Leasehold and no management company

summer0304

So we are currently in the process of buying a leasehold flat. Mortgage through Natwest. Solicitor has noted that the flat doesnt have a management company and is classed as absent landlord. The vendor has an indemnity policy in place from when she purchased the flat 5 years ago and this apparently stays with the flat for the life of the lease 996 years. The solicitor advised she now has to advise the bank of this. Is this a problem? I’m so stressed about it. We have already had 2 houses fall through and I can’t bear to think about this one falling flat on its face!

Thanks is advance

anna42hmr

summer0304 wrote: »

So we are currently in the process of buying a leasehold flat. Mortgage through Natwest. Solicitor has noted that the flat doesnt have a management company and is classed as absent landlord. The vendor has an indemnity policy in place from when she purchased the flat 5 years ago and this apparently stays with the flat for the life of the lease 996 years. The solicitor advised she now has to advise the bank of this. Is this a problem? I’m so stressed about it. We have already had 2 houses fall through and I can’t bear to think about this one falling flat on its face!

Thanks is advance

Whilst I cannot comment about the mortgage side of it (though if your vendor was mortgaged themselves when they purchased, would suggest that it its mortgageable) I personally would potentially be concerned about an absentee landlord on a flat, especially if it is part of a block (small or otherwise).

For example then does that mean no service charges are being collected - as such who funds/how is it funded in respect to work done (for example roof/pointing repairs, electrical work to communal areas, decoration to communal areas etc) have they even insured the building (as my mortgage co asked the solicitor to check the management back to ensure that the freeholder of my property was insuring the building), who is arranging things like fire checks of the building etc.

summer0304

Thanks for your reply. It’s done through insurance. So each of the 4 flats is liable for 25% of any repairs in the communal area. That’s how it was explained to us. So whatever insurance we get has to cover the communal area. The vendor does have a mortgage and she said her mortgage company accepted the insurances that was in place when she bought it

summer0304

The vendor actually put her own pictures etc in the stairwell as she decorated her own place. So it was nice an presentable. We only plan on living there for about 5 years as when we start a family we will have to move but it was just to get us on the property ladder with us not having a big budget it was all we could afford in a nice area

summer0304

Anyone else have any experience in this area?

IAmWales

What happens when one of the tenants doesn't want to pay towards repairs? Insurance doesn't cover maintenance or wear and tear.

I'd run as quickly as you can in the opposite direction. This is fraught with problems.

summer0304

A builder owns the other 3 flats and rents them out so it’s in his best interest to keep the place tidy. Up to now they have a good relationship and understanding in regards to the up keep. Basically they manage it themselves. We would, if everything goes well, seek advice on getting a management company after we move in