Hearing your grandparents tell stories about how they managed to bag their property for £2,000 can be a kick in the teeth – especially when the same property is likely worth £250,000 or maybe even more these days.
But residents of Birmingham were recently offered the opportunity to purchase a flat in a great location for just £1 – but there were catches.
Mike Frisby, a property mentor, posted on TikTok to theorise as to “why it’s been guided at £1”. The property, according to Rightmove, was set to be auctioned on December 17 2024. And while it’s not clear how much it sold for so far, somebody could have got themselves a bargain.
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Mike said he thought the low price was there to “entice people in,” but there are reasons people should be wary if they ever see a property being sold for such a low price at an auction.
He said that, firstly, the flat wasn’t at the front of the building; it was around the back. He also said it wasn’t “the most spacious apartment, and it’s dated and needs renovation”.
Mike showed more pictures of the property, highlighting that it was in need of modernisation. While people would assume it’d be of “huge value” when renovated, this isn’t necessarily the case. He said that you need to understand leases, and with this property, there is a “complex set of leases”.
“You’re not just taking a lease from the freeholder, the people who own the ground that this flat is on, it’s actually got a lease and then an underlease, and that underlease, so the bit that entitles you to that flat, has only got five years to run,” he explained.
Mike claimed: “So what’s making it £1 is basically you’ve got this flat, it has liabilities because it’s got service charges for this block, it’s got council tax due no doubt, and therefore, whoever’s owning it, and unfortunately it is in probate so therefore, someone’s passed away who used to live there and now there are liabilities on it, they need to just get shot of it, because it’s not worth much because it’s only got five years left.
“Someone could take it on with that five years, renovate it and rent it out; they’re probably not going to get their money back at all, are they? So, really, what is it worth? They’re gonna have to extend this under underlease if you can, so you need to look into all of this; you need to have a legal mind on this one; you probably need to refer this to a lawyer, but there is an opportunity there if you can unravel all of this”.
The service charge on the property was £1,374 per year, so even if you did manage to buy it for £1, you’d still need to be in a financial position to pay for that.