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I have just had notice today that the largely council owned block of flats in which I am the leaseholder of one flat, may be demolished due to regeneration of the area! I have owned the flat for two years, it's in a small well run block. I bought the flat as an investment out of a critical illness payout. It was meant to help me build a nest egg so I could retire a little earlier and provide my kids with some security. When I bought it, I spent a few thousand refurbing it, new kitchen, new bathroom, new flooring etc in order to make it attractive to tenants. I have just renewed the mortgage for 5 years (fixed rate interest only) and got a new tenant in. Has this all been a waste of time and money? Please tell me it will be ok!
When is regeneration scheduled for?
You should hopefully get market value plus costs if it goes to Compulsory Purchase/CPO
May be good idea to get written EA valuation x 2/3 as a baseline for later negotiations with LA.
Also look on LA website and check minutes of LEASEHOLDER meetings
Did solicitor not pick up on any plans for regeneration when you bought recently?
Thanks, good advice to get a few written EA valuations for later negotiations. I will make sure I do that.
The flat was purchased two years ago and I don't believe there were any plans to regenerate at the time. The regeneration has only recently been announced with a joint venture private partner so it is early days. Market value plus costs would be good. However, I would still lose my income and would need to find another property.
Do you know if costs include the cost of purchasing the property in the first place or would it just be my costs associated with the sale/CPO to the LA? Presumably if I buy another property the costs of that is not covered?
Certainly as an owner occupier CPO would usually cover both sale/ re buying costs - though as investor only sale costs though tends to be arbitrary decision by each LA.
Kingston LA had plans for big regen of Cambridge /Kingsnympton Estate but seems to have stalled as Tenants/Owners have been given final say and would be unlikely to vote to their detriment.
Time wise if only just announced in your case it could be years away before any action happens
Thanks LandLordy. OK, I'm in it for the long haul then. I'll go to the meetings and keep informed of developments.
That's useful to know that the sale/buying costs are usually covered as an owner occupier CPO but not necessarily both for an investor only. I may have to move in nearer the time!
Not sure moving in would work - though I was assuming that LA has more than one brain cell as they have CT records.
Only way they know that 38.6% of ex-RTB flats are owned by Landlords is differing address for Service Charge correspondence
Have a look at Guardian online - they have covered the regen issues a lot in recent past - you glean more from comment section than the main article usually
Also be pragmatic in your thought processes - if you have eg 30% equity that is the amount at risk - not the 100% figure.
LAs normally value on last sold price - check RM for any other sales in the block via postcode.
That is true, I do need to keep it in perspective. I just feel that the money spent on the refurb won't necessarily be reflected in the market value. The expenditure has also eaten into the profits in the last two years but I was planning to make this up in the long term. Now I don't think I will get the chance!
I'll keep an eye on the last sold price; thank you for your advice.
We have a property in the same position in London, though we were given notice of the demolition in 2005 with a forecast that it would be demolished within 15 years. Since then we have refurbished, new kitchen and new bathroom, flooring etc. The present estimated date is now 2023 and meanwhile the property is renting well and we still cannot be certain that it WILL be demolished as it is a small low rise block, brick built and the reasons for demolishing the rest of the estate do not apply to our property. Just keep going and keep listening out for more news, this one could go on for some time!