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    • jeffling
    • By jeffling 14th Apr 19, 7:57 PM
    • 7Posts
    • 1Thanks
    jeffling
    Ex-council flat with major works take the risk or run a mile?
    • #1
    • 14th Apr 19, 7:57 PM
    Ex-council flat with major works take the risk or run a mile? 14th Apr 19 at 7:57 PM
    Evening all,

    My wife and I (first-time buyers) viewed a great ex-council flat yesterday.

    Very large, good condition (to our untrained but informed eyes, at least), fantastic location and well priced for the area.

    The vendors have lived there 5 years, but, according to the agent, they've found a new place they love and are desperate for a quick sale. So potentially a real bargain to be had.

    It all seemed perfect on the surface. But the longer we looked around, the more it felt like there was a huge BUT coming.

    And sure enough, it came. Major works to the roof are about to start, estimated at 22k per leaseholder. So no wonder they're desperate to get out.

    The agent said there are several repayment options: interest-free for 60 months, a 10-year council loan, or an equity loan (where the council receives a share of the future selling price). None of which are exactly enticing.

    However, given the vendors' desperation to sell, the agent said it's bound to sell for way, way below the asking price (it's on the market for 300k).

    So now we're torn. The major works thing is obviously terrifying, and what's to say there won't be another massive bill in a couple of years' time? We simply don't have the money for that.

    But at the same time ... we wouldn't keep the flat for more than 5 years. If we could buy it for, say, 270k, we could absorb the cost of these roof works. And if nothing huge comes up in the next couple of years (big 'if,' I know) we'd stand to make a good profit.

    The block itself is small – 2 floors, 6 flats – and is a simple brick construction. No lift. So perhaps that reduces the chance of other expensive works being needed in the next few years.

    What do you think? A risk worth taking, or one to leave well alone?
    Last edited by jeffling; 14-04-2019 at 8:10 PM. Reason: Added info about the block
Page 2
    • Cakeguts
    • By Cakeguts 15th Apr 19, 12:59 PM
    • 5,856 Posts
    • 9,146 Thanks
    Cakeguts
    You never get money off any property that is going to be easy to sell. If it is being sold cheap then there is something else wrong with it apart from the roof costs that you haven't found out about yet.
    • jeffling
    • By jeffling 15th Apr 19, 1:06 PM
    • 7 Posts
    • 1 Thanks
    jeffling
    You never get money off any property that is going to be easy to sell. If it is being sold cheap then there is something else wrong with it apart from the roof costs that you haven't found out about yet.
    Originally posted by Cakeguts
    What makes you so sure of that? Surely wanting to avoid a 22k bill is reason enough to want to sell cheaply?
    • Rosieandjim
    • By Rosieandjim 15th Apr 19, 1:41 PM
    • 144 Posts
    • 183 Thanks
    Rosieandjim
    This sends shivers down my spine especially what happened in oxford scroll down. But that is because there is no way I could afford to keep paying out on a regular basis. It is hard enough trying to pay for everything as it is.


    https://www.theguardian.com/money/2017/jul/31/owners-ex-local-authority-homes-bills-thousands
    • jeffling
    • By jeffling 15th Apr 19, 2:25 PM
    • 7 Posts
    • 1 Thanks
    jeffling
    This sends shivers down my spine especially what happened in oxford scroll down. But that is because there is no way I could afford to keep paying out on a regular basis. It is hard enough trying to pay for everything as it is.
    Originally posted by Rosieandjim
    Yeah I read that article in my research it is shocking and indeed very off-putting.

    At the same time, the story is an extreme case in a historically run-down part of London.

    The property we're talking about is in a small block on a small, well-maintained estate in an otherwise affluent area.

    So maybe not quite the same level of risk. Who knows, though.
    • westernpromise
    • By westernpromise 15th Apr 19, 3:37 PM
    • 4,275 Posts
    • 5,576 Thanks
    westernpromise
    50 to 60 years old? What's the asbestos situation?
    Buying a house, if you believe the market has a way to fall, or if you are paying sill asking prices ( like some sheeple ) or if you are buying in London, is now a massive financial gamble!!!!! - June 8, 2012 by TheCountOfNowhere
    • Cakeguts
    • By Cakeguts 15th Apr 19, 3:52 PM
    • 5,856 Posts
    • 9,146 Thanks
    Cakeguts
    No one is going to sell a 300k flat for 270k in order to save 22k in bills. They could do what has been suggested that you do in order to pay it off.



    They might sell it for 270k if they think that the bills might reach 50k.
    • AlexMac
    • By AlexMac 16th Apr 19, 12:43 PM
    • 2,326 Posts
    • 2,030 Thanks
    AlexMac
    Thanks
    Thanks for your reply great to have some balance!... Out of interest, what would you consider "the right price" (roughly) in these circumstances?
    Originally posted by jeffling
    difficult to generalise. Over 40 years of buying and moving on, I've tended to get 5-8% off the asking price, depending on the local market, although once I paid full asking as the market was moving fast and the flat was pretty unique (neither of which considerations apply to your prospective purchase?) So, ignoring the roofing bill, that implies going in 10% under; 270k and and settling between 275k and 285k.

    But that ignores a number of factors other than the roof;

    - that the vendors are anxious to move;
    - that ([presumably) you are a good prospect with funds in place and flexibility on readiness to nmove (?), and crucially,
    - whether the asking price is high- which is seems to be a little, in that my two 2-bed flats, in a desirable bit of SE London, with good zone three commuter transport options, would barely scrape 285-290k in today's flat market? (Even Zoopla values them well below 300k for what that's worth?)

    As regards the roofing bill; the vendor could argue that as you will be the beneficiary, that's your problem so they might suggest you split the difference- say 11k each ... but that's before you consider the difficulty that other buyers will experience having to cough up an extra 370 per month for the next five years. For some that could be a serious deterrent. My council is also generous about an interest free spread, but start charging as soon as they let the contract, which could be soon.

    So certainly go in under 370, with a reasoned justification and a reminder of what a good prospect you are to the EA (not that they will even pass your letter to their client, who will only care about numbers). Have an upper negotiating ceiling in mind, but if you get it at even well over that and you like the house- that's fine!

    Happy negotiating
    • jeffling
    • By jeffling 16th Apr 19, 9:01 PM
    • 7 Posts
    • 1 Thanks
    jeffling
    So certainly go in under 370, with a reasoned justification and a reminder of what a good prospect you are to the EA (not that they will even pass your letter to their client, who will only care about numbers). Have an upper negotiating ceiling in mind, but if you get it at even well over that and you like the house- that's fine!

    Happy negotiating
    Originally posted by AlexMac
    Thank you, that's so helpful (your whole post, not just this quoted bit).
    • jonnygee2
    • By jonnygee2 16th Apr 19, 10:49 PM
    • 1,151 Posts
    • 1,146 Thanks
    jonnygee2
    I am the proud owner of an ex local authority flat.

    I guess everyone has a different experience but for me, the council have been the perfect freeholders. They are quick and efficient to respond to things and the service charge and ground rent are very reasonable. Remeber, as they pay it too (and they are broke!) it's in their intersst to keep it low. When a communal drain got blocked they had a team out in a couple of hours, and that was after midnight. Scare stories exist but there's also a lot of snobbery.

    A bill for 10k roof replacement did arrive not so long ago. But, I expected and planned for it. All houses need maintenance. They are offering an interest free ten year loan which does not rise with inflation, which is an incredibly favourable finance option.

    Ultimately if you like the flat, this shouldn't be a major hurdle imo as long as you can afford the amount it costs. As you have realised in London, you often get a lot, lot more floor space for your money in ex-local authority flats, and many are in great areas that would be unaffordable otherwise. I absolutely love mine, a great place to live and an absolute steal!
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