To pull out of purchase or not?

[lalah20]

Hello everyone, for context I am 30 and a FTB in London. I am currently living at home with mum and have been able to save up a deposit for a flat because of this.

Back in September I viewed an amazing amazing 2 bed flat in South Croydon - it is a duplex in a Victorian house conversion, stunning interior and genuinely massive. Made an offer straight away and that offer got accepted. Long lease and vacant + chainless. Very quickly got my mortgage approved and got a good solicitor to do my conveyancing.

Recently my solicitor gave me an emergency phone call to inform me that he discovered that it will be a subsale/flipped purchase. It turns out that I am not buying directly from the current owner - instead I am buying it from the estate agent who is buying it from the current and original owner and selling it on to me the very same day. This was not made clear to me at all at any point by the estate agent. It is utterly unprofessional and dishonest behaviour.

Anyway, the current issue is that my lender will 95% refuse to release funds as it is a flipped sale and they require the current owner to have owned the property for a minimum of 6 months. My solicitor has had to report to Nationwide. The middleman's (estate agent's) solicitor is refusing to provide information for the following enquiry: how much he is paying for the property. This seems very fishy and it is clear that he is flipping the property to make a profit - very unethical when the original seller could be getting the full amount I am paying OR I could be paying what the EA is paying for it. In addition, the estate agent was not totally honest about service charges, however I liked the property enough to not be put off by it.

I viewed two new properties just before Christmas and really liked one of them (maisonette, recently refurbished, no service charge or ground rent). Have decided I will make an offer after the new year.

I am on one hand tempted to see what Nationwide will say and perhaps just continue with my original purchase (if they even agree to release funds!) purely because I have spent time and money (nearly 3k!!) on the purchase through surveys and conveyancing. On the other hand, I have self respect and don't like doing business with people who lack openness and integrity. Furthermore there are plenty of flats for sale and I have my pick.

What would you do in my position?
and: How could I get the seller to pull out rather than me pulling out? Reason I ask is because if I pull out I will not be able to claim homebuyers insurance and I absolutely deserve to get some of the money back as I have been strung along and lied to this entire time!

I know almost nothing about the house buying laws and things however there is one key thing that would make me pull out of this sale.

You say the current accepted offer has hidden service fees and the maisonette you viewed had non.
I've seen threads on here about how service charges have been increased with only a month or twos notice to unaffordable amounts or how PPs haven't been able to sell without taking a loss because of service charges.
I would highly recommend you get yourself very up to speed about the service charges, whether they are set for a time period, if they have a limit on the increase etc. before you commit to a property you might not want for life.

You made your own point anyway, you have your pick of properties why tie yourself up in some dodgy deals with this one?

If the other one has no service charges how are things like general maintenance kept up
with

I'd go for the maisonette over this flat. Yes, it's annoying to be down £3k, but there's no point throwing good money after bad. Chalk it up to the shitty UK system and move on to getting the best property you can.

This

in spades

South Croydon is great, some lovely huge houses and wide tree lined avenues

Wise move..

Hmmm…

flipsale is a common thing at the moment and I guess who is selling isn’t really a matter until your bank ask questions and it is blocked…

if you can not pay some of the fees because…well, you were duped…I would use that to buy something else. The reason why they don’t want it is because the price doesn’t show… so it can be inflated to your expenses and no one lives in it after it is done so there can be malfunction but because your seller is not the seller whom made the last changes…they aren’t really anything you can do either.

It sounds like seller and estate agent are mate and you are the cake!

There are different areas in Croydon, South Croydon is nice but l would be tempted to pull out due to the circumstances.

And that to claim back and cut your losses!

you can’t get your searches and surveys back but if you go after the estate agency…

It turns out that I am not buying directly from the current owner - instead I am buying it from the estate agent who is buying it from the current and original owner and selling it on to me the very same day.
When you come to sell, won't this show up on records and raise suspicions in potential-buyers' minds? The EA will walk away from this and you will be the one left answering awkward questions.

If you lay down with dogs, you get up with fleas. (there's a cheery thought for the New Year).

Is this a fraud because it was undeclared? If so you may have a claim against the EA.

I'd call your solicitor and discuss it with them.

Would I continue with the purchase? No - run a mile.

Good luck finding the right property.

According to Google, EAs are regulated through mandatory membership in a <a class="break-all" href="https://www.google.com/url?sa=i&source=web&rct=j&url=www.propertymark.co.uk/professional-standards/uk-regulation/ropa.html&ved=2ahUKEwj_qYWP9OqRAxVn0AIHHTiXAQkQy_kOegQIARAC&opi=89978449&cd&psig=AOvVaw3sYFxzfKLwrSot2h3Jh4GU&ust=1767376353277000" rel="nofollow" target="_blank">government-approved redress scheme (like <a class="break-all" href="https://www.google.com/url?sa=i&source=web&rct=j&url=www.tpos.co.uk/&ved=2ahUKEwj_qYWP9OqRAxVn0AIHHTiXAQkQy_kOegQIARAD&opi=89978449&cd&psig=AOvVaw3sYFxzfKLwrSot2h3Jh4GU&ust=1767376353277000" rel="nofollow" target="_blank">The Property Ombudsman (TPO) or <a class="break-all" href="https://www.google.com/url?sa=i&source=web&rct=j&url=www.propertymark.co.uk/professional-standards/uk-regulation.html&ved=2ahUKEwj_qYWP9OqRAxVn0AIHHTiXAQkQy_kOegQIARAE&opi=89978449&cd&psig=AOvVaw3sYFxzfKLwrSot2h3Jh4GU&ust=1767376353277000" rel="nofollow" target="_blank">Propertymark) and must register with <a class="break-all" href="https://www.google.com/url?sa=i&source=web&rct=j&url=www.gov.uk/guidance/registration-guide-for-estate-agency-businesses&ved=2ahUKEwj_qYWP9OqRAxVn0AIHHTiXAQkQy_kOegQIARAF&opi=89978449&cd&psig=AOvVaw3sYFxzfKLwrSot2h3Jh4GU&ust=1767376353277000" rel="nofollow" target="_blank">HMRC for anti-money laundering (AML) rules. Agents must also follow the <a class="break-all" href="https://www.google.com/url?sa=i&source=web&rct=j&url=commonslibrary.parliament.uk/who-regulates-estate-agents/&ved=2ahUKEwj_qYWP9OqRAxVn0AIHHTiXAQkQy_kOegQIARAG&opi=89978449&cd&psig=AOvVaw3sYFxzfKLwrSot2h3Jh4GU&ust=1767376353277000" rel="nofollow" target="_blank">Estate Agents Act 1979 and Consumer Protection from Unfair Trading Regulations 2008. Professional bodies like <a class="break-all" href="https://www.google.com/url?sa=i&source=web&rct=j&url=www.skill-up.org/how-to-become-a-real-estate-agent-in-the-uk-without-experience/&ved=2ahUKEwj_qYWP9OqRAxVn0AIHHTiXAQkQy_kOegQIARAH&opi=89978449&cd&psig=AOvVaw3sYFxzfKLwrSot2h3Jh4GU&ust=1767376353277000" rel="nofollow" target="_blank">RICS and <a class="break-all" href="https://www.google.com/url?sa=i&source=web&rct=j&url=join.guildproperty.co.uk/estate-agency-regulations&ved=2ahUKEwj_qYWP9OqRAxVn0AIHHTiXAQkQy_kOegQIARAI&opi=89978449&cd&psig=AOvVaw3sYFxzfKLwrSot2h3Jh4GU&ust=1767376353277000" rel="nofollow" target="_blank">The Guild of Property Professionals offer voluntary qualifications and training to boost credibility.

I would call the property ombudsman and report them. You may receive redress for your costs through this process because they did not declare they were purchasing selling to you on the same day. It all sounds super dodgy to me. HMRC might be interested too.

There was a programme on TV years ago who would visit sellers to provide a valuation. If it was dear old Doris who was moving into a home the agent would substantially undervalue the properly thàen collude with his mate Dave to make an off-market offer. Dave would shortly thereafter sell it via the agent for full market value and share the lootp with the agent. Was apparently more common than would expect at that time. Perhaps this agent is doing something similar but cutting out Dave.

There was a programme on TV years ago who would visit sellers to provide a valuation. If it was dear old Doris who was moving into a home the agent would substantially undervalue the properly thàen collude with his mate Dave to make an off-market offer. Dave would shortly thereafter sell it via the agent for full market value and share the lootp with the agent. Was apparently more common than would expect at that time. Perhaps this agent is doing something similar but cutting out Dave.

The solicitor will have the office copies from land reg - they would have arrived with the contract pack with the contract papers. Because it is a back to back transaction there should be additional clauses in the contract (as the named seller is not yet registered proprietor, and a clause re the EAs solicitor completing their application for registration in a timely manner).

If a property transaction is back to back (ie being flipped) then this should be up front and transparent by the seller. But it’s not illegal - did OPs conveyancer have to chase and chase for the contract pack? It should have been disclosed in that.

Nationwide or any other lender will need a good reason as to why the transaction is being executed in this manner. Eg a builder who took a property in as part exchange against a new build and sells it a month later is usually no problem as that’s a common sense reason for a short period of ownership. Not quite what the reason would be for this though. Unless the current owner needs a quick sale (at undervalue) and the agent is selling for the the surveyors recommended value? Your lender would need to know that too as the registered owner may be struggling financially and that registered owner will need to complete a declaration of solvency.

From a stamp duty POV there’s an exemption code to be used when selling a property in the same day it is purchased. However the agent will need to speak to their own tax advisor about this (I don’t do tax so not sure if there’s any CGT liability).

When you buy a property your solicitor is provided with the current property register - not a list of who owned it on whichever dates and the dates they then sold on. You can only see who the current registered owner is. Hope that helps,

Why would the current owner agree to this sale which was so costing them money?

Have you decided what to do yet @lalah20?

Definitely. The person I'm buying from is in fact the registered director of the estate agents and it is a family run business! Crazy right. He will need to pay stamp duty and two lots of solicitors fees as he is buying and selling and I am sure he is buying it really cheap as it wouldn't be worth spending up to 3k on solicitor's fees other than to make a pretty profit. I will have great satisfaction in pulling out of this sale and seeing him waste his money on solicitors fees. Very odd behaviour and I will look to raise this with the property ombudsman and take it further to claim losses.

Hey thanks for your reply a few days ago 😊 yes I've decided I will 100% pull out of this. I will now go no contact with the EA and I will only communicate with my solicitor who will then communicate with their solicitor. This has been a big waste of my time and money for sure. I've made an offer on the nice maisonette I viewed before Christmas and I am hoping my offer gets accepted. I emailed my solicitor to ask how i can go about not formally withdrawing as I will need to make an insurance claim. My insurance won't pay me all the money I've spent as I opted for the basic policy that goes up to 1k for conveyancing fees and 500 for surveys. So, further down the line I am looking to claim further expenses as I was mis-sold this property.

A taste of his own medicine!

On an as and when basis. This is the downfall of places with low charges - lack of reserve funds. However big repairs are not super frequent. I would definitely get a L3 survey done to determine the likelihood of potentially eye watering repair bills

It's true, it's easier for me to stick with it if possible. However I feel the property now has a really bad omen so I will not continue with it. After reading all of the posts here, pulling out is definitely the right thing to do

She lives overseas in Australia and EA is lying saying that the reason the property is being sold in his name is because he is acting on her behalf to avoid extra taxes 😂 and he assured me over the phone that he is making zero profit from it. Then his solicitor begins refusing to share the amount being paid for the flat 😂 😂 the EA genuinely thinks I was born yesterday

That doesn't make sense that it's to avoid extra taxes because she's still selling it - to him. I think you're making the right decision!

I think you've made the right decision to pull out. House buying and selling relies on people being straight with each other. They have really messed things up for themselves by being such greedy cheats. Good luck with whatever you decide to do next.