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  • FIRST POST
    • Samfre
    • By Samfre 11th Jun 19, 8:00 PM
    • 8Posts
    • 4Thanks
    Samfre
    Buying a highrise council flat in city centre
    • #1
    • 11th Jun 19, 8:00 PM
    Buying a highrise council flat in city centre 11th Jun 19 at 8:00 PM
    My partner and I have been living in a council flat, 15 storey high, in Manchester city centre for 9 years. As we now have to children we have been working very hard to save some money for a deposite so we can buy our own house. The building has been upgraded so it is now in good standard. We have managed to save about 25000 to enable us to be able to get a mortgage but due to the location of the flat we are tempted to buy the flat using saved cash as we can put together a deposit of 10000 from family and buy a house. The building has about 10% owner occupier and the flat can be rented out for about 650 monthly with service charge of 100 per month. We are very divided about this and we could do with some words of advice. The flat value is approximately 80 000 and we have to pay about 33 000 to buy it.
Page 1
    • tacpot12
    • By tacpot12 11th Jun 19, 8:13 PM
    • 2,896 Posts
    • 2,621 Thanks
    tacpot12
    • #2
    • 11th Jun 19, 8:13 PM
    • #2
    • 11th Jun 19, 8:13 PM
    Well done for saving 25,000!

    If you can buy a flat worth 80,000 for 33,000, the sensible decision is to buy it, live in it until you can rent it out, and then buy a house.

    You will have spent the 25,000 on the flat, but you will be able to repay the family and resave the same amount more quickly with no rent to pay. I've done a quick calculation and think you could be back to having 25,000 in about four years. If you have to stay for five years before you can rent it, you will have about 30,000. When you do move out, you can overpay the mortgage using the rental income. This will reduce save you loads of interest on the mortgage, and get the mortgage cleared about eight years earlier than if you don't buy the flat.

    So financially, buying the flat makes sense. Having to put off the move to house is not ideal, but you will create a much better financial future for yourselves and your children if you take that route.
    The comments I post are my personal opinion. While I try to check everything is correct before posting, I can and do make mistakes, so always check official information sources before relying on my posts.
    • davidmcn
    • By davidmcn 11th Jun 19, 8:35 PM
    • 13,069 Posts
    • 14,861 Thanks
    davidmcn
    • #3
    • 11th Jun 19, 8:35 PM
    • #3
    • 11th Jun 19, 8:35 PM
    The mortgageability of council high-rises is very poor, so have you looked into whether lenders would even consider it? For similar reasons, it won't be that easy to get rid of when you come to sell.
    • buglawton
    • By buglawton 11th Jun 19, 8:44 PM
    • 8,711 Posts
    • 5,449 Thanks
    buglawton
    • #4
    • 11th Jun 19, 8:44 PM
    • #4
    • 11th Jun 19, 8:44 PM
    A no brainer to buy it but I feel there are sure to be clauses in it about early reselling.
    • Housebuy12345
    • By Housebuy12345 11th Jun 19, 9:19 PM
    • 210 Posts
    • 47 Thanks
    Housebuy12345
    • #5
    • 11th Jun 19, 9:19 PM
    • #5
    • 11th Jun 19, 9:19 PM
    Don’t forgot if you rent it out you’ll be paying. 20% tax.
    • Samfre
    • By Samfre 11th Jun 19, 9:48 PM
    • 8 Posts
    • 4 Thanks
    Samfre
    • #6
    • 11th Jun 19, 9:48 PM
    • #6
    • 11th Jun 19, 9:48 PM
    That is my main worry and possibly some unexpected maintenance charges but it has recently been upgraded and the cladding is safe from fire point of view.
    Another worry is whether potential renal income will be counted for the future mortgage application.
    • Samfre
    • By Samfre 11th Jun 19, 9:53 PM
    • 8 Posts
    • 4 Thanks
    Samfre
    • #7
    • 11th Jun 19, 9:53 PM
    • #7
    • 11th Jun 19, 9:53 PM
    Yeah...can't be sold within 5 years to benefit from the discounts. The obligation to pay the discount back goes down over the five years.
    • deannatrois
    • By deannatrois 11th Jun 19, 9:55 PM
    • 6,309 Posts
    • 8,890 Thanks
    deannatrois
    • #8
    • 11th Jun 19, 9:55 PM
    • #8
    • 11th Jun 19, 9:55 PM
    Are you sure you only have to pay 33k to buy the flat? Its a rather large discount after 9 years. I read its 35% after five years, with 1% extra for each year after that.

    I could be wrong, but might be worth checking.
    • Socajam
    • By Socajam 11th Jun 19, 9:56 PM
    • 488 Posts
    • 671 Thanks
    Socajam
    • #9
    • 11th Jun 19, 9:56 PM
    • #9
    • 11th Jun 19, 9:56 PM
    I am with davidmcn, I would not buy it, no matter how lucrative it may seem.
    If it was a house, I would say go ahead, but a high rise council flat may turn out to be an albatross around your neck.
    • Samfre
    • By Samfre 11th Jun 19, 9:56 PM
    • 8 Posts
    • 4 Thanks
    Samfre
    Based on my research not possible or very high rates.
    Flats have sold on to cash buyers for 70k to 80k though.
    • Samfre
    • By Samfre 11th Jun 19, 9:58 PM
    • 8 Posts
    • 4 Thanks
    Samfre
    50% for flats after 5 years and 2% for every year after that
    • deannatrois
    • By deannatrois 11th Jun 19, 10:01 PM
    • 6,309 Posts
    • 8,890 Thanks
    deannatrois
    Oops I apologise, the site is dreadful.
    Last edited by deannatrois; 11-06-2019 at 10:03 PM.
    • Mgman1965
    • By Mgman1965 12th Jun 19, 9:24 AM
    • 153 Posts
    • 151 Thanks
    Mgman1965
    As a general LA flats are a no-no to buy.

    LA's are not seen as the best freeholders for giving value for money and on here are stories of woe from ex LA flat owner occupiers being landed with bills for tens of thousands of pound reair/renovation bills.

    If the block has lifts, repair and replacement for them is eye wateringly expensive, and they are high maintenance.
    • Rosieandjim
    • By Rosieandjim 12th Jun 19, 9:35 AM
    • 223 Posts
    • 279 Thanks
    Rosieandjim
    Beware!


    https://www.theguardian.com/money/2019/may/18/a-terrible-shock-council-flat-owner-bill-tustin-estate


    https://www.leaseholdknowledge.com/uproar-in-oxford-as-50-council-leaseholders-face-bills-of-50000-each
    Last edited by Rosieandjim; 12-06-2019 at 9:54 AM.
    • ska lover
    • By ska lover 12th Jun 19, 12:14 PM
    • 3,331 Posts
    • 8,350 Thanks
    ska lover
    Oh gosh, I wouldn't touch it for several reasons

    1) You are likely going to need to stay there for the next five years. This is five years of your childrens childhoods that you are staying in a towerblock. By the time you move to a house with a garden, they won't be of 'playing in the garden age' for much longer. They need space now

    2) What Rosieandjim posted above. It is not a standalone property, the service charges can be ridiculous

    3) your hard work pays off Plus it releases the flat back into the local authority for a more needy family - everyones a winner
    The opposite of what you know...is also true
    • muhandis
    • By muhandis 12th Jun 19, 12:53 PM
    • 980 Posts
    • 729 Thanks
    muhandis
    If the following are accurate, in your place I would go ahead and buy a city centre flat -

    1. Similar flats in the block have changed hands for 70-80k cash.
    2. Rental potential is around 650/month, with a 100/month service charge
    3. It will cost you only 33k to buy it.

    Yes, there are risks but to my mind there is a proportionate potential return on investment. But of course, everyone's risk appetite is different.

    My partner and I have been living in a council flat, 15 storey high, in Manchester city centre for 9 years. As we now have to children we have been working very hard to save some money for a deposite so we can buy our own house. The building has been upgraded so it is now in good standard. We have managed to save about 25000 to enable us to be able to get a mortgage but due to the location of the flat we are tempted to buy the flat using saved cash as we can put together a deposit of 10000 from family and buy a house. The building has about 10% owner occupier and the flat can be rented out for about 650 monthly with service charge of 100 per month. We are very divided about this and we could do with some words of advice. The flat value is approximately 80 000 and we have to pay about 33 000 to buy it.
    Originally posted by Samfre
    Last edited by muhandis; 12-06-2019 at 1:08 PM.
    • hazyjo
    • By hazyjo 12th Jun 19, 1:00 PM
    • 12,312 Posts
    • 16,817 Thanks
    hazyjo
    ...with a 100/month service charge
    Originally posted by muhandis
    And if the lifts need replacing, or they decide to re-do all the windows, or the roof? Bill for possibly tens of thousands will turn up.
    2019 wins: Bottle of Prosecco; Popcorn Shed popcorn; Moisturising 'M&S Time Capsules'; Case of Boost Sport + 30 Just Eat voucher; Battle Proms tickets and hotel; under-eye serum...
    • muhandis
    • By muhandis 12th Jun 19, 1:07 PM
    • 980 Posts
    • 729 Thanks
    muhandis
    Sure, there's a risk of that happening. It's all about whether you think the potential return is proportionate to the risks associated with buying a high-rise ex-council flat.

    I do, but you (or the OP) may not.

    And if the lifts need replacing, or they decide to re-do all the windows, or the roof? Bill for possibly tens of thousands will turn up.
    Originally posted by hazyjo
    • davidmcn
    • By davidmcn 12th Jun 19, 1:33 PM
    • 13,069 Posts
    • 14,861 Thanks
    davidmcn
    Sure, there's a risk of that happening. It's all about whether you think the potential return is proportionate to the risks associated with buying a high-rise ex-council flat.

    I do, but you (or the OP) may not.
    Originally posted by muhandis
    Well, the OP may be satisfied that the cladding meets (current) requirements, but those may change - and I suspect there'll be other fire safety requirements arising out of Grenfell, whether compulsory or strongly recommended by insurers etc. Upgrading alarm systems, retrofitting sprinklers, etc could all be high potential costs. Plus whatever the effect has been on the market, even on blocks which are arguably safe.

    And like I said, this all assumes that they can even get the funding in the first place.
    • muhandis
    • By muhandis 12th Jun 19, 1:46 PM
    • 980 Posts
    • 729 Thanks
    muhandis
    Of course, I don't disagree with you at all. It's just that we have different assessments of the risk/reward proposition.

    Well, the OP may be satisfied that the cladding meets (current) requirements, but those may change - and I suspect there'll be other fire safety requirements arising out of Grenfell, whether compulsory or strongly recommended by insurers etc. Upgrading alarm systems, retrofitting sprinklers, etc could all be high potential costs. Plus whatever the effect has been on the market, even on blocks which are arguably safe.

    And like I said, this all assumes that they can even get the funding in the first place.
    Originally posted by davidmcn
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