Buying a purpose built (1982) flat what do I need to know? FTB London.

[another20]

I am trying to help a younger relative navigate the London property market as a first time buyer. My recommendation was for them to do "watchful waiting" for a year or so during this tricky market - but they want to get on with their life after a decade of renting which I understand...... I expect that they might take a financial hit initially but hopefully it will even out in the longer term.....so I just want to make sure this is as water tight as possible. They have their deposit saved and MIP in place.

I have pushed them to make sure it is future proof - so they are considering putting an offer on a spacious PB 2 bed in a leafy green residential area, right next to a lovely park and zone 3 tube links. It is 3rd floor (no lift) loads of parking and communal "gardens" (but cant imagine you would sit out in it - more areas of grass amongst the car park.

They plan to marry soon and hope to have a child (just the one) in the next 5 years.

What should they be concerned about and research with a flat of this age?
Can they ask for minutes / annual reports from the residents association and/or management committee? Can they ask about a sink fund? What is a survey likely to show up in a block of this age? Can they find out if windows are scheduled to be replaced or other works in the next 5 years - or is this just "sprung" on leaseholders.

What should they be looking for on a second viewing? Noise from flat above? How rubbish is collected/stored? How many flats (80 one and two beds across 3, 4 storey blocks) are BTL, shared ownership, social housing? What Qs should they ask of the estate agent and owner. What else should they be doing - talking to neighbours? Visiting the development at different times of the day/week?

It has a new long lease - anything else to consider?

Sorry, that rogue ANW should be NW

Kylo - what's cheeky? and what's max?

See my posts from earlier for context...2 bed, 3rd floor (not top floor) no lift.

"It is on at £385 and an identical (size and standard) flat sold on the first floor for £375 in Jan this year - so I think that if they did offer on it they should be chipping a bit off the price to reflect the difference in value
from 1st floor (most desirable floor) to 3rd floor with no lift (and not the top floor to compensate for no noise above) - as well as a taking into account a slowdown / uncertainty in the market since this other flat went under offer a year ago."

"Zoopla is saying that the other 1st floor flat that sold for 385 one in Jan is now worth 381 - no idea how accurate their data would be.

But it seems consistent in direction at least with ONS tool that showed the borough has dropped 1% between June 2016 and June 2017
www.homesandproperty.co.uk/property-news/whats-happening-to-house-prices-a-year-after-the-brexit-vote-and-10-years-after-the-financial-crisis-a112866.html

Other consideration is that current owner only bought in Jan 2015 and paid £330 (which looks about £10k more than others sold around the same time on better floors) - they also put it on for £395 at the beginning of summer and have since dropped to £385 (end of Sept).

Apparently they have had an offer that they rejected (EA wont say what this was?) and they had found somewhere else to buy but it fell through (don't really understand this as they didn't have an offer on their own)."

I am worried that the seller does not have much room for manoeuvre - tho I have no evidence for this just I think that they bought highish and are moving on after 2.5 years which is an expensive drain on equity?

Well first off the market hasn’t increased from £330k to £395k in two years IMO. Unless they’ve done a load of work to it that’s too much.

Asking is £385k and other (better) sold for £375k, and market has dropped/stabilised... without seeing it I think I’d go cheeky - £345?! (10% off fairly standard) Up to £365 max depending on how much they like it.

Trouble is if owner perceives it to be worth more, and doesn’t have anywhere to move to yet (to motivate them) they may not accept.

But still, you don’t want to overpay obviously.

Just saw max budget is £360k. That’s your top then!

snotandbothered The bedroom are tiny in that one. Here's one near me that's much bigger, it's zone 4 but close to a future crossrail station and is in a lovely location.

They have done nothing to it but imagine that they wanted to recoup their moving twice costs.

Probably this is why they put it on initially at 10K more than the one that it is probably worth 10K more than theirs - due to 3rd floor?

But thats not our issue. Need to be ready to walk away.

JoJo came up with that ball park as well earlier so I feel confident that will offer the right amount.....like the approach of going low to give them room to neg up.

Hope the owner has a realistic mindset....

Like you say - their moving costs don’t equal the flat being worth more.

Thanks all. Fingers crossed for a chink of light with regards to stamp duty for first time buyers in next weeks budget. Also if anyone can recommend an efficient cost effective conveyancing sol that would be great.

Little bit more info......saw the flat. Young relative loved it. Additional info from EA ....

"there have been quite a few initial low offers, from various property investor consortia in region of £340-£350k, rejected by vendor, . Vendor would take £370"

Not sure if I should read anything further into this ? Or does this just confirm that if we could settle on £360 we would be getting a reasonably fair deal?

Questions I asked for our leasehold flat was:

1. How's the building managed?
2. Is there service charge? What does the service charge covers?
3. Is there a sinking fund in place, how much available, and what do they plan to do repairs works in the future?
4. Is there any dispute between landlord/ you/ and managing agent ? (We got court and the sales didn't go through because of this).
5. Are you allowed to do alternation to the flat? What's the requirement? Mind you, my purchase didn't go through after all the questions asked (mostly I think because our seller isn't that keen to sell), so we now only want freehold, and only will want to buy from someone who needs to move (e.g us).

Not sure if I should read anything further into this ? Or does this just confirm that if we could settle on £360 we would be getting a reasonably fair deal?

Probably means they think it’s worth £370, which it sounds like it isn’t. Helpful as you know where to start your offers (slightly above previous rejected offers), unhelpful as they might reject anything other than £370.

Still worth trying it though as they they might be happier with a FTB who can proceed quickly than investors, or they might have realised with a bit of time passing that they need to accept a lower offer.

Today's news of Euro Banking Assoc and Euro Medicine Authority moving out of London is giving me the colly wobbles - I really think that they should sit on their hands for the next year and not buy now.

Another
There was never any doubt that the EMA and EBA would move from London after the Brexit vote. Not sure what impact these moves will have on the housing market, but they may be an early indication of jobs moving to Europe ( who would have guessed.... )
I would probably bid at 345K but not go above £355K. Property is worth what someone will pay for it. Make it clear that they are not an investment consortium but FTB ready to move
Agree with Zoemelb's question. Try to establish who the managing agent are and get a copy of their accounts for the development. Go through them with a fine toothcomb. There are some real cowboys about who treat the leaseholders as a cash cow, and getting a change can be fun!

another it’s crystal ball territory what house prices will do even with things like those moves.

Will price of that flat drop more than a couple years of rent + stamp duty?