Selling flat back to the council. Do they offer market value or below? Any experience?

[Sandrine1982]

Hi.

We're looking into the possibility of selling our ex-LA flat back to the council. It's a nice 2-bed flat in a popular location in London. It has been valued at 400K (similar properties have sold at 370-400K, one even at 440K). However, we have only 87 years left on the lease which is borderline, so it will probably affect the price.

My question:

Has anyone recently sold back to the council and what was your experience? Do they generally offer market value? And if so, would it be the lower end of the market malue? How much lower compared to what your property was valued at by independent agents?

And what about the lease? How much will it affect the price, e.g. 5K less? or 10K less?

I think we could get around 410K if we had a longer lease, but I can't face going through the faff of extending it. :(

Any advice would be greatly appreciated!

Thanks

We approached the council but they declined as they wouldn't have had a majority share in the block (we are in an 8 block tenement)

However the EA did advise that our council can offer over the home report value (Scotland) if they really want the property

Your EA should have a contact where they can approach them to put the feelers out

Good luck!

They will send a RICS surveyor around to carry out the valuation. Generally, a surveyor will value below what an estate agent will, because they aren’t trying to get your business; but they will be fair and accurate. If similar properties have sold recently for between £370k - £400k then you can expect a valuation somewhere in that bracket. If the block is council-owned then the lease won’t be a particular issue for a council purchase.

We approached out local housing association regarding selling our flat back to them when we wanted to move.
We were offered a price that was way below market value, I think by 25%.
We turned it down!

Presumably you’re considering selling to the council because your block is difficult to mortgage / non-standard construction / requires EWS1 certification? Which will ultimately affect its value on the open market anyway. An 87-year lease isn’t particularly an issue on its own; it’s on the short side but not short enough that it would pose an issue for mortgaging.

Thanks. How do I know if it's council owned? There are 8 flats in the block, 3 of which are social. Initially all the flats were social. Does that mean it's council owned?

Who is your freeholder? Who do you pay service charges to? If it’s the council, then the block is a council owned block. Apologies, I made the assumption that an ex-LA flat in a block would be a council block, but obviously there can be exceptions.

Freeholder I don't know, there is some strange name on the lease (Countess Something Something). But the service charges are paid to the council, yes...

@ComtesseDeSpair no we're not considering selling to the council because of the reasons you outlined. We just thought it would be safer and quicker. Plus no agent fees, no viewings ...

But if it's anything like 25% below market value, then definitely not interesting :-p

You may have a managing agent who act on the council’s behalf. If service charges are paid to the council, it’s very probably a council-owned block. But your lease will clarify that.

If you want to find out what true “market” value is, then the test is to put it up on the open market and see what offers you get. You can always approach the council simultaneously.

80 years is the issue but 87 isnt bad & they should be able to get mortgage. what you can do is apply to have the lease extended & pass this over to the buyer so they don't have to wait 2 years to extend it.
Even if you get council or HA to take it over they probably would underpay
The rules on extending leases are being reviewed so people don't get such outrageous quotes & the higher the years on the lease the lower the figure
I would try it out on the market (& say that you would start the process of extending the lease as part of the purchase - you won't have such a big bill for that)

We sold our ex-LA flat with 89 yrs left on the lease. The buyer knocked us down on price a bit on the basis he'd have to extend it himself after living there 2yrs and it would cost £10-15k. The council declined to buy our place back. You could look into the process, timescale and cost of extending so any potential buyers can be aware?

As the council was forced to sell your flat, at a discount, to the then tenant, it seems reasonable that they should pay a discounted price to get it back into social housing.

It would be criminal if they sold council properties under market value and bought them back at current market value, but nothing would surprise me. Sorry OP not at all helpful to me but quite shocked they might do this!!

Can I ask a stupid question?
We don’t have freehold/leasehold in Scotland (I don’t think). What happens when your leasehold ends? Do you (assuming you’re still alive) lose your property? I mean, say I buy a property with 40 years left, what happens then?

@Ifailed

As the council was forced to sell your flat, at a discount, to the then tenant, it seems reasonable that they should pay a discounted price to get it back into social housing.

If it was sold by them to the OP that would be fair. Since it wasn't (or OP hasn't mentioned this) and assuming OP didn't pay a ridiculously cheap price, yes of course it would be unreasonable for them to get a discount on a 400k property for absolutely no reason. OP shouldn't lose out selling something she owns and paid a fair price for just because it was once a council property.

What happens when your leasehold ends? Do you (assuming you’re still alive) lose your property?

The property reverts back to the freeholder who can then set up a new lease. A friend of mine has lived in her flat for many years and only has a very short term left on the lease. She's not bothered about losing the flat as she has another property and has no-one to leave it to upon her death. She could well afford to extend her lease if she wished to.

@changingnames786 I understand but we're not the original buyers who bought the flat under the right-to-buy scheme. We paid £396K. So obviously I don't want to lose out...