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Guide to Selling Your Property
While the VH Ground Rent Working Group (GRWG) was set up by volunteer leaseholders to examine the ground rent issue, we are also actively examining all barriers to selling our properties.
We have tried to document all known barriers to sale and have suggested a strategy below to mitigate against these. Please read this in detail if you are looking to sell your property - you must be familiar with the potential issues, otherwise you will struggle to achieve a sale.
Please contact us on vhgroundrent@gmail.com if you have your property listed on the market so that we can coordinate with you to help achieve a sale.
Problem 1 - Poor Quality of Agents
Agents are not articulating the value add of our property or that our building has right to manage (RTM), which provides a great degree of protection over our service charge costs, at a time where other leaseholders are actively struggling with escalating costs and deteriorating developments.
For example, c.£2000 of our service charge is for 24/7 concierge and security costs. This should be actively presented as a selling point, as not many properties in the area have security, and those that do often carry significantly higher charges. Our service charge has been reviewed in depth by our RTM Directors and is average for a building of our size, and security should always be presented as a selling point.
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Given our building has some challenges with lenders, we also need to work with an agent and a mortgage broker who:
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A) understands the building
B) can help potential buyers find financing
C) can coordinate sales so that there are not multiple properties listed publicly at one time, creating a buyer’s market.
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Some agents also look for cash buyers for our properties, knowing that some lenders refuse to lend on Valentines House. They then significantly drop the asking price below what we originally paid for our flats. This devaluation harms everyone and sets a bad precedent for our building, which is in fact in a high-demand area.
Problem 2 - Too Many Properties Are Listed, Devaluing Every Flat
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Given there are currently 7 two bedroom flats on the market, many of the buyers are seeing this and pushing for a race to the bottom. Many potential buyers are I.T. professionals who already live in the building and know each other, and one estate agent has experienced buyers asking friends to view a property and submit a low offer to give the impression that their offer is “higher”.
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Potential buyers are strategising, yet we as sellers are not.
Some 2 bedroom flats in our building are even being listed for as low as £290/300k - which we feel is significantly undervalued - and are still struggling to sell.
With so many properties on the market, we are also putting off potential investors who are seeing multiple properties and thinking that there is something wrong with the building. We are arguably putting off buyers.
It harms everyone’s chances and property values if we saturate the market like this, without taking a coordinated approach.
Problem 3 - Lower Prices Doesn’t Mean That Lenders Will Lend
As outlined on the website, we have seen issues with lenders not being willing to lend on a property if the service charge exceeds 0.1% of the asking price. From preliminary research, we think that this appears to be standard across leaseholds and is not exclusive to our building (it makes sense for a lender to have concerns with a borrower’s ability to keep up with mortgage payments if they can only afford a low value property but are signing up to high service charges relative to that value).
The issue here isn’t (arguably) necessarily the service charge, which is average for a building of our size. We can only cut the service charge by so much before we risk the building falling into disrepair, further harming our chances of a sale.
In our view, the issue is that in desperation many leaseholders have cut their price too far. By doing so, they actively make it harder for their buyer to find a mortgage and deals are falling through, leaving leaseholders with properties that can’t be sold.
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Problem 4 - Building Safety Act 2022
The BSA 2022 introduced a requirement for additional safety reviews of a building, which creates additional work for a conveyancing solicitor for a flat above 11 meters (floor 5). This can cost around £2000 more. Our recommended broker, Ela, can help a buyer navigate this.
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Problem 5 - Flats on Lower Floors Are Less Attractive to Lenders
Some lenders can view flats on lower floors as less attractive for lending, as they can see these flats as harder to sell.
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Problem 6 - Lenders see Valentine’s House as a ‘Investor-Led’ Building
This is due to the high percentage of buy-to-lets. This is why it is crucial that we achieve more residential sales.
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Solutions
For context, our building is in fact in a high-demand area, where rents are only escalating. Our building and flats within it are of a good quality and, vitally, we have RTM and with mortgage rates set to decrease this year, we should see more buyers coming to the market. Many existing tenants have expressed an interest in purchasing their flats.
Volunteer leaseholders are simultaneously working to set up an Ilford Hill residents’ and leaseholders association, arrange street parties to create a sense of community, and set up community-led greening initiatives to green the area surrounding our building. This all should enhance the marketability of our development as a trendy, desirable and safe community, particularly as the Ilford Mercato has opened, along with a host of quality restaurants.
The GRWG feels that a coordinated approach increases the chances of achieving sales while we work through the ground rent issue. A coordinated approach also increases the chance of protecting the value of our flats, rather than driving a race to the bottom.
We suggest:
1) All leaseholders looking to sell exclusively work with one agent, who the GRWG recommends. We will also ask to work exclusively with a mortgage broker.​
We have had lengthy, positive discussions with Daniel Clarke, who is a sole agent and not a high-street agent. We have found Daniel to be very proactive and attuned to the issues of our building. Please see more about Daniel below.
This exclusive approach ensures we get value for our money, a high quality of service, and a coordinated approach. We cannot be let down by poor quality agents and Daniel has previously achieved the highest sale in the building, at £410k. Daniel feels that our apartments are severely undervalued and are suffering due to a haphazard approach.
We will also ask to work exclusively with a mortgage broker, Ela, who is Daniel’s recommended broker (he does not receive commission for recommending her or benefit). Ela understands the challenges with some lenders and will work to try to secure financing for our potential buyers. Please see more about Ela below.
2) We remove all properties from the public market and, through Daniel, list only 1-2 at a time publicly, while listing the rest privately with him.
Daniel feels that he can identify buyers privately. We will need to determine leaseholder circumstances and draw up a priority list for the public market. We do not feel that a private approach harms anyone - if anything, it can only help, and ensures that your property isn’t publicly sat on the market for months.
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By restricting supply, we can hopefully increase values. We know that people want to buy in the building but see mutliple flats listed and negotiate down.
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For any leaseholders who do not need to immediately sell, we recommend considering if renting is an option. If it is, we are currently in the process of identifying a recommended agent for lettings, to ensure that our property’s rental value is also protected.
We will also look to advertise Daniel within the building as the “Valentine’s House Agent”, helping to target existing tenants, many of whom have previously expressed an interest in purchasing a flat. We will also look to invite Daniel to community events to ensure that he is socialised to prospective buyers as the “Valentine’s House Agent” and we can generate interest in buying amongst tenants.
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We are conscious that many leaseholders are overseas, and as volunteers (some of whom are living in the building) we want to work for and with you, to ensure that we all protect our investments.
​Please urgently contact us on vhgroundrent@gmail.com if you have your property listed on the market so that we can coordinate with you to help acheive a sale.
An Appraisal from Daniel Clarke
"Valentines House presents an attractive option for homebuyers in the area. The flats are spacious, centrally located in Ilford, and offer good value. However, there are certain issues hindering potential buyers from completing purchases, as you're aware. The most significant concern is the 5-year ground rent review period, which falls short of the minimum 10-year requirement by most lenders.
Although Barclays and Halifax have shown willingness to lend previously, problems often arise following the valuation survey, where negative feedback from surveyors leads to a collapsed sale due to limited lending options for buyers. Removing the 5-year review period would expand the pool of lenders available. Despite being a commercial-to-residential conversion and a mixed-use building initially marketed to buy-to-let landlords, Ela, the mortgage broker I've introduced, is confident in finding suitable lending options once the review period issue is addressed.
It's crucial that all current leaseholders selling on the open market withdraw their listings. With 7 two-bedroom flats currently for sale, buyers have too many options, resulting in a buyer's market. Ideally, there should be no more than 2-3 properties for sale at any given time. If anyone needs to sell, we can explore off-market options to prevent properties from languishing on the market for extended periods. Oversupply is a threat to all leaseholders!
Considering the complexity of the situation, my fee stands at 2.5% of the sales price, payable upon completion, with an upfront charge of £250 for photography, floor plans, etc. Given that many flats are considered unmortgageable due to existing issues, we'll need to explore cash buyers, which can be challenging in the current market. I'm in discussions with several cash buyers who may offer quick sale options for those unable to wait for leasehold reform or adjusted review periods, but I am still working on that. It should be noted that the fee is warranted due to the non-standard nature of these transactions.
Once the review period issue is resolved, my fee will reduce to 1.5% of the sale price, payable upon completion, with no upfront marketing fees, as the likelihood of completing sales will be higher, reducing the risk of a wasted effort."
Daniel's Biography
Daniel Clarke is a personal estate agent affiliated with The Agency UK (TAUK), specialises in the East London property market while having a proven track record throughout London and Essex. With over a decade of industry experience spanning property investment, development, and sales, Daniel has become known for his transparency, directness and putting his clients first.
Daniel is relationship-based and results driven, therefore limiting his clientele to ensure personalised attention for every client. He is available round the clock, using WhatsApp for his international clients, and offering his expertise and support whenever needed. He thoroughly understands the challenges facing leaseholders in Valentines House, where he has earned the trust of many leaseholders.
Daniel excels in implementing innovative marketing strategies across various channels, enhancing property visibility to attract motivated buyers. When showing homes, he creates competition among buyers to secure the best deals. Notably, Daniel has completed the highest value sale in Valentines House in the last 12 months with the sale of Flat 806, which sold for £410,000. With Daniel, you've got a reliable partner for all your property needs.
An Appraisal
from Mortgage Broker - Elzbieta Bednarz
"I would like to highlight the main issue with the building, the ground rent review period of 5 years. Most lenders require a minimum of 10 years, with specific clauses regarding the percentage it can increase by. Only 3 lenders were prepared to lend based on my findings from previous applications in the building, however the valuation came in, advised by the valuers that the building was investor led and therefore the units were not suitable for residential purposes.
Valuations
Company eServe
"They have eventually refused valuing the units in the block due to a number of applications that were rejected at the time. In future I am able to reach out to lenders that use the valuer Connells for example, so that units can be discussed prior to application through the proposed lender. Yet the ground rent review period would determine the suitability of the lender and right now it is only a few.
Valentines house is a lovely building, very popular, and a great location. It was such a shame for all those mortgages to be rejected at a point of valuation. The flats make lovely homes, and it would be really good to see them sold as residential flats. From a lending point of view, the Ground Rent Review Period is the main issue.
I have been a mortgage adviser for 13 years, I started as a broker, moved to Halifax then HSBC, eventually went back to the broker's role. I have extensive experience with complex cases which comes handy with Valentines house. I offer the whole market (not limited, and not restricted to any lender), this means if there is a solution I will be able to access it. I work with 33 brokers, all very experienced should I need any help finding ways forward. I have access to exclusive deals. As a company we have a dedicated team through our Network to support us especially with such complexity, with so many different factors to consider - not many brokers outhere get dedicated support!
As I have gone through a fair share of applications in Valentine's house I have learnt a lot about its challenges, I would be prepared to do even more research to be as prepared as we can possibly be to tackle this in the future. I have spoken to numerous buyers interested in Valentines house, I have no doubt we will have more interest, with the correct approach they will sell.
As you do your research, it would be really helpful to know the ratio of lenders in the block and if it is buy to let or residential mortgage (not if it is rented or resi occupied but the type of the mortgage) so I could work out maximum exposure, this will make placing business easier."
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