small flat (less than 500sqft) is exceptionally high and I feel this should have been disclosed to me at the start of the process when I enquired. 

There are also smaller issues (the boiler has never been serviced, 3 window panes need replacing, there were mice in the property, the bathroom floor needs replacing) which all add to my concerns. 

Any advice welcomed! 

MeteredOut

We don't know how much 10% equates to, so difficult to say. eg, does it cover the addition £5K in 2024 plus the £160/month for x years? 

It's also not clear if you'll still have to pay the £32K in 2028, or is that just if you bought it then. Assuming the latter, that does mean that if you plan to sell it in 2028, your then-buyer would want to pay less. So, take that into account. What if you wanted to sell in 2029 - would there be future repairs for the buyer?

The vendors challenge around affording his onward purchase is not your concern.

Ignore the smaller issues; those should have already been priced into the offer you initially made.

vlw2121

In response to the comment above, whoever owns the flat in 2028 has to pay £32,000. So yes I'd have to disclose it to a future buyer and have that taken off the asking price if I sold it before then. In total the repairs - if I purchase will cost me - £37,000 total. Assuming that the budget is accurate. The management company previously budgeted the repairs due in 2024 to be worth £10,000 and have since lowered the estimate. So I'm not sure whether there might be greater costs.  

MeteredOut

vlw2121 said:

In response to the comment above, whoever owns the flat in 2028 has to pay £32,000. So yes I'd have to disclose it to a future buyer and have that taken off the asking price if I sold it before then. In total the repairs - if I purchase will cost me - £37,000 total. Assuming that the budget is accurate. The management company previously budgeted the repairs due in 2024 to be worth £10,000 and have since lowered the estimate. So I'm not sure whether there might be greater costs.  

Can you edit your first post as it currently states 

"If I buy the flat in 2028 I will have to pay £32k for repairs (so will every flat in the building)."

Which is not the same as you buying it now and having to pay the £32K in 2028.

I'd certainly be lowering my offer to cover future expenses not disclosed before an initial offer was made.

EssexHebridean

In fairness to the sellers, it may be that the 2028 amount has only come up in the management pack and they may have been as taken aback by it as you are. I know when ours was applied for I was very anxious about what the freeholder might put in it concerning major works - thankfully they kept it very vague indeed with no specifics, and our buyer continued without any issues. 5 years ahead would be extremely early to have already been through the notification process with Leaseholders for upcoming works - not least as materials prices can change massively in a short period of time, so it's surprising any trades have been willing to quote for works that far ahead. 

I agree that this discovery does make a material different to what should be payable for the property though - I know it would to me. As for the service charges - do they come under the heading of reasonable for what you get for them? £1800 a year Service charge is very different to what you have now discovered to be £3800 per year - what is the reason for this more than doubling? You should have a good number of previous years service charge statements in the sales pack you've been sent so it's well worth going through those to see if you can establish whether this is something that the freeholder or management Co have a habit of doing. 

On the 5k repairs - if this is repairs which will be being charged in the new financial year but were done in the past financial year, then your solicitor should be able to negotiate that these are cleared by the sellers - in full if you complete after the beginning of the new financial year, and in major part if you complete before then. 

NameUnavailable

An estimate of £32K now could easily be double that in a few years the way things are going!

Personally I'd be walking away from this and looking for something else, annoying though it may be.

dander

To be fair to vendor, it may be that the information requests ask specifically if a Section 20 has been issued for the major works and it may not have been. If, as you say, this is all a bit hidden in a management pack, the stuff happening in 2028 may be new to the vendor too. I'm guessing this could be ex-council if there is no sinking fund. The bit about giving you entirely wrong amount for service charge is pretty unforgivable. That will affect your mortgage application - you need to give them accurate information. 

100% all of this means you should reduce your offer. The vendor's onward purchase is nothing to do with you and you have no requirement to fund it. As with others above, this is one to seriously consider walking away from the purchase if you can't get a substantial discount on the original offer, which was made on the basis of incomplete disclosure of information.

koalakoala

I wouldn’t give him the satisfaction of buying it now
That’s way too much fees to be paying!

lika_86

MeteredOut said:

vlw2121 said:

In response to the comment above, whoever owns the flat in 2028 has to pay £32,000. So yes I'd have to disclose it to a future buyer and have that taken off the asking price if I sold it before then. In total the repairs - if I purchase will cost me - £37,000 total. Assuming that the budget is accurate. The management company previously budgeted the repairs due in 2024 to be worth £10,000 and have since lowered the estimate. So I'm not sure whether there might be greater costs.  

Can you edit your first post as it currently states 

"If I buy the flat in 2028 I will have to pay £32k for repairs (so will every flat in the building)."

Which is not the same as you buying it now and having to pay the £32K in 2028.

I'd certainly be lowering my offer to cover future expenses not disclosed before an initial offer was made.

Isn't it just a comma that is missing - If I buy the flat, in 2028 I will have to pay £32k for repairs (so will every flat in the building).?

MeteredOut

lika_86 said:

MeteredOut said:

vlw2121 said:

In response to the comment above, whoever owns the flat in 2028 has to pay £32,000. So yes I'd have to disclose it to a future buyer and have that taken off the asking price if I sold it before then. In total the repairs - if I purchase will cost me - £37,000 total. Assuming that the budget is accurate. The management company previously budgeted the repairs due in 2024 to be worth £10,000 and have since lowered the estimate. So I'm not sure whether there might be greater costs.  

Can you edit your first post as it currently states 

"If I buy the flat in 2028 I will have to pay £32k for repairs (so will every flat in the building)."

Which is not the same as you buying it now and having to pay the £32K in 2028.

I'd certainly be lowering my offer to cover future expenses not disclosed before an initial offer was made.

Isn't it just a comma that is missing - If I buy the flat, in 2028 I will have to pay £32k for repairs (so will every flat in the building).?

Yes.

(but it being in context with the previous line ("If I buy in 2024...") also caused amplified the ambiguity)

Schwarzwald

have you check what the driver behind the service charge increase has been?

if they have increased the service charge in order to fund a Sinking Fund in order to pay for the 2028 major works .... then you currently double count.

• in regard to the major works and your position to ask for a reduction, i believe it very much depends on WHEN the vendor was informed about it and if at all. if he hasnt been informed about it yet and given it is 4+ years out, i think you are in a weak position to ask for a reduction.

however, you could still aks for a reduction in light of the service charge. if it is £2k pa more, i would guess it warrants a 4-5k reduction.

•  "... 3 window panes need replacing, ... the bathroom floor needs replacing" this was obvious at the offering stage so cannot really argue for a reduction
• " ... there were mice in the property ..." i would ask him to take action against mice and rodents asap and get rid off them until exchange, you dont want to find yourself in an infested property upon moving in