Updating post from Reddit.
My first buy to let so apologies if this seems obvious.
I'm in the final steps of purchasing a buy to let flat in a council owned block ( searches are virtually done, completion date is soon to be decided)
However, one of the searches has come back to show there are some compulsory works being completed on the block (painting and window replacement) totalling just shy of £7k. I've gone back to the estate agent lowering our offer by the £7k, is this normal? Should I expect a fight?
Note - we did specifically ask the estate agent if there was any planned works and he said no.
You can ask for a reduction, but I would expect about 50% (so 3.5k) as you will be benefiting from a more valuable property with newly painted windows. Same with any repairs brought up in surveys.
Thanks for this. The painting was completed prior to viewing the property so I'm thinking it would be fair to full offset that cost and aim for half of the window cost
Does the lease management have a sink fund ?
They do not no
In that case I’d knock the full £7k off… also I’d be worried about that whole set up to be fair
To be fair the management company have been completely transparent about the full tender process, they're also offering 5 year interest free payment schemes
Councils cannot legally charge leaseholders for a sinking / reserve fund.
I'm not sure council freeholders are allowed to take money for that from leaseholders, it's not exactly like a standard mgmt co.
I would keep the price the same, and I would ask for the 7k or, the amount you agree to be held back on completion by solicitors and paid directly into the management fund to cover this. Especially if you’re getting a mortgage that’s aligned to a specific LTV because if you reduce the price, you won’t benefit in cash terms by much if you just reduce the price.
It wouldn’t have been your searches this has come back on but the sellers management pack or your enquiries.
Is it £7k amongst all in the block or per individual lease? When are the works due, this year of 5 years time? Will the costs be demanded soon in one lump sum or other a period of time?
Future works can often come up, I wouldn’t let it put me off an oversize good deal. Then again, I wouldn’t buy a LH property. Never met one which is enough value for money compared to simple FH. I always save myself the time and ignore the LH properties as there are plenty of competitive FH properties.
That's useful to know, thanks.
Per lease where the work is applicable. Paintings already completed, windows are due shortly. Payment is a 5 year 0% finance offer from council.
It's a solid 9.5% yield in a solid up and coming area with rock bottom service charges so I'm pretty chuffed with it
Then I would say ask for a portion from the seller but I wouldn’t be surprise if it becomes a negotiation and you may not get the full amount.
9.5% is a strong net profit especially if as you say the SC is low. Maybe consider length of lease but I’m sure your solicitor already has. Good luck.
That's kind of what I'm expecting. Between the 0% finance and reduction in stamp duty etc potentially I could end up better off here
Lease is 109 years left and service charge has historically had very reasonable inflation based increases based on actual spend (some years has a credit applied to the next)
I’d pull out and buy a freehold house if I was you.
As if it’s that easy to pull out of buying a one bed ex council flat and then buying a 3 bed house that will obviously be significantly more money.
Not all leaseholds are crap. Fact is, reforms will change the whole landscape of leasehold in the not too distant future and some say, this will add value to apartments.
Hmm idk. I charge almost 2k rent on a 3k annual svc charge council property. It was significantly discounted because Brits just can't be arsed with buying ex council flats (though apparently they do need to rent them). It was literally a 45% discount on the same kind of property 3 min walk away in private houses converted to flats. There are some leaseholds where it's more than worth it.