Leasehold flat - no management company?

FelinePrincess

Hi,

Hope someone can advise me if this is good or bad, what questions I should be asking, ect.

I am going to see a flat tomorrow which is advertised as having 995 years left on the lease, when I phoned up I asked how much the ground rent and service charges are and was told none at the moment as it is a repossesed property and no management company. I asked would there be repercussions in the future because of this and he said what he thought would happen is when all the flats were sold all the owners would join together to take care of management, bills ect..

But then after I got off the phone I thought surely someone must hold the lease? Would they not be liable to manage the building and occupants pay them the charges?

My understanding of leaseholds is minimal so could someone please advise any issues I should be on the lookout for here?

The estate agent has already advised that it would need to be a cash sale as a few people have already been turned down for mortgages due to there being no management.

zcacmxi

I thought that ground rent & management charge were two separate charges. They may or may not be payable to the same person.

Ground rent is payable to the entity that owns the Freehold of the property. Maybe they are no longer collecting the Ground Rent as it is too small and too much hassle?

Management charge would cover paying bills and maintenance of communal areas. If nobody is dealing with this, then I can assume if the roof leaks, lift breaks, lobby needs painting, then it would not be done. At that point all the owners would need to get together and organise something.

These are some of the practical issues of not having a management company. Best to get legal advise I'm thinking.

Doozergirl

How many in the block?

It's true that it will cash only if there is no management company to speak of. And it's true that someone will own the freehold - it will be detailed on the Land Registry website at a cost of £4 to you; you'll see a list of titles, one for each lease in the block and one freehold title.

With a 995 year lease, what happened four years ago? Was it built ?

And what do you mean when you say 'when all the flats are sold' how many are for sale?

Trying to restore it would be simpler if it is very small block but still complicated. As it stands, it should be for sale for well below normal market value.

westv

Doozergirl wrote: »

How many in the block?

It's true that it will cash only if there is no management company to speak of.

How's that then? There must be thousands of Victorian conversions throughout the country that don't have a management company to speak of. How do they get bought and sold?

FelinePrincess

Thanks for the replies

I don't think there are many flats in the building, maybe 6 or so, it is a big house thats been converted. Not sure what happened 4 years ago, maybe this is when it was converted into flats, I will try and find out.

I am not actually aware of any other flats in the building being for sale, I wish I'd thought to question it when he said "when all the flats are sold"

It is for sale at a low price, and has been reduced by a further 10,000 so as someone thats knows nothing about whats complications may be involved it looks like a bargain but with all these other things to take into account I dont know..

Mum_of_3_3

I wasn't living here when it happened, but after converting the house and selling the flats where I live the builders went bust. The freehold was transferred to a separate company together with the management of the building, which is done by the people living in the flats. Our leasehold was then set for 999 years I think.

I know it may not be help as I don't know the ins and outs of how this was done, but it may help to know that this is what may happen.

Maybe try and find out if all of the other flats are for sale, if not then as the owner occupiers what are their plans and whether they are going to take over the running of the management company.

We have 6 flats in our building and it's a very simple to run our own Management Company. Also, because each owner gets a copy of the accounts each year, we even signed a few forms with Companies House which means we don't even have to have an AGM and if it's only something small that needs doing (like buying plants for the containers outside) then whoever fancies doing it will casually ask around each owner and if it's agreed then it goes ahead.

To be honest I see our flats as more or less being freehold as we are all directors of the Management Co which holds the leasehold and the leasehold being for such a long time that it's not a problem for mortgage companies. Every time someone posts on here about an horrific Management Co I thank my lucky stars.

So if all the legal cogs are turning to ensure that the owners of your flat will hold the leasehold and take care of the management then it could be a good buy.

Doozergirl

westv wrote: »

How's that then? There must be thousands of Victorian conversions throughout the country that don't have a management company to speak of. How do they get bought and sold?

Apologies. If the lease dictates that there needs to be a proper managment system in place and there isn't one then lenders will not lend. I had a Victorian conversions in London where the arrangement was informal but costs were to be split between the flats. A nightmare in itself!

If there are neighbours then I would knock on the door. What can happen is that circumstances change during the person's ownership which the mortgage company aren't informed of and therefore don't know what is going on when they come to repossess. They write to the agent who says 'we don't manage this anymore, don't know who does' and then don't push anymore on it. One of the neighbours will probably know exactly what is going on, good or bad!

Oldernotwiser

Do all the flats own a share of the freehold? This was the case in the conversion I owned and the owners did the organisation of any works and kept an bank account for the maintenance fund.

fred7777

Hi
I spent 6 years in a leasehold flat with no management company with no problems whatsoever. £20 per year ground rent was paid to the free holder & maintenance was shared between the flats as defined by the lease.
It worked far far better than a management company (just search for solitaire of peverel to see what they can do) but it only worked because the leases stated who did what. I had the ground floor flat so was responsible for the maintenance of the foundations and the upstairs flat was responsible for the roof etc.
If the lease specifies things properly then there doesn't need to be a management company. If the lease is properly set out & the flats are repossessed then the company which repossessed them is responsible for the upkeep of the parts which their repossessed leases specify.
If the lease doesn't specify who maintains what then the current owner needs to sort out a management company before selling otherwise your dependent on the other owners co-operation to get things sorted out.

FelinePrincess

Thanks everyone for the helpful replies

I have been to see the flat today and like it so I think I will see a solicitor for advice on the management/lease situation, it's all so new to me don't want to get myself into any complicated situations!

Thanks again for your replies, it's been good to read the success stories

muskoka

My son has lived in a leashold flat with no management company for over 10 years now & not had a problem - yet