Darren Peters

Registered with Property118.com
Saturday 2nd January 2016

Insures properties through a broker recommended by Property118
0


Latest Comments

Total Number of Property118 Comments: 122

Darren Peters

9:40 AM, 12th February 2020
About A week ago

Mortgage on ex-LA going at auction?

I have a few flats in ex-local high-rises in Hackney. I'm slowly selling down.

Most important if you have decided to buy in auction, have a plan B for the finance in case the mortgage company lets you down. It's not unknown for the mortgage company to agree in principle then change their mind and not tell you. They just drag out the process with random questions knowing you will run out of time. So be ready to have a bridging facility lined up ready to step in.

The above is especially so with they type of property you describe. From a lender's point of view there are several red flags namely above 5 floors in height, lifts (high service charge), ex-local authority and low percentage private ownership (big red flag). Method of construction might be an issue also.

When the money tide is high, you should have no problem with finance but if it's not at 'high tide' right now your prospective purchase is the first type they will stop lending on.

This should also be a concern with your exit strategy also. When you want to sell, your buyer might not be able to get finance as the money tide is low. You will have to accept that the best time to sell will be dictated by this much more so than a privately owned low rise flat.

In other words the yield has to be really good to justify the purchase. Ie the purchase price must be considerably cheaper than the vanilla private flat next door.

Also, the service charges and maintenance cost will be much higher, if the lifts need replacing you might get a bill for £10,000. If there's flammable cladding, you'll probably have to pay to have it removed. Ditto fitting double glazing - £10-£15000 since 10 floors of scaffolding is specialized and expensive.

Hackney Council in my view are full of great people doing their best (unlike others) but sometimes overwhelmed by problems and lack of funds. They seem to have a maintenance strategy that defies logic though. Eg spending more (of your!) money repairing part of a 50 year old communal heating system than it would cost to fit something new and more efficient.

So check if there are any planned works in the pipeline, the historical service charges. Go there late at night and other times to see if you can see any social issues that weren't apparent with the block when you saw it the first time. Do the lifts smell? With high rises it only takes one anti-social tenant to make everyone's life hell.

Check how much time is left on the Lease in case that's an issue.

Other than that, good luck and let us all know how it turns out.... Read More

Darren Peters

13:09 PM, 28th January 2020
About 3 weeks ago

Joint AST and alleged victim has left?

I thought that on a joint tenancy any named tenant can end the tenancy for all. It doesn't need all people to sign. Smarter minds than me on here will know.

If this is the case, perhaps the tenant that has left will be happy to end the tenancy for all. Pulling the rug from under the remaining tenant as it were.... Read More

Darren Peters

10:42 AM, 6th December 2019
About 2 months ago

Selective Licencing - 1 room is 10cm too small?

Do an analysis of whether you can sell and buy a small freehold house outside London in a commuter town. While you might take a hit in the short term, the property you purchase might give you uplift angles and more control of the repairs and maintenance.

Also if your leasehold is approaching 81 years, factor in the additional cost of getting the extension.... Read More

Darren Peters

12:56 PM, 2nd December 2019
About 3 months ago

Right to buy council flat - is it a good idea?

Do you like living there and would you be happy to live there for the foreseeable future? I.e. could you use it as your home and do your property business elsewhere? If you want to purchase and sell or purchase and rent immediately it probably won't work out.

If you want to live there, how does renting compare to the likely cost of services and mortgage? The council should provide 3 years of service charges accounts to give you an idea of that cost - which you won't have seen as a tenant. Costs for things like communal heating tend to be a lot higher than if you had a 'normal' property for some reason that I've never managed to get to the bottom of.

RTB has restrictions on you and also the council for several years after purchase. The possible restrictions on you are as Neil says above. Restrictions on the council will be to protect you from shock service charge increases or building works costs for 3 or 5 years (I can't remember which). So if the council needs to replace all the windows and put up 20 floors of scaffolding to do so, you _might_ be sheltered from the worst of the cost. But if they do it say in 6 years you will have to pay your full proportion.

From experience, service charge costs on high rises are expensive. Back in 2005 said window replacement works cost in excess of £20,000 per flat in a block where I bought. Lifts and communal heating are other elements that can have eye-wateringly expensive costs. It's not a case of if but when. Though some councils allow you to pay this off over 5 years.

For mortgages, it depends how much money is washing around the banks when you apply. If funds are tight, the following are used to restrict demand: Ex local authority, above 5 floors, communal balcony access, low proportion of owner occupiers in the block. Each of these reduces the lenders and products available. This is something to consider not just for purchase but if you want to sell later.... Read More

Darren Peters

10:33 AM, 19th November 2019
About 3 months ago

Bare Trust as IHT mitigation tool?

Colin, it may be problematic (but not impossible) for the sisters to get a mortgage in their '60s and then they have the new problems of finding the interest payments and what to do if they survive to the end of the mortgage term. Hence the equity release suggestion.

As Iain says above if the money drawn out of the house continues to exist in the sisters' name, whether in a bank or an investment, it remains part of their estate.

There's no mention of whether the sisters already have a source of income nor whether they want a 3rd person to benefit from their estate. These factors will have a bearing on any actions to be taken.

Frederick could you post back after everything is decided to let us know how this played out please?... Read More