Sell up, rent out or give up?

gazebo

Just looking for the opinions of knowledgeable folk around this wonderful site (not after advice, just an idea of what you would do in my situation).

I currently own (via a mortgage) a lovely sized 2 bedroom, open planned living space 1st floor flat in Glasgow.

Unfortunately it's in a really badly managed building, a not so desirable area and well quite frankly - it feels like a massive drain on my sanity.

My situation is somewhat tricky so if you do have the time, please have a read, if not, I understand.

I purchased the property around 5 years ago with my now ex partner. The short story of it all is that any profit I make if I were to sell up, half of this profit will be given to the ex, so it is in both of our interests for me to secure the best possible price for the property.

Realistically in the area I live, I suspect that if I put the flat on the market just now, I'd barely make enough to pay off the mortgage and sols/estate agent fees (I am hoping that it's not in negative equity).

The main problem I have is that due to the severe problems we've had with the property factor, the building itself is not in a good state of repair. I am starting to suspect that the property will shortly be no longer suitable for mortgage purposes, it's that bad.

Anyways, with that in mind, if I hold onto the flat and rent it out (assuming of course I get enough rent to cover the mortgage payments and a small portion of factors fees) - I don't know if I'd actually walk away with anything in the future either.

So really - can anyone offer me a solution short of accidentally losing the keys and walking away?

BitterAndTwisted

Please do not imagine that there is any chance whatsoever of "walking away". Any debt on the property will follow you and you won't even have a roof over your head.

I sincerely hope that if your ex-partner is no longer living in the flat that they are still contributing to the mortgage payments as they are still currently liable for them, or that once the property is sold that any mortgage payments they did not contribute 50% of will be deducted from their "share".

I would try and dissuade you in the strongest possible terms to not contemplate renting the flat out until and unless you fully understand all of the responsibilities entailed with being a professional landlord and all of the risks as well because there are many.

Have you had the flat valued recently so you know what you might be dealing with? What attempts have been made to get the management company to deal with the condition of the building properly?

gazebo

thank you for your reply bitterandtwisted

I will confirm or put at ease the fact I honestly won't just walk away - I think I'm just at the stage where if it were even a remote possibility I'd be tempted, but I am in reality too sensible to do such a silly thing (we can dream - so long as we know it's not real)

as for the ex and the mortgage - I didn't mention in first post that mortgage is and always has been in my sole name - the confusion comes from the fact the deposit came from sale of their previous property.

We have an agreement in place that they will receive 50% of any equity based on the balance of the mortgage on the day they moved out, thus they won't get credit for subsequent mortgage payments (it's hard to explain what I mean - but I think you already said that)

As for a valuation of the property, I've done the ask an agent thing via zoopla this morning and I'm waiting on them coming back to me.

It's difficult to look at the value in relation to other properties in the area or even this building as it's one of few like it.

In terms of the management company - many things have been done by myself and other owners, but the constant message we were hit with was 'high level of arrears' which gave me little hope of getting anything done and little faith in said factor (my arguement being if they were managing correctly, arrears wouldn't be able to become as excessive as they claim)

The company have historically given emergence repair work to the cheapest cowboys around - so owners have paid for this to be carried out, only to have to pay again several weeks later to have the repair repaired again if you see what I mean.

today I received a letter claiming to be a reminder about essential repair work, demanding a large sum of money - it's the first letter I've received, and I can't get through to a human at the factoring company to find out what the repair work actually is (the letter doesn't actually tell me). I think it's this that's tipped my mood somewhat.

In terms of renting out - I do know I'd need to fully investigate this, but in my head I know it's not a good idea.

BitterAndTwisted

If you have two bedrooms I think the wisest thing to do in the short-term is to find a lodger. That way you would have a regular sum each month to either help towards the service-charges or to over-pay the mortgage and creep out of any negative equity there might be. Lodgers have no security of tenure and if it doesn't work out you can ask them to leave and find some-one else. Maybe a Monday to Friday person working in the city with a family too far away to commute?

Service-charge arrears: the management company is ham-strung if the leaseholders cannot or will not pay. The company only have access to the leaseholders' funds and will never make contributions on their behalf or make loans to cover them and this is probably one of the reasons why they can't afford to get decent maintenance or repair companies to do the work satisfactorily. They're in a very unfavourable position, just as you are and the only way to remedy that is to get the leaseholders to cough up. Catch 22

Fire_Fox

I know the situation with leasehold flats is somewhat different in England/Wales and in Scotland, but I cannot see that some of the same principles should not apply. Here in England/ Wales, service charges must be "reasonable", "reasonably incurred" and work must be of a "reasonable standard". It is common sense that you cannot legally be charged for work that is not carried out at all. Exactly what the responsibilities of each part are in laid out in the long lease, and this holds regardless of who pays and what arrears there are. This doesn't mean the management company has to maintain the property without funds (they can resign) it means the freeholder must maintain the property. Have you read your long lease and is this the same for you?

Have you formed a recognised tenants and residents association? Have you written to the freeholder and asked him to get rid of the incumbent freeholder? Have you considered taking legal advice on the situation as a group? Have you tried ALL withholding your service charges but paying them into, say, your RTA bank account and getting the work completed yourselves? Are you doing simple things like individually laying out your complaints in writing by recorded delivery?

Fire_Fox

BitterAndTwisted wrote: »

Service-charge arrears: the management company is ham-strung if the leaseholders cannot or will not pay. The company only have access to the leaseholders' funds and will never make contributions on their behalf or make loans to cover them and this is probably one of the reasons why they can't afford to get decent maintenance or repair companies to do the work satisfactorily. They're in a very unfavourable position, just as you are and the only way to remedy that is to get the leaseholders to cough up. Catch 22

That may be the case in Scotland but it is not the case in England and Wales. Here the freeholder has an absolute responsibility to maintain the property. IMO too many leaseholder start withholding service charges at every little frustration, but in some cases it really is the only option.

Our ex-management company continued to collect service charges and pay monthly invoices for almost three years after I first (of many) reported the cleaning company were simply not visiting the building. I raised concerns about fraudulent or erroneous invoices from the caretaker and they simply refused to investigate and paid the invoices! As the OP says there is a point where you realise you are going to be double charged.

gazebo

I'm now confused a little by this - as far as I know, this is a feudal property (is that the correct term?), not leasehold of freehold.

I've got my title deeds which show a different factor was originally in control. It is my understanding they were overthrown by a residents committee after a short period of time (this was prior to my purchase). The current factors are apparently better than the old ones, but not particulary efficent.

I do understand that it's not all the fault of the factor though.

When first built, part of the property was bought by btl folk, and the flats were rented out to 'undesirables' which led to issues of junkies in common stairwells, vandalism etc. This is information gained from speaking to the live in caretaker and his wife.

Really then, what would be my best course of action? Should I make it my own personal crusade to set up a proper tenants/residents association? if I do so, what do I have to do?

I honestly do wish I'd never listened to the ex and bought in such a rubbish place....

Fire_Fox

Google is your friend!
http://scotland.shelter.org.uk/getadvice/advice_topics/neighbourhood_issues/tenants_and_residents_associations
If you can set up a tenants and residents association, you have learned something new that can be added to your CV. I am involved in community group and the networking opportunities are excellent - see this as a learning experience and another string to your bow.

If you have a live-in caretaker I'd be expecting a fairly decent service on a day to day basis, what exactly is this person doing and what does his contract say he should be doing?

gazebo

I would like to be able to answer that question honestly fire fox but I will have to refrain.

Generally I cannot fault the caretaker as some of the things he does are above and beyond the call of duty (in my eyes).

I will get in touch with the factor by snail mail (recorded delivery) and will ask for full details of the caretakers duties before I comment any further there.

I'm grateful to the replies I've had - as said before, my main issue this morning is receiving a letter demanding payment of £150 to do something to windows, otherwise if someone gets hurt, it'll be my fault (that's the general gist of the letter, not what it actually says - though it doesn't tell me what is needing done to the windows - which is why I am still trying to speak to a humanoid). Let's face it, being sent a demand for a not so insignificant sum of money isn't likely to cheer folk up of a morning.

Maybe I shouldn't have gotten up today

Fire_Fox

Stop dealing with these jokers by telephone, it is absolutely useless if you later need evidence of your attempts to elicit information from the factor. I am the veteran of a three year dispute and haven't paid a penny in all that time: like you I would much prefer to pay and get a decent service, however I will not pay for the same work doing twice hence the withholding of funds. The only reason I am winning is a dedication to researching the legislation and writing recorded delivery letters; the few phone conversations I have had I now wish had been properly documented.

gazebo

I wish I could bring myself to withold payments, as it is I am giving these folks a chunk of my wages every single week (paid weekly, set up a standing order weekly to keep payments ticking over and assist me with budgeting)

I don't have a magical £150 that I can give to them right this very second, and even if I did, the letter telling me it's now overdue and trying to blackmail or guilt trip me into giving them money right now isn't the way to do it.

I do fully understand however that as a responsible homeowner, if there is a repair required that is of a serious nature, I am fully liable to pay so I will be trying to figure out where I can find £150