Buying a flat in a Tower Block as a BTL
Discussion
I am considering buying a flat in a tower block as an investment (without a BTL mortgage). Now having done a fair bit of research on this, it seems the service charges can become astronomical (double glazing replacement, lift servicing/replacement etc) and section 20's such as mandatory 'qualifying works' etc can be quite a sting in the tail.
Need some advice if you have purchased a flat in a tower block and what your experience was/is like?
type-r said:
Property is not of standard construction either so will only attract cash buyers in future.
TBH buying this sounds like pure insanity. However, to give any serious consideration we would need to know at the very minimum,1. Cost to buy
2. Gross rental yield
3. Current service charge
4. Is this a council block in which some flats have been sold.
As I keep saying on here, BTL is not the automatic answer to every investment question.
Ozzie Osmond said:
TBH buying this sounds like pure insanity. However, to give any serious consideration we would need to know at the very minimum,
1. Cost to buy
2. Gross rental yield
3. Current service charge
4. Is this a council block in which some flats have been sold.
As I keep saying on here, BTL is not the automatic answer to every investment question.
Indeed true, though it makes sense if the price is right. I bought a flat with a short lease, 14years, for £30k cash. Returned 22% gross over the last 3 years.1. Cost to buy
2. Gross rental yield
3. Current service charge
4. Is this a council block in which some flats have been sold.
As I keep saying on here, BTL is not the automatic answer to every investment question.
Plus I could extend the lease, around 15k and sell it for 65 to 70k.
Got to be selective and have the cash to buy quickly.
Ozzie Osmond said:
TBH buying this sounds like pure insanity. However, to give any serious consideration we would need to know at the very minimum,
1. Cost to buy
2. Gross rental yield
3. Current service charge
4. Is this a council block in which some flats have been sold.
As I keep saying on here, BTL is not the automatic answer to every investment question.
1. 150k1. Cost to buy
2. Gross rental yield
3. Current service charge
4. Is this a council block in which some flats have been sold.
As I keep saying on here, BTL is not the automatic answer to every investment question.
2. 10.5%
3. Unknown, waiting for solicitor to enquire. Let's assume a 'standard' charge of around 2k.
4. Yes. Flat is ex-local authority. I will assume majority of flats are still council owned.
anonymous said:
[redacted]
This was my concern and hence the reason for the post and alluded to this already in my first post. Is there a way of finding out the LA's planned schedule of works over say X years?I am still in the process of considering the options, doing the math etc. Just want to be sure before I completely rule it out.
It is often very difficult to know if there is a major upgrade being planned for a property. Often the Council themselves don't know themselves until suddenly work needs to be done. Just because there are no plans to do such work (say) for the next two years does not mean that suddenly you will be told that in year three that substantive work will need to be carried out and the private owners will have to pay their share.
type-r said:
1. 150k
2. 10.5%
3. Unknown, waiting for solicitor to enquire. Let's assume a 'standard' charge of around 2k.
4. Yes. Flat is ex-local authority. I will assume majority of flats are still council owned.
Hmmmm. 2. 10.5%
3. Unknown, waiting for solicitor to enquire. Let's assume a 'standard' charge of around 2k.
4. Yes. Flat is ex-local authority. I will assume majority of flats are still council owned.
1. If it's hard/impossible to mortgage, £150k is quite a lot of cash for a buyer to find when you want to sell.
2. In the absence of gearing (mortgage) and tax relief that 10.5% isn't as big as it initially looks...
3. ... and that service charge on its own will drop the figure to about 9%.
4. I have to say the council background would make me uncomfortable for a number of reasons.
And finally
- what are the prospects for capital growth on the property? Will they be held back by its nature?
- will you be paying an agent to manage the property? If so, remember they charge VAT on top of all their various fees.
- don't forget to factor into your overall figures the transaction costs of buying, selling and letting.
Ozzie Osmond said:
And finally
- what are the prospects for capital growth on the property? Will they be held back by its nature?
I have considered this also. I expect very little growth for this type of property and perhaps over 5 years, neglible growth maybe even the possibility of selling for a small loss. - what are the prospects for capital growth on the property? Will they be held back by its nature?
"I am considering buying a flat in a tower block as an investment (without a BTL mortgage)"\
Don't. Just. Don't.
For all the reasons already outlined and more.
Anyway ... unless you're looking for capital growth (the tenants you'll be attracting require an entire chapter) why do you even want the hassle?
Use your cash as a 40 per cent deposit and interest-only mortgage the rest. You'll get a higher quality property with higher quality tenants and your capital growth will be much greater (e.g. growth on £100,000 is more than growth on £40,000).
One more thing - unless you are in for 10 years and don't need access to the cash - forget about BTL.
Don't. Just. Don't.
For all the reasons already outlined and more.
Anyway ... unless you're looking for capital growth (the tenants you'll be attracting require an entire chapter) why do you even want the hassle?
Use your cash as a 40 per cent deposit and interest-only mortgage the rest. You'll get a higher quality property with higher quality tenants and your capital growth will be much greater (e.g. growth on £100,000 is more than growth on £40,000).
One more thing - unless you are in for 10 years and don't need access to the cash - forget about BTL.
anonymous said:
[redacted]
This. I once owned a studio flat BTL. The service charge was £1500pa, yet the communal area's were is a s
t state of repair. Then the extra bills started rolling in. Then there was a survey done which identified so much work that our service charge would need to be £5k per year.Remember this is a studio flat so effectively 1 room with an en-suite.
I sold it at an auction just to get rid of the place!
Edited by 98elise on Sunday 1st November 06:44
DONT! For all the reasons listed above. Service charge on ex locals usually around 1k per year which is nice & low but when they decide to send a bill for works you'd better be sitting down. A few recent ones friends of mine have had include 8k, 10k, 15k, 17k & 25k. Unless the block has just had its major works & you are only planning on keeping a few years ex locals can be a risky buy these days. Certainly in my part of town. The fact it's a cash buy with not much potential for going up in value would rule it out for me alone. If you have 150k cash much better btl prospects out there. Good luck op.
We inherited a flat going back a few years now in a tower block was going ok renting it out until local council wanted to regenerate the area and spend £14 million!! on the three tower blocks our share was £100K it caused tears and mayhem at local meetings especially with other residents who had bought their flats from the council if you were a council tenant you didnt have to pay 
At the time difficult decision as whether to try and raise a mortgage but being on 14th floor no one would give you one in the end sold it minus the £100k felt sorry for the people who had just bought their flats.
Looking back definitely the right decision
At the time difficult decision as whether to try and raise a mortgage but being on 14th floor no one would give you one in the end sold it minus the £100k felt sorry for the people who had just bought their flats.
Looking back definitely the right decision
Contrary to all the above my wife still owns the flat she bought when she was a nurse at The London Hospital. Block is managed by The Corporation of London and in the last ten years there have been windows replaced but that has all come out of the service charge which is fairly lumpy at £2k a year. There have been no unexpected bills. Flat yields about 8% and is a 5 min walk from Liverpool St station, tenant is a banker and has been in there for 5 years. Flat is managed by a fellow PH'er who is bloody brilliant. Oh and the flat is on the 20th floor and has views of The Gurkin and The Shard.
Eric Mc said:
I shudder to think what a Gurkin looks like.
The small child of a Nepalese soldier.www.joannalumley.org
I have five leasehold properties, three ex local council and two private landlords, with maximum four floor block and four leaseholders. Two of the properties I now self manage, halfing insurance premium, accountancy, gardening and repair costs.
The more flats, floors, leaseholders, local housing association together with mixture of social housing, tenanted and private leaseholders, would put me off purchasing, investing in a leasehold flat.
Talking to occupants of other flats,reviewing past accounts, expenditure for past repairs, remedial works etc. etc.
http://www.lease-advice.org/documents/Service_Char...
The more flats, floors, leaseholders, local housing association together with mixture of social housing, tenanted and private leaseholders, would put me off purchasing, investing in a leasehold flat.
Talking to occupants of other flats,reviewing past accounts, expenditure for past repairs, remedial works etc. etc.
http://www.lease-advice.org/documents/Service_Char...
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