Offer accepted on a 2bed flat in Sheffield, but straightaway run into a problem - should I pull out?

Halabala9

I think I am going to give up on buying a flat. From what I checked, if I use that cash as my deposit, I could buy a freehold house for around £240k-£250k with a mortgage of around 600-700 a month. Considering that I would have to pay £200 a month for service charge / ground rent if I go for a flat, that makes the monthly payment on a house at around £400-£500 instead of £600-700. 
I already missed one phenomenal house yesterday. Phoned them up today first thing in the morning, already sold, within 24hrs...

ReadySteadyPop

Mike997 said:

Hi,

After months of searching and discovering that the leasehold system in the UK is broken, I thought that I have finally found a flat, that looks alright, not sure if I can use links here so:

2 bed flat, 4th floor in 5 storeys building, 975 years lease left (built around 2000), £224.50 current ground rent (I assume it's RPI reviewed 10 or 20 years considering that figure), £2200 service charge, EWS1 A1 rating - offer accepted £150k in Sheffield.

No dodgy doubling rent, no dodgy office conversion, no dodgy high service charge, the flat looked alright, the estate too. Had a chat with one of the residents and he said that the estate is very nice, they are happy there. Made an offer on Friday, accepted yesterday. I am planning to do a cash purchase.

Straightaway, I run into a problem, the solicitor I had lined up, said she doesn't take buildings with 5 storeys or more. I was shocked, yet another problem in this already broken market. Few other solicitors refused too but finally got one that will take it, but obviously they will charge me £2500 (which is like £800-£900 more than for a flat below 5 storeys due to some fresh Building Regulations Act or something, I don't even want to know...).

But then I noticed another problem. The ground rent currently sits at £224, so I presume it is a either 10 or 20 years review RPI (as the building is 23yo). That is 0.15% value of the property currently. From what I found on reddit, some lenders don't lend if it's above 0.1% value. Not a problem for me now, as I am a cash buyer, but I need a property that is mortgage-able, to avoid problems in the future.

Not sure what to do. Should I pull out now, when I only invested £60 on ID check? I don't want to spent £2500 on a solicitor just to find out it's a bad idea to buy it...

What made this situation even worse is the attitude of the EA. He is a nice guy, however when I told him after 1h after he said that the offer got accepted yesterday, that my solicitor refused to take and I need to find a different one, he started to push me really hard to get a new one ASAP. Phoned me up after 4h asking if I found one. Then asked what time I started work today, when I said 8am, he said he will call me to check if I found one already. That is weird, he is pushing a bit too hard IMO, that offer got accepted yesterday at 11:30am.

I am honestly fed up after months of searching, the whole situation around flats is ridiculous. Had a long converstation with my landlord last evening (she has got loads of exp in properties) and she said that her only regret after investing in properties is that she bought too many flats instead of freehold houses, and now she is trying to sell due to all ground rent / service charge problems.

Her advise is to get that money I want to spend on a cash purchase, and use it as a high deposit, get the mortgage and buy a freehold house. My only problem is that such house won't be in any good location when a flat can be.

Give me some hope guys...

Sounds like a decent landlord, take her advice. And block the EA, they sound like a PITA.

iza_belle1

The service charge sounds really steep as well. £2200 per year? I would imagine it will only increase and would also create problems selling in the future