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We are in the process of buying a 2 bed maisonette in Essex for £96K (975 year lease)
The flat requires £12K refurb (tops) in order to rent out for £675/£700 pcm. Value post refurb £135ish.
We have received the report on title from the solicitor and it has come to light that a Investment company purchased the Freehold for the 8 flats in 2012 for £2K (cheap I know)
All the managing agent does is collect a annual premium for building insurance. Circa £400 pa on behave of the freeholder
The freeholder has not collected any service charge or proposed any schedule of works.
It is evident from the overgrown private road, garden and potholes on the private land that no Maintance has been carried out by the freeholder.
The strategy for this investment was to buy and keep in a LTD Co.
I’m however having second thoughts as whether to purchase this flat, i note post refurb & bits it will cost us circa £115K.
is the issue with the freeholder landing the block with a large schedule of works with no funds a problem waiting to happen?
Im not in a rush to buy, equally don’t want to be overthinking this.
Then I think to just hold out for a small FH house with less of this problem for a little more money.
Your thoughts will be welcome.
that's why I avoid leasehold.there is a tower block in Ipswich that is currently having it's cladding removed (post Grenfell) - £2.4 million - each of the 116 flats is getting a bill for £21k
It does not bode well for your investment that your freeholder is not undertaking any maintenance.These kind of situations often become very complicated and expensive, and may affect your ability to sell the property in the future.I would not touch this with someone else's bargepole!Keep your powder dry, walk away from this, and hold out for a freehold house. Life will be much simpler and you will have an asset that you can fully control.
Vanessa Warwick Landlord and Co-Founder of PropertyTribes.com **If you have got value from Property Tribes, find out how you can support it in remaining a free to use community resource**
Properties with such bad management and lack of any maintenance is always a concern. Also with a private road that can cost thousands for up keep pp if it is consider a danger to users ie potholes.Remember the insurance company can refuse to pay out on claims for damages on the road if it has failed to be kept in good condition.Thats why its so cheap -not worth the potential problems you could have further down the road.Finally with only 8 flats its hardly worth the manage agents time. Before you purchase any leasehold property you should see the last three yrs accounts and see if their is any sinking fund provisions. If these don't add up walk away.
The problem with leasehold properties that have not been maintained is when the bill for rectification finally comes in, it can be huge. Then you get X amount of other flat owners who can't afford/won't pay and the whole place gets even worse.
As has been said, look elsewhere!
Hi, can I ask where in Essex for that sort of purchase price? Thanks
Ipswich is in Suffolk not Essex.
Thank you all for your comments and thoughts. Much appreciated. FYI I pulled out of the deal yesterday..:-)