Section 20 Notice served/ BTL

[starchildmum]

Hello

I am end stage of buying a BTL 1 bed flat in an old Victorian building in central London.
There are 4 flats in the building and flat is a leasehold. Yearly service charge for insurance etc. is £ 2000. I assume that as a leaseholder the entier cost for Section 20 works will be split between those 4 flats?

I found out that a Section 20 has been served in December outlining that major works are due:

The works to be carried out under the agreement are as follows:
a) Overhaul of the roof coverings and details.
b) Overhaul of the gutters/pipework.
c) Mortar repairs.
d) Render repairs.
e) Asphalt repairs.
f) Carpet replacement
g) External redecorations.
h) Internal decorations.
i) Plaster repairs
j) Replacement of boarding to comply with current fire and safety
regulations.

This sounds as a lot of work!

There is no estimate yet but in your opinion, would would you think it could be?
is there a change I can still cut of a bit from asking price?

Thank you!

Run - fast

Is there no such a thing as capping?
The mandatory capping requirements only apply to service charges payable by someone who is a qualifying leaseholder on the date on which the works commence. This should be noted when purchasing a leasehold property that is part of an ongoing major works project.

so 15.000 in London and 10.000 elsewere?

£150k which will be more by the time the management cut has been added. How large is the roof that is being re-roofed?

Is there a sink fund for this type of work? Who is the freeholder? Have they written to leaseholders asking for their recommendations for contractors to carry out work? Did any leaseholders take that up? It's usually cheaper.

Ultimately, the vendor will have known this work was due to be carried out and it's up to you to negotiate a price that takes this work into account now that it has been brought to your attention. This is completely normal in a sale/purchase. A few years ago, i sold a flat for which there was no short-term plan for works by the freeholders but, as they were working on other blocks in the area, the buyer negotiated that several thousand pounds were put aside for 18 months in case they did decide to upgrade my bl9ck too. (Luckily for me they didn't and I got the money when the period expired.)

On a block of four flats, I do not think it woukd be anything like £150k. I own a flat in London, one in a block of 18 - to repair the roof, redecorate the exterior, all the interior common areas - quite extensive - replace some soffits etc came to £5000 each flat (which I think was a lot). The outside decoration was minimal as the block is mostly brick and tile but they did repaint all the garages.

Replacing the roof though? Overhaul doesn't suggest a light repair

That sounds like a lot of work to me too. 150k is probably an over estimation but if you work to something like that figure you shouldn't get caught with your pants down.

I'm not sure how it works for "private" freeholds but I lived in a London ex council flat and got a Section 20 notice to update the heating system. The whole thing was one of the most stressful experiences of my life. The council couldn't administer the process properly, we were sent wild estimates for our share of the work which was over 10x the cost of having the work done ourselves separately. We had barely any control over what was happening. In the end, the S20 process wasn't followed properly and it was cancelled, and I sold the flat before it was reissued.
To proceed with this flat, you need to have virtually infinite money and a desire to want to live there a long time to recoup the costs. Otherwise you're in for a long and stressful and expensive experience, and you probably lose money on the property in the end.
Sorry, not sugarcoating it, run!!!

Hi

Let’s assume its between 60-150 K. However who is going to pay? All split between the 4 flats? So anything betw. 15- 40? Would I need to pay £ 40 in one go or is there capping? If I only pay 15 but works are calculated for 150 who pays the difference?

The point is, you should be deducting the repair money from the price you offered. The sale needs to be delayed until this is sorted out.

It is quite rare for a S20 to turn up out of the blue. I suspect the vendor knew it was coming and should have declared it earlier in the process. How it is paid - lump sum or in stages - depends on the freeholder. As far as I know, there is no device for capping a service charge - this is one of the reasons that flats in blocks affected by the cladding scandal have been very difficult to sell/mortgage.