No maintenance company.. no buildings insurance.. mortgage?

daleuk_3

Im interested in a flat, its a repo. In a converted house with 5 flats in total.

However there is an issue with it. There is no working management company. Thus a few minor things externally need work. Internally its fine.

I will be getting a mortgage on this. Thus had worries over if it would pass valuation etc. Iv spoken to my lender and she has spoken to the company whom carry out the valuations and they see no problem with this, as long as its reflected in the price to be paid/lent.

However.. my final concern is that it is likely that the building does not currently have buildings insurance. Would this be a problem for mortgage (the adviser said the bank do not have a problem but the solicitor has to see this)? Would buildings insurance for just my flat suffice?

If not, then I would need communal buildings insurance. Can someone point me to where I can get a quote on this? My plan is to visit the owners and get agreement to purchase this. This would be to allow me to get a mortgage and to cover us until we can get a maintenance company in place.

Thank you all!

sarah_elton

Never mind whether it's a problem for the mortgage (and I'm pretty sure it would be!), it would be a problem for you if the building burnt down/blew up and you were left with no flat and a mortgage to pay off!

The freeholder needs to organise buildings insurance (or do the flats all have a share of freehold?). Sometimes the management company they employ will do that on their behalf. Otherwise, they should do it themselves.

How do problems in communal areas get fixed at the moment? I'd be really wary of a flat with no maintenance scheme in place. Could turn into a nightmare coordinating with other owners to get things done...

Ultranol_2

Pretty sure the building would have to have buildings insurance or else how would the other 4 owners have got mortgages? I thought buildings insurance was a legal requirement?

daleuk_3

Im treating it with investment potential. It really is priced realisticly and Im not one to turn away from a bit of risk :-) I wont be buying it without any insurance. And will most likely be renting it out.

Just got a quote for buildings insurance for a block of 5 flats. £250k rebuild cost. Annually £412. Personally id be more than happy to pay that for my peace of mind to begin with until I could get things sorted with the other residents.

I will be getting details of the freeholder before I go further too to find out what arrangements are being made.

Communal areas atm are not being fixed... Yes I agree it could be a nightmare. But it could also be a good investment, with huge growth potential.

daleuk_3

Ultranol wrote: »

Pretty sure the building would have to have buildings insurance or else how would the other 4 owners have got mortgages? I thought buildings insurance was a legal requirement?

It is only a recent conversion 1-2 yrs ago. I guess at the time it would have had some buildings insurance. Im just at this stage looking at the worst case scenario.

Richard_Webster

There is no working management company.

So?

There doesn't have to be a management company for every block of flats/converted house. Or do you mean managing agent?

This gets quite technical and unless you really understand the set up you are probably better to let your solicitor check it all for you because you may worry about something that really isn't all that important and miss something else that really is important. That's all stuff we know about.

The important thing is that there are adequate arrangements for the maintenance and insurance of the building. Has OP talked to the other flat owners about what happens in practice? Maybe the freeholder/landlord insures and collects a proportion of the cost from the lessees and carries out maintenance and charges for it on an as and when basis. Some people are quite happy with that.

In other cases the landlord insures but doesn't do any maintenance and essentially lets the lessees sort it out amongst themselves - this isn't necessarily in line with what the leases may say, but as long as the lessees get on with each other this can be a practical solution - the landlord sits back and says that if they really want him to get involved he will but his contractors will be more expensive than those chosen by the lessees and that threat is often enough to get a recalcitrant lessee to fall into line with what is wanted by the majority!

Fire_Fox

http://www.lease-advice.org/publications/