Buyer asking for further reduction due to current situation?

by Readers Question

9:50 AM, 18th May 2020
About 2 weeks ago

Buyer asking for further reduction due to current situation?

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Buyer asking for further reduction due to current situation?

Just before the pandemic we had an offer for a Leasehold Maisonette which we advertised and we accepted a reduced offer. Since then he has asked for a further reduction of 5K due to the uncertainty of the current market promising to exchange contracts without any delay.

We had the boiler replaced in 2013 for which we have not documentation as the Engineer did not provide these to us. This has not been registered with Gas Safe and Bldg. Regs which we told him at the beginning. Now he is asking us to take out an indemnity policy for this old boiler. We have been servicing the boiler every year and have Gas Safe certificates which we have given him.

The freeholder of the property is the Council who is proposing to do some repairs on the roofs etc. in the near future and has informed us that they are seeking contracts for this work which will last for 4 years. The buyer now wants us to agree to pay 50% of the amount payable when this work is carried out after we sell the property as he is not comfortable inheriting this liability.

He has asked for a further reduction in price by another 2K or withhold 2K in escrow by the solicitors. Because of the current situation we are of the opinion that this work will be put on hold for the foreseeable future. Would like to have some advice as to whether this is a reasonable request as we feel it is the buyers responsibility to bear the cost of any future repairs once he owns the property.

Any advice on this will be greatly appreciated.

LJ



Comments

Lindsay Keith

10:21 AM, 18th May 2020
About 2 weeks ago

Unless you are desperate to be rid of this property or give it away but then how much long/medium-tail liability do you keep re freeholder's works when they ever happen, think about just withdrawing property from the market? Buyer will come back for more, gazundering away...?

Boiler replaced 2013 and no docs??? You call it 'old' regarding buyer's request for an indemnity policy? Something odd?

david porter

10:24 AM, 18th May 2020
About 2 weeks ago

Unless you really need to sell rent it out.
You do not neeed the stress at this time.

Alina A

10:39 AM, 18th May 2020
About 2 weeks ago

One argument we used in a similar situation was that FUTURE works will benefit the future owner over the long term of their ownership and therefore fall into the cost of such ownership, so you do not feel you should be funding them. Worked in our case. Major works in council flats will get ages to be assessed, carried out and invoiced, so I would not recommend looking into retainer, unless it's time bound. On indemnity insurance, compare the cost of it versus getting retrospective approval from building control for the boiler installation. You would need this next time around you try to sell. Apart from building control consent there is also freeholder consent that is often required from the management company prior to changing the boiler (check your lease and also information on the council's site for leaseholders on this). I think insurance may be a cheaper and faster option than getting these sorted. I would then give the buyer a hard deadline to exchange contracts.

Freda Blogs

10:42 AM, 18th May 2020
About 2 weeks ago

Depends how much you want/need to sell, and how marketable you consider the property to be. If you want to proceed, you don't have to agree to all the requested terms. Agree with whatever you are comfortable with and condition your acceptance to exchange of contracts by x date or the concession will no longer apply. Be prepared to walk away.

Graham Bowcock

10:58 AM, 18th May 2020
About 2 weeks ago

Hi LJ

There's a few issues here which complicate the answer anyone can give you.

Like many buyers, yours is playing the CV card to try and get a reduction. Some will succeed and some won't. It will entirely depend on how badly any seller wants to sell and whether the market could produce another buyer if yours walked away.

Unfortunately for you, there are issues which play into the buyer's hands.

Boiler - if your contractor cannot give a building regs/GasSafe certificate then presumably he was not up to the job and should not have done it. The buyer is right to get you to deal with it. Providing a building regs certificate is a legal requirement. If you can't get it done retrospectively then you will need to foot the bill for insurance.

As for the roof repair, this is a problem with leasehold properties. The value of the repairs needs to somehow be reflected in the price of the property. Would anybody else pay you the agreed price, knowing there is a liability for roof repairs? That is the basis question. This is a question for you/your agent. Personally I wouldn't get into discussions about holding money back - just get the buyer to pay a price in a one-off deal - whether that's the price already agreed or a lower one is just something for you to negotiate. You are right that once the property is sold, the liability rests with the buyer. Your buyer is hedging his bets a bit.

moneymanager

14:37 PM, 18th May 2020
About 2 weeks ago

We have bought a leasehold flat where there was no "Part P" which covers a replacement with "minor works" only, an indmenity policy paid for by the seller is standard practice, we have also sold one acquired with such and thre was just a small incremental charge, £16 or so I think and frankly not worth the time trying to extract original docs.

This development has some 400 units and about a third were never signed off with a Buildings Regulations Completions Certificate for no other reason than a unit was ready on the day and the Council were never called back, the sols again accept an indemnity.

Darren Peters

14:41 PM, 18th May 2020
About 2 weeks ago

I don't know how desperate you are to sell but I would just say no to everything the buyer has asked for for the reasons given above. I certainly wouldn't leave myself on the hook for unknown costs after selling ever.

One other thing you could do if you take your property off the market is plan to get a new boiler with the council's approval, building regs compliance, installation cert, whatever is required so your boiler is no longer an issue. The cost of a new boiler is less than you would be giving away to the current buyer. It regularises situation so you can sell to anyone without this being a problem - indeed it would be an extra selling point.

I think it's going to be a lot easier to rent for the next year than to sell for a good price.

BernieW

16:31 PM, 18th May 2020
About 2 weeks ago

Be careful about major works being carried out by a council freeholder. Look out for - and reply to - the section 20 consultation notices which they (should) send you. Make sure you nominate a suitable contractor from whom a quotation can be obtained. Make sure you respond to the Statement of Estimates too.

After the works have been completed - make sure you check the actual invoices and specification details to ascertain what was actual completed. Then check those details against what your specific lease says you should pay for. Be very careful about invoices which cover several blocks of flats under one contract/specification.

When it all doesn't add up - which with councils is very common - you'll need to make an application to the First-tier Tribunal for a determination of reasonableness and clarification of what you should pay.

Lali Jayasooriya

19:45 PM, 20th May 2020
About 2 weeks ago

Reply to the comment left by Graham Bowcock at 18/05/2020 - 10:58
Appreciate very much all the comments and advice which is much appreciated. finally managed to get a reply from the Council which states clearly that no repairs are being proposed for the block of flats which we have sent to the Estate Agent/Buyer. The only issue is the boiler. The installer did give a Gas Certificate at the time and every year we have had it serviced and certificates provided when the property was tenanted. After the tenants vacated the property last year, we did not get one done as we decided to sell which was a mistake. We are not desperate to sell so will await for a reply from the buyer. We have decided not to reduce the price but agree to an indemnity policy for the boiler if the buyer wants to proceed. Many thanks. LJ

david porter

14:59 PM, 21st May 2020
About 2 weeks ago

yes
it seems sensible not to reduce
if they really want it they can pawn granny's jewels!

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