Bought new leasehold flat.

eddddy

jstvj wrote: »

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Does this give the management company the right to alter the lease and moreover can any individual leaseholder (part freeholder) vary their own lease themselves without agreement of the others ?

A lease is a contract between two parties. Neither party can vary the lease without the other's consent. (Except that a court/tribunal can order it in certain circumstances.)

So if you (as leaseholder) and the management company (as freeholder) both agree, you can vary a lease.

(As long as it doesn't beach the terms of anyone else's lease.)

It's up to the management company (freeholder) to decide how they 'agree' about something. (e.g. It may be that the directors decide, it may be that everyone has a vote, or it may be some other way.)

jstvj

eddddy wrote: »

A lease is a contract between two parties. Neither party can vary the lease without the other's consent. (Except that a court/tribunal can order it in certain circumstances.)

So if you (as leaseholder) and the management company (as freeholder) both agree, you can vary a lease.

(As long as it doesn't beach the terms of anyone else's lease.)

It's up to the management company (freeholder) to decide how they 'agree' about something. (e.g. It may be that the directors decide, it may be that everyone has a vote, or it may be some other way.)

Thanks eddddy. I know that all of the leaseholders will be Directors, but any others details will presumably only become known once the transfer happens and the new management is up and running.

If I understand your kind advice correctly the management company/Directors as a whole will be able to vary the lease(s) as a whole, but individual leaseholders/freeholders will not.

Fraise

jstvj wrote: »

I have bought an retirement flat and being affordable housing the price attracted me, despite some very restrictive rules in the lease. The management company is soon due to be transferred to the Residents. Also I understand that when this happens the Freehold is also to be transferred to the Management Company. Whilst I understand that being Directors of the Management Company the Residents have control over the service charges etc. However I do not know what rights the transfer of the Freehold conveys. Can anyone give me any advice on this aspect please.

Hi,

Firstly, it sounds like your flats have a managing AGENT who is employed by the freeholders to carry out works. Very often theGse agents take money for old rope, and are very costly. But if there's lots of apartments in the estate you will need an agent to manage the upkeep and repairs.

You say the residents are taking over from the management agency (good idea!!) and it sounds like each leaseholder will have a share of the freehold. Therefore, each owner of each flat will be both a leaseholder AND a freeholder. Instead of having an ordinary Share of Freehold, they will each own a share of the FREEHOLD COMPANY that owns the freehold. It's pedantic, and you will be one of the owners of the freehold, as will all the other leaseholders. It doesn't matter if you are married: each flat will own ONE share of the freehold.

When residents buy the freehold, if it's a fairly large estate, they will elect some of the residents to act as directors in order to organise repairs and upkeep. The directors do NOT have any powers over the residents, they are your equals in as much as they are also leaseholders and have a share of the company that owns the freehold. You can elect to be a director, but your position as a leaseholder and owner of part of the sharehold gives you ample clout if things go wrong.

Sometimes, the word DIRECTOR goes to the head of those who feel all important, and they can be right pests.It is quick and simple to kick them off if they misbehave or take liberties.

Any time ANY work needs carrying out ALL residents must be shown quotes from builders etc, and they must also be shown accounts every year. If the directors don't do their voluntary jobs properly they must be kicked out and replaced. I've heard of directirs siphoning money out of the maintenance fund and fiddling the books, so it's imperative to see ALL quotes, receipts, invoices...every single thing.

Finally, your rights as joint freeholder gives you clout, your leasehold does too. In fact, the lease itself is the most important part of the whole thing. Breaching the lease is very serious. Being the freeholder means you own a share of the land you property sits on and depending on the length of your lease you're in a very good position. If your lease is long, say, 999 years, you're laughing. But if you have a short lease it will need extending otherwise the value of your flat will be much lower. However, as you're also a joint freeholder by way of the freehold company, I would imagine you can extend your own lease as you own the freehold.

jstvj

Hello Fraise

Thank you for your very informative reply. The Landlord (as they call themselves in the lease) have not employed an agent. In the six months we have been resident they have done virtually nothing. However as I have said the last of the flats is now sold and it is stipulated in the lease that each Resident must agree to be a Director of the new management company. At the same time the freehold well be transferred.

Presumably from then on the Landlord can no longer have an interest or involvement. I know it's academic but once the 999 year lease expires the property has to be handed back to the Landlord.

Under these circumstances, I assume there is no real benefit in the Tenants/Residents/Owners/Freeholders (whatever you want to call them or me) buying their share of the Freehold.

I just can't see why the Landlord should give the Freehold away, even to the Management Company and am suspicious that there is something I don't know. No doubt, I will eventually find that out, probably when we take over?

Fraise

jstvj wrote: »

Hello Fraise

Thank you for your very informative reply. The Landlord (as they call themselves in the lease) have not employed an agent. In the six months we have been resident they have done virtually nothing. However as I have said the last of the flats is now sold and it is stipulated in the lease that each Resident must agree to be a Director of the new management company. At the same time the freehold well be transferred.

Presumably from then on the Landlord can no longer have an interest or involvement. I know it's academic but once the 999 year lease expires the property has to be handed back to the Landlord.

Under these circumstances, I assume there is no real benefit in the Tenants/Residents/Owners/Freeholders (whatever you want to call them or me) buying their share of the Freehold.

I just can't see why the Landlord should give the Freehold away, even to the Management Company and am suspicious that there is something I don't know. No doubt, I will eventually find that out, probably when we take over?

Hi JSVTJ

The current owners of the freehold are legally known as Landlords, even though it's you who owns your flat. They own the LAND your property sits on, but when you take over the freehold you will be the landlord.

It is very common for external management companies (freeholders) to rake in maintenance funds each year, but never do any work. I'm sure SOME companies are good, but a huge amount just take the money and do nothing.

If the lease states that each new owner of the freehold must be a director, then you must. It really is no big deal and can only benefit you. Directors of such companies are required to attend meetings each year, sometimes every 3/6/ or 12 months depending. I don't know how many flats there are on your estate, though I'm presuming there's not that many if they want all owners of the leasehold to become directors when they take over the freehold.

Meetings are usually fairly informal and often held in one of the owner's flats. The meetings are just to iron out any issues e.g. If bins aren't being collected, gutters are leaking etc....just general things.

It is important you establish what the voting system will be once you're a director. Sometimes they want unanimous votes, and sometimes majority votes. I think unanimous voting is better if there's just a few directors, say, four, but if you have about 20 or more then majority voting is probably better.

Remember, you don't have to take a particularly active part in the running of the freehold, but it's only fair you have your say in the running of the estate (you'll be one of the landlords), and your position will be compromised if you can't vote on things or have any input. Besides, the lease States you must be a director, and it really isn't the big headache it may seem, so it's for your benefit. If you refused to sign as director the whole transfer could fall through, and that would be to your detriment, as well as everyone else's.

Once you've all taken over the freehold the previous owners of the freehold will have nothing to do with the estate whatsoever.

Despite your leasehold being 999 years long there most certainly is very good reason to own the freehold: whilst you're just a leaseholder you are governed by your freeholder as regards ground rent,maintenance charges, repairs etc. some freeholders are good, but many are bad. By you all being the freeholder you have your OWN interests at heart, and probably won't neglect the property nor cheat yourself out of money by imposing huge fees upon yourself. Having a freeholder who manages the company means they can up your service charges to stupid amounts, but if you're the freeholder YOURE in charge. You also own the property lock, stock and barrel, increasing its value. There's huge benefit in owning the freehold in more ways than one, and I can't think why you wouldn't want to. You say the current freeholders are doing no maintenance, so that's one reason alone. Their neglect is devaluing your property.

I thought you said earlier that the landlord (freeholders) were the management company too? Are you positive the freeholder isn't employing a managing agent? How many flats are on the estate?

Whatever, it sounds like the current owners of the freehold don't want the hassle of sorting out the upkeep of the property, and as the lease is 999 years long it's of little value to them. If you all had short leases of less than, say, 75 years, every so often when a lease came up for renewal they could charge THOUSANDS to extend it, but that's not going to happen with a 999 year long lease. They may feel the bother of arranging maintenance for possibly a low profit is just not worth it, hence why they want it off their hands. Or, if as you say, they are not maintaining the property as they should - and effectively charging you all for nothing - very soon one of you will take them to court for breach of the lease and mismanagement and it will cost them dearly. I suspect that's why they don't want the bother of running it.

How old is your property and how many flats are there? If it's relatively small and is in fairly good condition it should be very easy and straightforward to arrange external repairs once or twice a year if need be. Things like cleaning the gutters, replacing a roof tile, exterior decorating every 5 years or so (whatever the lease stipulates), any drain blockages etc...you just get three separate quotes from different builders and you all decide on who to employ. It really is that easy.

You will also need to estimate how much the maintenance should cost each year, so all you need are estimates from various builders. You can then determine a fair maintenance sum to go into the fund, and I guarantee it will be less than what you are paying now. Some self-managing estates add a little extra for a sinking fund for unforeseen larger works that may need doing in the future, but you will determine how much to club in by the condition of your property now.It will ALWAYS be cheaper self-managing than employing an agent. Agents make a profit - out of you. They're not charities,many many of them are sharks...

You will also need a company secretary (accountant) to do the books annually, and that should only cost a couple of hundred pound depending on how much work has been done.

You'll also all need the same solicitor to transfer the freehold into your names, and that's very straightforward and is not costly. Just a few hundred pound. The solicitor will also guide and help you and give you a formal Articles of Association stipulating the terms of the freehold and how it's to be managed. It may sound daunting but it isn't at all. It's easy, straightforward, cheaper than having a freeholder you pay maintenance/ground rent to, and you're in charge of your property. Your property will also be worth more.

Lastly, you will also need to take out insurance for the whole property, which often works out cheaper than having your own single buildings insurance. So, if in the event a storm broke out and dislodged a roof tile or broke fencing etc....you're all covered and have peace of mind.

Please, don't be put off by being a director, it really is not daunting at all....it's for YOUR benefit.

I hope that helps

PS. Please excuse any typos, my iPad plays up.......

jstvj

Thank you Fraise, that is very, very helpful and dispels my fears. The building is an old hospital and the 11 flats were converted just before Xmas. The Landlord has a separate company setup to manage, which of course, will cease once everything is transferred to our new management company. All the Directors forms etc had to be done at the time the leases were signed, so the transfer is just a formality.

Thank you again for taking the time to explain everything so fully, I am very grateful to you and the others who replied.

Fraise

I'm glad I've been of help,to you

From what you now say it does sound like the current freeholder is employing a managing agent to do the maintenance - and they're not doing it. They're just taking your money and giving nothing in return.

One thing I would advise - now you've told me it's an old converted hospital - is to arrange a surveyor's report before taking over the freehold. Obviously, you'd have had one done yourself when buying your flat, but depending on the survey you had done you may not have full details of everything that may need repairing or renewing. One of the most expensive jobs is to have a new roof fitted, so make sure that won't need doing for many years to come. The current freeholders may be aware it needs replacing (if it indeed does), so check that out first. Also make sure there's no subsidence or damp etc.....I'm sure there isn't as your surveyor's report would have surely mentioned that, but better to make sure, anyway.

Lastly, as there's 11 flats I'm assuming you also have communal areas i.e. Front door system, hallway, lifts, gardens, parking/spaces....and maybe window cleaning and cleaners for the communal areas. Obviously, you will need to get quotes from cleaners, gardeners etc....and then choose the ones you all feel are right for the job. It sounds time consuming, but it's simply phoning around local tradesmen and obtaining quotes. All that initial work can be shared and is very straightforward, and once you're up an running
You don't even have to think about it. The company secretary can pay the cleaners etc by cheque or standing order once every month, or two of the directors can both sign a cheque themselves and pay the cleaners direct. You just do it how it suits you all best.

Good luck and try not to worry. It's much easier than it seems,,and it will increase the value of,your property.

jstvj

Thank you again Fraise. The current management company is definitely not an agent, because the Directors are the same people as the Landlords. The building itself has been fully refinished with a new roof etc. However, clearly it's all been done on a budget which is understandable when six of the flats are affordable housing. However the remaining five flats were, in my opinion very over priced and simply not worth the money. Having said that, they have all sold. its a complex for the over 55's and there remainder of the properties are over priced bungalows. What has annoyed me is the bullying nature of the Developers/Landlord, they specialize in elderly communities and take advantage. The Lease contains some very restrictive ruthem(example: drying of washing outside forbidden) and frankly I will be glad to see the back of them.

Fraise

JSTVJ,

Just to clarify: the Management COMPANY that owns the freehold (which will soon be yours) must have directors.

That doesn't mean those people are actually managing the maintenance. Many freehold companies that have several properties to manage bring in a managing AGENT.

A MANAGING AGENT is a glorified housekeeper. They will come round and inspect the property once in a while, or when called out, and will arrange for a roofer, plumber, gardener etc to come round and fix something. They then add THEIR charge to the tradesmans fee, so you're paying more for a service that you could do yourself. And cheaper too. Man again agents are renowned for employing people they know, who give them a rake off of cash....which comes from your pockets.

Good job you're getting rid of them.

Once the solicitor has transferred the freehold to you and the other owners - and providing the other owners are in agreement - you could ask the solicitor to add a new clause or amendment to the lease (he/she will know better than me how that's done, or if It can be done), allowing to hang your clothes outside. It sounds petty, but you have to get everything in black and white and done legally just to protect your own interests.

If the solicitor says he can't change the lease you might ask your neighbours if they'd mind you erecting a removable washing spiny to dry your clothes outside..lim sure most people wouldn't object to that

jstvj

Fraise

I think all the Tenants would welcome outdoor drying facilities and a number of other changes, either formally on the lease or otherwise. Now I know what it's all about, thanks to you, I am looking forward to seeing the back of the Landlords. I think another resident is organising a meeting of the tenants and thanks to you, I can explain the basics to them.