A rather pretty flat within a handsome period building located in the centre of London came up for auction recently, through McHugh & Co.
The property is worth £260,000, which I know for a fact. It was guided at £240,000 and sold on the day for £220,000, a considerable saving on the market. There’s some work to do: damp in the kitchen on one exterior wall, caused by a corroded lintel (one small crack in the concrete rendering having allowed rainwater to seep in over time and react with the building’s steel skeleton structure at this point). But the cause of the damage has been addressed by the landlord and repaired to a high standard and the internal remedial work is only cosmetic, costing no more than a couple of thousand pounds at worst.
I know all this because I, too, own a flat in the same block ... and I’m also the landlord of the building. And I know something else, as well, which the purchaser doesn’t: in March of this year they’re going to be hit with a big bill by way of contribution to the property’s ongoing renovation programme, over and above their annual service charge, of some £4,500. Ouch. How do I know they’re unaware of this? Because absolutely no one who bid on that property at that auction bothered to contact our Managing Agent and make enquires. If they had, he would have informed me. But they didn’t. Not one.
When buying a leasehold property at auction it is essential that you make such enquiries yourself in advance of purchase. Your solicitor nor your surveyor will do this; it’s not within their brief. You may assume that all relevant questions have been asked for the money you’re paying these professionals, but I can assure you that this matter will not have been undertaken; it’s something that you’ll have to take on board personally and in the absence of being able to talk to the vendor, the building’s Managing Agent is as near to the horse’s mouth as you’re likely to get. And grill them! Remember, they’re being paid to address lessees’ concerns, and you’re a potential lessee. Talk about service charge rates and any proposed increases, whether contributions to a sinking fund are being sought, if and when renovations and/or building alterations are scheduled. You may even be able to find out information that the vendor doesn’t know, such as the hit we’re being forced to impose on lessees in March. Although we have not yet informed lessees, the Managing Agent knows all about this (it was his idea) and would be obliged to disclose the information to an enquirer.
A good Managing Agent, who is often also a surveyor, in most cases will know more about a building they’re responsible for, its state of repair and the running of its accounts, than the vendor. Find them, get through to them, interrogate them, use them. I guarantee that you’ll approach an property purchase better informed than the competition.