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Harry Monk

Buying A Flat For Cash.

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Apologies if this is in the wrong forum.

A flat has come onto the market locally, priced at £59,000, CASH BUYER ONLY. It sold when new in 2007 for £110,000 and is very similar to the flat I am currently renting, although it is bigger and has a balcony, so it superficially appears equal or better although I have not viewed the interior yet. It is in a gated community and the general feel is that it is a little run-down (e.g. communal gardens are mostly weeds). It's the one on the top left, and I do like the style of the building which is slightly quirky.

thepassage.jpg

I could just about reach that sort of price with my STR fund, and as I am receiving little interest on that, it seems that buying the flat and saving the rent I currently pay, £525 a month, might be a better use of my funds. I am fully aware that property prices in general will fall sharply again in the near future.

So, my question is this. Has anyone bought a flat for cash, what is the likely timescale between having an offer accepted and completion, what will be the likely costs in legal fees, and is there anything I should be aware of about buying for cash?

What would be a realistic offer to make? It is a repo and I would be far more mercenary with a repossession company than I would be with an owner-occupier in difficulties, but at the same time I would not want endless dickering about the price, I would want to make an offer which was accepted first time.

Any advice that anyone could give would be greatly appreciated.

Harry Monk.

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Apologies if this is in the wrong forum.

A flat has come onto the market locally, priced at £59,000, CASH BUYER ONLY. It sold when new in 2007 for £110,000 and is very similar to the flat I am currently renting, although it is bigger and has a balcony, so it superficially appears equal or better although I have not viewed the interior yet. It is in a gated community and the general feel is that it is a little run-down (e.g. communal gardens are mostly weeds). It's the one on the top left, and I do like the style of the building which is slightly quirky.

thepassage.jpg

I could just about reach that sort of price with my STR fund, and as I am receiving little interest on that, it seems that buying the flat and saving the rent I currently pay, £525 a month, might be a better use of my funds. I am fully aware that property prices in general will fall sharply again in the near future.

So, my question is this. Has anyone bought a flat for cash, what is the likely timescale between having an offer accepted and completion, what will be the likely costs in legal fees, and is there anything I should be aware of about buying for cash?

What would be a realistic offer to make? It is a repo and I would be far more mercenary with a repossession company than I would be with an owner-occupier in difficulties, but at the same time I would not want endless dickering about the price, I would want to make an offer which was accepted first time.

Any advice that anyone could give would be greatly appreciated.

Harry Monk.

It seems that it has already dropped by about 50% in which case I might be tempted to buy instead of continuing to rent. Depending where it is, it seems that around 50k or so is right for a flat. 90-110 for a nice terrace, 120-140 for a semi , 150-170 ish for a small detached and 225 for an "executive" house. At the moment we can double those prices which suggests the crash has yet to dent the inflated levels that linger after the Brown bubble and the financial crash. When the government subsidies come off this Autumn and IR reflect reality the crash will resume.

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Who owns the rest?

Why cash buyer only? Cos it's been sold recently already and can't get another mortgage so soon.. or cos it's knackered? or cos it's worth 30p cos it's going to be knocked down.

Offer very low. 50k

But do plenty of research and meet the neighbours/research planning etc. before you make offer. View twice.

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costs are going to be less than 1k. You need a solicitor and a survey, no stamp duty... I would question why it is so cheap and why the grounds are covered in weeds. If the grounds aren't being kept what is the management company doing. We get gardeners appearing randomly in our gated courtyard, and the grounds look great

My concern would be with who else lives there, check out the place at night, are the other tenants paying the management company and why arent the management company doing the gardening. Cash buyers only suggests there is a problem, and it will probably be linked with messy grounds.

Search the media, ring the neighbours doors and ask them, and get a solictor to do the searches

Edited by AteMoose

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So, my question is this. Has anyone bought a flat for cash, what is the likely timescale between having an offer accepted and completion, what will be the likely costs in legal fees, and is there anything I should be aware of about buying for cash?

Get it valued?

That's what a non-cash buyer would have to do. There's a risk with being a cash buyer, of over-paying because it's easier (at that instant) to put your hand in your pocket, than it would be for a borrower to squeeze more LTV out of his lender. Particularly a danger if you're unwise enough to "fall in love" with a property -- which it sounds like you've avoided in this case :)

edit: maybe knock on some neighbouring doors to find out why it's getting run down, and any other info you could glean about the development.

Edited by huw

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The cash buyer only requirement suggests the place may not be mortgageable for some reason. For a freehold house that would likely be because of structural problems or similar, not sure what could cause it for a leasehold apartment (and the photo doesn't look like somewhere that's about to fall down).

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The cash buyer only requirement suggests the place may not be mortgageable for some reason. For a freehold house that would likely be because of structural problems or similar, not sure what could cause it for a leasehold apartment (and the photo doesn't look like somewhere that's about to fall down).

It could be because it has Magnolia walls

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costs are going to be less than 1k. You need a solicitor and a survey, no stamp duty...  I would question why it is so cheap and why the grounds are covered in weeds.  If the grounds aren't being kept what is the management company doing.  We get gardeners appearing randomly in our gated courtyard, and the grounds look great

My concern would be with who else lives there, check out the place at night, are the other tenants paying the management company and why arent the management company doing the gardening.  Cash buyers only suggests there is a problem, and it will probably be linked with messy grounds.

Search the media, ring the neighbours doors and ask them, and get a solictor to do the searches

Thanks, there have been some excellent replies so far but this seems the best so I will start by expanding on points raised here.

It does appear slightly cheap to me although property prices locally are low and the location is poor, it is surrounded be derelict buildings and the whole local area is very run-down. I've looked a couple of times and seen and briefly spoken to other residents and they seem fairly normal and helpful.

There is an air of "the money ran out before we finished it" about the place and I don't want that to impact on me, I imagine there will be some type of Management Charge or Ground Rent to pay, anyone care to speculate on what would be typical?

Finally, would you say a survey was essential? I can generally look at a building and tell if it has problems or not, and imagine that the general structure would be covered by guarantee. The last time I had a survey, I paid £300 to be told that a single-glazed Victorian cottage was likely to be cold and draughty n Winter :rolleyes:

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Yes, ask why it is cash buyer only. There will be a reason and then you decide whether you are happy with that for the price you are paying.

I would also ask about service charges, as a gated community you will be paying for the upkeep of the roads, the bloke on the gate, lighting, fencing, lawns and flower beds plus maintenance of the block. You may find that comes to a substantial part of your existing rent but if you like the place, well so what - go for it.

Good luck though Harry, hope it ticks all the boxes.

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Thanks, there have been some excellent replies so far but this seems the best so I will start by expanding on points raised here.

It does appear slightly cheap to me although property prices locally are low and the location is poor, it is surrounded be derelict buildings and the whole local area is very run-down. I've looked a couple of times and seen and briefly spoken to other residents and they seem fairly normal and helpful.

There is an air of "the money ran out before we finished it" about the place and I don't want that to impact on me, I imagine there will be some type of Management Charge or Ground Rent to pay, anyone care to speculate on what would be typical?

Finally, would you say a survey was essential? I can generally look at a building and tell if it has problems or not, and imagine that the general structure would be covered by guarantee. The last time I had a survey, I paid £300 to be told that a single-glazed Victorian cottage was likely to be cold and draughty n Winter :rolleyes:

Ground rent - buttons. £50 a year?

Management charge - potentially £200 / £250 a month. Ask what it is now (don't be shy) and whether it is likely to go up substantially. Then ensure your solicitor asks the same, if they say "no" get it in writing and challenge it if they do want to up it a few years down the line.

As to the survey, well that is your cover if the wall falls down in the first week. They may pick this up but if they don't then you can sue them.

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Yes, ask why it is cash buyer only. There will be a reason and then you decide whether you are happy with that for the price you are paying.

I would also ask about service charges, as a gated community you will be paying for the upkeep of the roads, the bloke on the gate, lighting, fencing, lawns and flower beds plus maintenance of the block. You may find that comes to a substantial part of your existing rent but if you like the place, well so what - go for it.

Good luck though Harry, hope it ticks all the boxes.

Good point, the house I am renting costs my landlord in excess of £2,000 per year in service/maintenance charges.

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I bought a flat in 2002 cash purchaser only, 38k, had a dodgy freeholder who i knew from previous property dealings, as the flat wasn't for me to live in i decided to take it on.

It took over 5 years to obtain the freehold, in which time the whole building had fallen into a state of disrepair, eventually, once we got the freehold we were able to get the work done, we are only now able to extend our leases to 999years, so my advice is, if you have family and want the place as a home, steer clear, 59k and cash would seriously make me smell a rat.

Sometimes with leasehold properties you find problems have a tendancy to come out of the woodwork later on and then you're lumbered and to be honest solicitors really don't have the means or can't be bothered to find them out.

If it were a home purchase opposed to an investment purchase (sic) i'd go freehold over leasehold everytime, look for a 2 bed terrace. ;)

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Are their many empty properties in the surrounding flats, because it could be possible that the builders have gone bust and have done a deal with the local authority who will allocate the remaining properties for social housing.

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Any advice that anyone could give would be greatly appreciated.

Harry Monk.

Move in and if you don't like it you could always rent it out. The return on your 50K will be greater than what you are getting in the bank.

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You need to find out exactly why it is cash buyer only, as this usually means that the property is unmortgageable - i.e. it may be hiding unknown liabilities.

One possibility is that the management company has done a runner, or has collapsed - leaving an unknown liability in terms of maintenance requirements. E.g. the building may have been damaged or neglected in some way - e.g. the building may have lifts which have been neglected, and have broken down (and could cost £tens of thousands to fix). Or the management company has defaulted on its creditors (tradesmen, cleaners, gardeners, etc.) - perhaps, because they have been unable to (or unwilling) to collect bad debts on service charge arrears.

You will need to find out what the service charge and ground rent are, before you consider making an offer. These are widely variable. Ground rent traditionally has been a token payment - e.g. I lived in a flat 5 years ago where the ground rent was £5/year. More recent builds have put the GR up to £100, or even £500 - for which you get nothing in return. Service charge depends upon the service provided (e.g. how much communal area needs cleaning, gardening, etc. Whether a concierge or security guard is employed, whether the block has any special shared facilities - gyms have been quite common in a number of recent developments), and the competence of the managment company at looking after the finances. However, for a flat in a small development, with minimal service provision, I would expect around £500-1000 per year. Blocks with lots of expensive equipment (lifts, etc.) and full-time employees (security, porters) can charge very high service charges (in excess of £2k per year). A common problem with incompetent management, is that they don't plan for major maintenance - e.g. they just about break even every year for 5 years, just paying wages, and the utiltiy bills, etc. Then suddenly it's time to replace the carpets and repaint the walls - oh and a gale has just blown a hole in the roof - and the management company has to find £50k before the end of the year - the residents end up pissed that they are suddenly getting an unexpected bill of £5000 - but there's not a lot they can do about it.

You should ask for a copy of the service charge statement for the flat - you should also try to get a copy of the management company accounts (this may require a search at companies house).

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Apologies if this is in the wrong forum.

A flat has come onto the market locally, priced at £59,000, CASH BUYER ONLY. It sold when new in 2007 for £110,000 and is very similar to the flat I am currently renting, although it is bigger and has a balcony, so it superficially appears equal or better although I have not viewed the interior yet. It is in a gated community and the general feel is that it is a little run-down (e.g. communal gardens are mostly weeds). It's the one on the top left, and I do like the style of the building which is slightly quirky.

thepassage.jpg

I could just about reach that sort of price with my STR fund, and as I am receiving little interest on that, it seems that buying the flat and saving the rent I currently pay, £525 a month, might be a better use of my funds. I am fully aware that property prices in general will fall sharply again in the near future.

So, my question is this. Has anyone bought a flat for cash, what is the likely timescale between having an offer accepted and completion, what will be the likely costs in legal fees, and is there anything I should be aware of about buying for cash?

What would be a realistic offer to make? It is a repo and I would be far more mercenary with a repossession company than I would be with an owner-occupier in difficulties, but at the same time I would not want endless dickering about the price, I would want to make an offer which was accepted first time.

Any advice that anyone could give would be greatly appreciated.

Harry Monk.

I've been considering this property and wondered why the EA had flagged it as cash offers only.

I haven't pursued it yet, as (I think) it's a bit far from the station for me, in a town that's already further from London than I really want to be(though it's unclear exactly where it is as the map location that the EA supplied does not match the address!).

I doubt that you will get it for much under the asking. Most new build 2 beds in the area are priced at 80-90 and I went to auction two weeks ago where several similar properties, local to this, sold at 50-100% over guide (35 for a 1-bed, 45 for 2-bed), though some of the worst sold at guide, with all requiring more work that this one does. The EA is unlikely not to have noticed this.

In this locality you don't want to be paying more than 100 pm for maintenance (preferably less). I've been looking at some repo properties in a better area, with charges of 200 pm that have been marked down considerably and are almost un-sellable, with neither OOs or BTL wanting to pay that much per month. One just went to action three times before it sold (I think that they continued until they got a mug who hadn’t checked!)

FWIW my sister thinks that I'm mad to even consider living in this town. She says that I'd be surrounded by benefit scroungers and drugs pushers (her previous job dealt with drugs awareness for the LA), I think she's exaggerating a lot. But as you already live there you will know this.

tim

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You need to find out exactly why it is cash buyer only, as this usually means that the property is unmortgageable - i.e. it may be hiding unknown liabilities.

One possibility is that the management company has done a runner, or has collapsed - leaving an unknown liability in terms of maintenance requirements. E.g. the building may have been damaged or neglected in some way - e.g. the building may have lifts which have been neglected, and have broken down (and could cost £tens of thousands to fix).

Lifts cost tens of thousands to fix even when they haven't broken down. They are the ultimate money pit IME.

Fortunately, there is no mention of a lift in this property.

tim

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I also happen to know where the flat is and don't think it's good value at that price. It came on the market late last year with a £79,950 asking price. Reduced twice to the now £59K. 12 more months of patience and you could get something much superior there like a house for the same money is the way I see it.

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Its sounds like a good reduction to me also looks fairly new. Given your circumstances i'd be inclined to buy. But saying that flats come with a service charge and around Birmingham that comes in about 1 thousand a year which is eye watering to me. Will you be looking for flats if we do get a hpc or using your str fund as a deposit on a house.

For some reason i tend to see more reductions in flats around me also some priced very good.

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I could just about reach that sort of price with my STR fund, and as I am receiving little interest on that, it seems that buying the flat and saving the rent I currently pay, £525 a month, might be a better use of my funds. I am fully aware that property prices in general will fall sharply again in the near future.

1) Woa! General prices WILL fall SHARPLY? You seem to have taken something as a given that leading economists and HPC posters alike are totally diverged on. In any event, who cares about general prices? This one flat is what we're talking about - is the price fair or not?

2) All the usual questions - length of lease? Service charge? Location? If something looks cheap it is either (A) a bargain or (B) too good to be true. I can't tell from one internet post.

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I also happen to know where the flat is and don't think it's good value at that price. It came on the market late last year with a £79,950 asking price. Reduced twice to the now £59K. 12 more months of patience and you could get something much superior there like a house for the same money is the way I see it.

Is this because there's something specifically wrong with it, or because you don't think any 2 bed in the town is worth this much.

tim

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I've been considering this property and wondered why the EA had flagged it as cash offers only.

Well, I have been to see the EA and it is now SSTC.

The reason it is cash only is because it is not mortgageable, and the reason for that is that "the Builders Certificate was not signed off", although the EA did not know the reason for this. Apparently though, TDC say it is now too late to sign it off.

I'm curious to know why this should have arisen, money problems I suppose...

Will keep looking but I am in no rush.

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  • 150 Brexit, House prices and Summer 2020

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      • up 5%



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