Mortgage on a block of flats?

Seawater

Hi

This may be an odd question to ask but I thought I'd give it a go.

The situation: A block of flats may require some external works costing say for example £100k in the near future. All the leaseholders own a share of the freehold.

It has been suggested by one of the residents that instead of either saving up in advance to pay for the work or requesting a large one off payment from each resdent, that a mortgage is obtained and paid off over a number of years. This would enable the work to be undertaken sooner rather than later and the cost could be spread over current and future owners.

Firstly, is obtaining a mortgage on the building as a whole possible or not and secondly, if it is possible would it be a legal nightmare and not worth the hassle?

Thanks in advance

foxwales

A personal mortgage in this format is not legally possible on this type of property.

The only way you could obtain a mortgage is if you formed a company with each resident being a stakeholder and obtaining a business mortgage. This would be a legal nightmare in itself as not only would you have to consider existing and future stakeholder legalities but also the legalities of running an operational company.

You could form a charity / association of residents where an account could be setup in trust for the purpose of overall maintenance and repair; which again would have legal responsibilities, albeit to a lesser commercial extent.

Seawater

Thanks for your reply.

We are a limited company with a few Directors, Co. Secretary and Shareholders (flat owners) etc. The company income is obviously the monthly maintenance charge from each resident (which would have to be increased).

Not sure whether we could get a business/commercial mortgage or not but it might worth trying.

Cheers

Joe_Bloggs

@Seawater
You need a growing pool of funds to deal with maintenance issues. Getting mortgages for this may just be a side track for those that have to pay being skint at present.
J_B.

Thrugelmir

[QUOTE=Seawater;50593869
We are a limited company with a few Directors, Co. Secretary and Shareholders (flat owners) etc. The company income is obviously the monthly maintenance charge from each resident (which would have to be increased).

[/QUOTE]

Increasing the service charges is really your only option.