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Buy a flat

by leeg 16 February 2010 |

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I've recently found a flat I want to buy and had an offer accepted. However I've just been told that there is no HIP yet. I thought this was legally required before the property is marketed.

Further more, it's share of freehold but with a 99 year lease. As it was converted recently from a house and not been sold yet, the lease isnt ready yet either (which may explain why the HIP isnt ready yet).

The buyer is refusing to take it off the market until I get a survey done, but I'm reluctant to spend any money until I can see the HIP and the lease.

I know he's supposed to have a HIP but what are the penalties for not having one?

Many thanks in advance.

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MikeGG1 posted
If the HIP has been arranged, he is probably legal, or sufficiently so as not to be penalised. The agent could have 'jumped the gun' in arranging a viewing for you and your offer was premature without the HIP.
I am not surprised that the flat is remaining 'on the market'. I would do the same as your mortgage would be dependent on the valuation part of the survey.
Don't worry about the actual lease at the moment, but insist on a draft of it. The formal lease will be drawn up as part of the sale. You might even be able to get amendments done at this stage, so don't insist on the formal lease. By asking for a draft, they would have to inform you if there are any changes that they would like to make.
I would want a full structural survey done as it is a recent conversion, just in case the conversion work has weakened any of the structure or the electrics, gas or water pipes have been poorly fitted.
Mike
Posted on 16 February 2010 | Love 1 love Report
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leeg posted
Since posting this, I've actually done a bit more research and found out that he does in fact have to have one from the first day it is marketed (since June 2008), and it's a fine of £200 per day it's been on the market without it. It's actually being very agressively marketed by at least 5 agents. My agent has now changed his email to say they have a mini HIP, but they've got 14 days to get it to me. They've actually got a further 28 days to include the lease in the pack.
I've been told I will not able to get a full structural survey done as it's two flats and they say they cant get access to both. They probably could though, as both flats are owned by the same guy and are both on the market at the moment. I may have to see about getting it done this way and will have to pay a bit more for it.
Posted on 16 February 2010 | Love 1 love Report
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liesarenocomfort posted
Hi Leeq,
The penalty for no HIP is just £200 in total (rather than "£200 per day it's on the market without one") although the fine can be levied more than once for repeated breach. But that's a side issue. More importantly, approach your purchase with some caution (as I think you are ).
This wheeze of buying a standard house and converting it into two flats is becoming quite popular. It's a great idea for the seller of course (two flats add up to considerably more than one house financially).
It's not so great for the buyers. These conversions are often (but not always) rather Heath Robinson. Soundproofing is often pretty dire (one of my clients complained she could hear the chap in the upstairs flat turning the pages of his newspaper!). As it appears both flats are empty I'd be wary (no wonder it sounds quiet in the other flat when you went for your viewing!)
As Mike advises, - do get a full survey done. Far more important than worrying about the terms of the lease at this stage is to find out about the quality of the conversion works.
The downstairs flat usually gets the garden if there is one - worth checking.
Posted on 16 February 2010 | Love 1 love Report
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leeg posted
Thanks for the advice. The site I checked must have been wrong about the fine.
The flats werent empty when I viewed them, they are both rented out (I've checked when the tennants are vacating!). I'm in London and the area I'm in is basically all conversions. There are few purpose builts and the ones that are there are very new and very very tiny. I've been looking for a while and not a single house has come on the market in my price range, so I'm pretty much stuck on a conversion.
I've lived in several different conversions for 10 years so I'm very aware of the problems with noise. One of the things I like about this flat is that its a duplex, and I have the top two floors, so if it gets too noisey downstairs, then I can just move up a level! Its also a detached so I dont have problems from any other neighbours.
Definitely going to get the full survey done though, especially since as its never been sold then no-one else has ever got one done. I guess I'm in the lucky position that its the same owner and both flats are currently for sale so it will be possible and I should take advantage of that. No point in trying to save a couple of hundred pounds if its going to cost me thousands later on!
Also, the downstairs does get the garden which to be honest with, I'm quite happy about. My current rented accomodation has a garden I barely use but takes me ages to maintain. I'm also close enough to several parks for it not to matter too much.
Posted on 16 February 2010 | Love 0 loves Report
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liesarenocomfort posted
Leeg - good luck with your purchase. I see your point about the duplux + it sounds a good idea. It's also good you'll have a share of the freehold.
Posted on 16 February 2010 | Love 0 loves Report
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leeg posted
Hopefully the share of the freehold wont cause too many problems. I'm a little worried about that because to be honest, I dont see the bottom flat being sold anytime soon. Its a very strange layout (kitchen is kind of in the middle where you would expect a hall and all rooms have doors to it). Plus its never been sold before as flats so theres no company already set up for the freeholders. Hopefully it should be a major problem but its something I'll need to set up eventually. Any advice on setting up the share of freehold agreement or something I should just take up with my solictor?
Posted on 16 February 2010 | Love 0 loves Report
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liesarenocomfort posted
If it's just the two - the simplest thing is not to bother with managemnet co (unnecessary expense), just have the owners of both flats owning freehold 50/50. You'll be part landlord of downstairs flat and vice versa. There will be some tweaks - the solicitors will sort it out. Just means you'll have to cooperate with downstairs about joint expenses ( building insurance /repainting windows etc)
It's simpler than it sounds -honestly!

Posted on 16 February 2010 | Love 1 love Report
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Swarbs posted
Personally I wouldn't worry about the HIP - even if the buyer had one, it would be unlikely to have a full structural survey, and you'll have to get your own for your mortgage anyway.
Re: the share of freehold, I think you will have to set up a limited company which owns the freehold, and you and the flat downstairs own 50% of the shares in the company. This has the benefit that you can sell your part of the freehold on quite easily, whereas if the freehold itself was jointly owned you'd need consent from the other owner - they would effectively be able to veto who you sell your flat to in the future! The lease itself will then be drawn up by a solicitor acting for the limited company, so you should be able to have some input over this when you set up the company. But this is just my experience - it's best to check with your conveyancing solicitor over the exact details.
Re: the kitchen - this is probably because it originally was a hall / landing - the downstairs flat has the actual kitchen so its just been fitted into your flat. I would be a bit wary of this - if the kitchen is near to the stairs and doesn't have good ventilation you could stink the flat out if you are cooking something with strong aromas!
Posted on 16 February 2010 | Love 1 love Report
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leeg posted
Turns out my mortgage provider wont lend on more than 75% LTV on new conversions. I only have a 20% deposit. I've checked a few other mortgages but they dont say whether they have this restriction. Is there anywhere I can look that might help me rule out having to phone round all the providers. I cant raise another £12k at this point!!
Posted on 17 February 2010 | Love 0 loves Report
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liesarenocomfort posted
Have you tried Northern Rock?
http://www.northernrock.co.uk/mortgages/current-rates/residential/
Posted on 18 February 2010 | Love 0 loves Report

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