Leasehold ... but no Service Charge?

Rautavaara

Hello

I saw a property today that I really liked. Good price, good location, meeting most of my requirements. It is a leasehold property, and although the EA didn't have the full details on him, he did say that there was a ground rent charge, but no service charge.

Is this a good or a bad thing? Obviously not paying service every month is a nice thing, but does this mean the obligation of repair is on the flat owners?

No doubt the lease will have the specifics, but has anyone come across this before?

Thanks

G_M

Is it a house or a flat?

Less usual for a flat, but many conversions (maybe a house converted into 2/3 flats) have no formal arrangements for repairs/maintenance. That does not mean each leaseholder is not liable for costs that arise - only the lease will tell you.

If there IS no formal arrangement, making sure the freeholder/other leaseholders work well together is important otherwise you can end up fighing over repairs etc.

On the plus side, you minimise management costs.

Rautavaara

Hi - it's a flat. There are 4 flats in total. I'll be given the full details tomorrow. Not sure if I can ask for a copy of the lease before putting in an offer? Does it really matter as at least putting in an offer, were I inclined to do so, I could check out the lease anyhow and pull out if anything nasty crops up?

G_M

You can ask to see anything you like. Whether you get it......
The agent is unlikely to have it. Ask the vendor direct.

Better still, wait. Negotiate price. Agree. You can still adjust your price later based on the survey, lease, anything else that comes up later.

Wyndham

What would happen if the roof blew off in storms? OK, this is a bad scenario, but I'm sure you get my meaning. I think in that case you'd have to fix it, and you'll all have to find the money to do so. Many leasehold schemes have a reserve fund in case something big needs doing (assuming the something big is not covered by insurance), so if there isn't one, you should be prepared for big bills now and then, and possible disputes with the others.

Richard_Webster

Talk to the owners of the other flats and ask about what happens when work needs to be done and what their views are about paying for work..

Possibly each flat is responsible for its own part of the building but this less likely with 4 flats than 2. (I take it that this is not like a pair of semis at a quick glance but is in fact a 2 storey building with 4 maisonettes.)

More likely is that some kind of service charge provisions exist in the lease but the landlord never bothers to collect anything because generally nothing needs doing. This is fine, until, as others have hinted, some major work needs to be done and then nobody wants to pay and often the landlord just can't be bothered to get into the argument!

Somebody should be insuring and again if there are 4 flats it is not really sensible for there to be separate insurances for each flat - but acceptable in the maisonette scenario mentioned above.

When you have a small building the views of the other flat owners can be key, because if one or two of them are reluctant to pay then often work simply doesn't get done. The legal position may be interesting but the cost of going to court to enforce lease provisions can be considerable so it is best not to go there to start with. I am not saying not to buy the flat but you need to ask questions and weigh the risks.

Larger blocks can have more settled and formal maintenance arrangements but these tend to mean £500-£1,000 pa on average for service charges - smaller buildings tend to be less formally run and you can make savings but there are downsides too. (Also some of the larger blocks can be managed by rip-off managing agents....) So there is no one set up that is always going to be the best - you have to look at all the factors - and the smaller the building the more the personalities of those involved become important.

kayla3600

We live in a leasehold flat and pay £92p/month service charge and £63p/quarter ground rent. We get the accounts each year showing what the management company has in the reserve. I wouldnt be too worried about not having a service charge, but definately make sure you are putting money aside incase anything major happens.
Our service charge covers all the cleaning in the building, window cleaning, gardening, general wear and tear, lift maintenance, buildings insurance etc.
Because of there being no service charge you need to check the buildings insurance, as this is normally covered

Rautavaara

Hi all

Thanks for your advice. Unfortunately things have changed a little. The EA got in touch and this time explained that they didn't not have the lease details and that they have been trying to get these via the seller (it's being sold by another company), who in turn have tried to get in touch with the management company for weeks, but with no luck.

He also mentioned something about the possibility that the company might no longer be in operation?

He advised that if I were interested in going forward I should get my solicitor to apply for an indemnity policy.

Frankly, without knowing service charges/ground rent, lease length, any possible outstanding charges, I can't say that I am feeling all too confident about pursuing it any further.

It's a shame because although I have only viewed five or so properties, this is the first that I could say fitted all my expectations.

Not sure if this is an unusual situation, or whether this kind of thing happens often or not ... ? The EA did say there had been some interest from a number of buyers, but the current scenario has put everyone off (except for one buyer who eventually pulled out).

ankspon

Where do you want a flat,i pay £59 per month service charge and £100 per annum ground rent.Thinking of selling mine

Rautavaara

davidhwdn wrote: »

Where do you want a flat,i pay £59 per month service charge and £100 per annum ground rent.Thinking of selling mine

If you're selling in Ealing/Acton/Richmond/Wandsworth/Twickenham then I might be interested

catfish50

Rautavaara wrote: »

Hello

I saw a property today that I really liked. Good price, good location, meeting most of my requirements. It is a leasehold property, and although the EA didn't have the full details on him, he did say that there was a ground rent charge, but no service charge.

Is this a good or a bad thing? Obviously not paying service every month is a nice thing, but does this mean the obligation of repair is on the flat owners?

No doubt the lease will have the specifics, but has anyone come across this before?

Thanks

My leasehold flat has a very low service charge, due to the fact that nearly all repairs are the duty of the individual leaseholders. This is written into the leases. It's not a very satisfactory situation as it's not very clear who has the responsibility for certain parts. Result: squabbles, and often the work just doesn't get done because nobody wants to risk arranging for it to be done and then getting stuck with the cost.

The other problem with this kind of situation is that if some of the leaseholders don't maintain their external parts properly, it can make the whole place look rundown, no matter how well you keep up your own flat.

My advice would be not to even think about making an offer without seeing the lease. Personally I would smell a rat from the very fact that excuses are being made instead of the lease being shown. But I have a suspicious nature, I may be being unfair to the seller.