Buy to let property - freeholder is a London Borough, Managing Agent is a huge company (London and Quadrant) - crazy idea to buy?(7 Posts)
We've been fortunate enough to be able to afford to put an offer (lowish but cash) in on a 2 bed flat which we intend to do up and rent out.
It's a reposession (apparently), is in a small ex-local authority block (the LA is the freeholder) and the managing agent is in the title of the thread..
It's currently with 2 agents. We are new (and green) to buy to let and there's a whole thing about them keeping it open for offers until the day of exchange in order to fulfil the duty of achieving the best price.
DH phoned the managing agents to try and get a bit more info (the Estate agents has been unable to confirm the annual service charge for example) and got lost in their telephone systems after speaking to 5 different people there who each knew less than the one before!
However, we like the flat (which will need doing up) so is it going to be too much trouble to do this or do these things go through eventually?
In addition, is the price on Rightmove likely to have been set low in order to get offers above it, or could our offer (about 8% less than the quoted price) have a chance? Which is the most common scenario?
We bought a repo last year.
It is stressful as you will HAVE to complete in 28 days otherwise you will be fined.
They will advertise your offer in the local press so you may be gasumped also.
Our property has been black balled due to the debts owed on it which has been an eye opener! The previous owner had a gas coin meter in which he bypassed so when our plumber turned the heating on we had a gas leak! The gas board said we could have blown up the whole street!!!
Other than that we did get a bargin.
However when we were looking for our first BTL we were advised not to buy flats as the xapital growth is crap, hard to sell etc
and also we were told never to buy leasehold or LA houses.
We noe have 7 properties and to be honest we don,t make much more than if we had the money in a really good interst paying bank account.
Bad tenants not paying, tenants breaking things as they don,t look after the property as well as if it was there own etc, insurance, void periods council tax when empty etc
Not to put you off but we are now going down the route of buying, doing up and reselling.
Sorry about the sp as typed quickly whilst eating
Why does this forum not have an edit option like most others? I press post rather than preview because I have lost so many posts in the past!!!
My issue with it being in a LA block would be the service charges.
In reality you would have very little control over whole block repairs and could find yourself with charges £10k+ if any major repairs need doing, for example roof renewal or repairs to communal areas.
I've owned a flat like this in the past. Councils handed their housing stock over to the 'Housing Corporation' years ago - this was a govt/political iniative/decision - I believe all/most council housing was transferred at the same time and is now 'managed' by housing associations like L&Q. So there is nothing unusual or to be wary of in that. Does create a couple of extra/admin steps in the purchase/sale process.
Can't say whether this would have any impact on a BTL property. You would have to ask L&Q for permission which I guess they wouldn't unreasonably withhold - I think they have very good FAQs on their own website which may deal with this very issue.
Thank you all for your views and pointers. Most helpful.
That's my fear Rugbug about potentially high one-off charges. We've been unofficially told that the annual service charge is £800 per year which is reasonable, with a ground rent of £10. The block has a flat roof so that could easily be a problem one day.
I can see that if we can find something freehold it would be so easier. Our budget is probably too low though. I guess I'm lucky to be even considering it!
I own two properties with council as freeholder and arms length managing organisation as day to day contact people (in the Westminster borough). I think it's brilliant. The almo is super responsive and the service charges are much lower than their fully private sector equivalent. I wouldn't take the freehold even if it was offered to me as I doubt anyone else could achieve the same cost efficiencies through economy of scale.
However be careful with the flat roof if you are responsible for building or contents insurance as that can be very expensive. Particularly if there is anything else 'unusual' about the property eg non-standard construction. I would also avoid blocks with more than five floors if possible as six storeys plus local authority is not a great combination and your mortgage options then narrow considerably. Even if you do not need a mortgage future buyers probably will.
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