Section 20: What will lender say?

[starchildmum]

I am buying a BTL leasehold flat ( studio) in a Victorian Mansion Building with a share of freehold and I am close to exchange.

I was aware at offer stage there is a Section 20 for some works ( upgrade the flat front doors to fire doors, internal redecoration including painting and woodworks, carpets and firelights), nothing major.

In principle I am happy to pay for section 20. I just do not like the fact that we do not have estimates and I am supposed to exchange next week and close the week after. However I am fine with whatever the numbers will be and apparently this can only be established at the end if the year, after accounts will reveal how much the reserve fund can cover and to what level service charges will increase.

I understand that the schedule is key for the vendor, and I do not want to disturb the chain. I am happy to proceed as it is.

My solicitor announced today that we have to infirm the lender. I wonder if that could impact the sale process or if it’s just standard procedure?

It is generally the case that your solicitor is also acting on behalf of the lender. If there’s something they have to report, they will need the lender to ok it before contracts can be exchanged.(regardless of whether or not you are happy to accept it)

I did not know this so was pointing out the extra stress of the section 20 and if an allowance could be negotiated. I now regret that I have emphasised this fact as I factored the works in but just was not very happy to proceed without estimates. But would have preferred to proceed regardless and now very annoyed about myself. I feels as if the solicitor would not have reported it if I had shown less concerns. I am not concerned, simply hoped for a small allowance/ retainer if possible but key is to proceed.
I hope the lender will not withdraw offer.

Or is it just normal procedure? Any experience with a similar situation?

All lenders have different requirements and different things that they want to know about. Don’t beat yourself up thinking that the solicitor has reported this because of you raising your concerns; it’s likely they would have reported it anyway.
I don’t have any experience of reporting s20 work, but I have reported various other matters to lenders. It is standard process, but it is now down to the lender to confirm whether they’re happy to go ahead or to say what additional conditions they might have.

Property solicitor here and yes they would have reported regardless of what you said, I've reported s20 works to lenders and so long as costs aren't astronomical and you're happy then they will be fine to proceed

The problem is there are no estimates yet.
Works are upgrading flat front doors to fire doors, painting and internal decoration, fire lights and some small other things. I am more worried about the element that those works are fire safety improvement which could be perceived as not being up to fire regulations? But can a house ever be 100% compliant with all fire safety recommendations.

I guess informing was standard but I am still worried. I guess I just have to wait…

Could I just change the lender otherwise..?
I had a different offer previously, but did not proceed with the flat.

Hi, they might ask for quotes but the scope of works I don't think they will have issues with, we are finding that due to recent changes in fire legislation fire doors crop up in most risk assessments, they might actually be pleased that the man co is doing their job properly!

Lender says “ that they would need total numbers to see if valuation is affected and that application therefore cannot proceed”.

This seems very intense given the type if works ( to upgrade and modernise internal communal area, painting and flat fire doors).

This means the day 4 people in chain can’t exchange/ close. Estimates only available in 1 month so how does this scenario play out I do not know…

I feel sorry for seller and given the fact that I am happy to proceed I find it difficult to believe that lender is not flexible, for example to suggest that I proof additional funds etc. Of course I would have been delighted with an allowance but to put everything on hold until further notice is unexpected. I hope I am not loosing the flat. Could seller put it back on the market?