Massive refurb costs - pull out?

[aprillfestival]

We are first time buyers, buying a one bed flat (leasehold) in London for cash. (We're very lucky but the money came from bereavement which I'd really like not to get into.) We're late 20s and the first of our friends to buy and don't have adult relations in our lives we can ask advice from I thought I'd try here...

The sale should have been quick and easy but the vendor's solicitors are taking forever on everything. We were told she was going to change solicitors, she hasn't. That's a whole thing in and of itself.

However, the lag in sale means we've had some time to chat to some neighbours. It turns out the management company has proposed 80k refurbishments in the next few years. Divided by the flats in the block, it'll be about a £13k bill.

Buying this flat is going to take us to our financial limit (with about 6k in savings left which we'll begin adding to once we're in). This kind of bill a year in would cripple us - even if it's in smaller repayments.

We are thinking of going to the estate agent and asking for £13k off the price so that we could reserve that money to pay the refurbishments when the time comes. We know there's a strong chance the seller will balk at this (though she is a landlord with multiple properties she's selling off, probably worth a few million) and we will have to walk away.

I guess my question is, is there anything else we should do? One of the residents gave us the vendor's direct email. Should we get in touch with her first? Any other advice?

We really don't want to lose the flat, we love it and obviously will lose our conveyancing fees but we simply can't pay the price we bought for AND 13k within a few years.

Thanks for any help.

Hi. The vendor should really have declared this via the property information forms they fill in. I'm sure for leasehold flats there's a section about planned future works for them to fill in.

I would go back to your solicitor and get them to check with the vendors solicitor or get them to get in touch with the management company.

Then I would def negotiate on price. You might not get to the full £13k but you should get some money off. This sort of future bill would put many buyers off so I would have thought the vendor will negotiate

All flats will have refurbishment expenses though so i don't think you'll get it back off the seller.

Is there no money in the management fund? I paid a monthly amount into my block of flats management fund and the costs of maintenance and upkeep were taken out of this. We were never liable for a massive bill.

@Caselgarcia - everyone does pay a service charge which should add to this. But there's recently been 40k worth of fireworks which we believe has greatly reduced the pot. So it seems, from what neighbours say, this will be a bill.

You need clear information about what works are planned and when.

The block should have a “sinking fund” of savings which will cover some of the major works.

All flats have ongoing refurbishment costs, it’s part of flat ownership. Actually also part of house ownership.

If the works are definite and there is a budget agreed already I’d check the sinking fund position and then negotiate. It should have been investigated and declared already as part of the sale documents though.

£40k on fireworks?! You need to see the management accounts, the freeholder or the managing agent has to provide them, usually for a fee.

@beggingforsleep

I think the problem is her solicitors are being so slow that we still don't have answers on this. And because the works are proposed not planned she may not have to declare them?

But we will go to our solicitors and see if they've had any information on this. Thanks. We'll do that before we go to the agent.

Yeah, I think it's going to affect anyone buying. Though I agree @StephenBelafonte there will always being maintenance, such a high bill that's already in discussion surely will have some affect on price?

£40k on fireworks?

Really?

How do fireworks maintain a property? I would ask to see why they were purchased, who agreed to it etc. There should be a committee of residents, if they agreed to spending 40k on fireworks, I'd question whether I would want to be living there to be honest.

@Caselgarcia

Is there no money in the management fund? I paid a monthly amount into my block of flats management fund and the costs of maintenance and upkeep were taken out of this. We were never liable for a massive bill.

You had a good management company. Many want to keep the service cost low as their attractive to buyers but then there's no sinking fund.

We had a flat like this, management company mismanaged the renovations and didn't chase the builders up to fix it so we had to pay out nearly as much again to rectify it.

Your solicitor needs to ask her solicitor to get the managing agents to confirm all this information and provide the service charge accounts.

there's recently been 40k worth of fireworks

Wow - love to have seen that!!!!

I assume fireworks was supposed to be 'works'!

If you've got enough to buy a one bed for cash, why don't you get a mortgage. Surely you'd the be able to afford a small house? That would be a much better investment than a one bed flat.

Something seems off here. I sold a flat recently and we had to declare any upcoming works on the paperwork. The management company also provided (at cost) a seller’s pack, pretty standard, that included things like recent statements of accounts, a CAPEX plan, details of requests for recent works. If there really is a huge bill coming up, you should know about it.

I'm just amazed when people buy 1 bed flats :S like nooo I would never! I would never buy anything smaller than a 2 bed in case kids came because selling is a nightmare and I would never buy a flat. Its unfortunate that London is so expensive but ugh I just could never

I know this isn’t what you asked, but is there no way you can find something freehold? Maybe use the money to add to a mortgage to get a two bed house for instance?
Otherwise when I sold my one bed flat I paid the outstanding bill for the roof works myself first. I don’t think anyone would have been interested otherwise. It does seem a bit off that this hasn’t come up until now. If you take the flat on at this point then essentially it’s costing you £13k more. Is it worth that?

Tbh, I wouldn't buy a one bed flat unless you plan to rent it out. There's no space to grow in that.

Either move to a cheaper area or get a small mortgage to get something larger

Obviously "fireworks" should read "fire works", works to increase fire safety.

We don't earn enough for a mortgage unfortunately. Zero hour contracts.

@aprillfestival

Obviously "fireworks" should read "fire works", works to increase fire safety.

We don't earn enough for a mortgage unfortunately. Zero hour contracts.

Have you tried a broker? If you can show consistent hours even on a zero hour contract you should be able to get a mortgage.