Buying a property above shop for cash

by Readers Question

9:55 AM, 5th August 2014
About 4 years ago

Buying a property above shop for cash

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Buying a property above shop for cash

We are in the process of buying a property above the shop on the high street. Although cash and a chain free purchase, it has already taken a very long time, but we are starting to see the lights at the end of the tunnel.

We are still discovering new things all the time. So, any advise would be much appreciated.

The property is above one of two units on the ground floor leased to the shop. The property consists of first floor flat with kitchen and bathroom and partitioned bedroom, much smaller than it sounds. Then on the second and third floor there is another 3 bedroom flat and the whole thing is sold as a refurbishment project.

We were until yesterday lead to believe that this is one property but it turns out that the council has this down as two properties (two separate council tax). The entrance to the property is rather unappealing to most as it is from the back and above the shop, which does not bother us. We are buying it as a cash purchase but it seems that this property will never be mortgage-able, which also does not really bother us as we plan to live there ourselves and we just fell in love with the location.

It is sold as 125 years lease again as cash buyers but on a very tight budget.
So, a list of our endless questions:

  1. As building insurance is arranged by freeholder who also owns the shop bellow; is there a way we can secure our investment and if so, how? Any insured risk covers freeholder not us?!
  2. We could not find out if property has been ever lived in and as we could see some shop lights through the floor boards we envisage problems with fire safety at least; who could we arrange to advise on this before we commit to buy
  3. We do not know the extent of the refurbishment and although we are not planning major renovation, are worried about planning requirements as it is in conservation area
  4. Then, suddenly only today we just by mistake found out that there is flying freehold (not the property that belongs to the shop, but one next to it?!)

So thank you if you are still reading and although I could go on, my question is: should we just walk off or see it through after all this time?

We are hoping to make this our first family home with small children and we still think this can all work out. As answers are being avoided by most of involved sides, are we being complete romantics that should have walked away long time ago.

Many thanks
Still Hopefulflat aboveshop



Comments

Neil Patterson

10:08 AM, 5th August 2014
About 4 years ago

Just because you do not require a mortgage does not mean that a property being mortgageable is not important.

A properties value or Price is based on the balance of Supply and Demand. If you reduce Demand by only people being able to purchase it with cash you greatly reduce its value or Price.

You have also not mentioned what the shop below is. If the business below or adjacent is noisy or smelly as deemed by lenders again it will be difficult to mortgage and reduce its future value.

You may be purchasing at a very good price, but you need to remember the trade off at the other end.

Among your questions number 3 worries me the most as you have not done enough research to make an informed decision as to whether the property is worth purchasing or just an endless money pit. "We do not know the extent of the refurbishment and although we are not planning major renovation, are worried about planning requirements as it is in conservation area"

If you are serious you need to get a Survey done first as you have no idea until this is done what you are getting yourself into.

Please do not purchase this property and hope it will all just work out.

Ian Ringrose

12:08 PM, 5th August 2014
About 4 years ago

What if a takeaway or sex shop took over the retail units below?

Fire safety need to be sorted out from below the floor, with 60 minutes rated ceiling, I expect that the shop would not be happy with this work being done.

Personally I would not be happy owning most flats above shops until I also owned the shop.

Pete Judd

11:11 AM, 18th August 2014
About 4 years ago

Read the contents of the lease very carefully. You probably will only own the property from the plaster inwards, the walls roof etc belong to the shop below. I bought a maisonette from a well known high street bank and it has caused no end of problems with alterations. To put a phone line in I had to get permission to drill through their wall which required me to pay for their surveyor to visit the property and then their solicitor to draw up legal papers and they required a fee also to cover their administration. All in all about a thousand quid. I had a similar bill when I wanted to install an ensuite.
I have also had problems with insurance because the building belongs to the bank but I have to insure the plaster work inwards. There have been numerous other problems but may be that was because of the concern I bought from so as I said read the lease and all its subclauses very carefully. As far as I am concerned this is the one investment I wish I had never made.


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