Buying flat with no formal maintenance agreement

iansl2000

Hi
I,ve made an offer on a flat with a share of freehold and where maintenance is done on an as and when basis paid for by the 4 flats on the block.
My solicitor has warned that mortgage lenders are unlikely to lend on flats where there is no formal maintenance agreement making selling on an issue.
I am buying for cash.

Does anyone know if this type of arrangement is mortgageable or not?

Many thanks for any help.
Ian

eddddy

You need to be a bit clearer.

iansl2000 wrote: »

My solicitor has warned that mortgage lenders are unlikely to lend on flats where there is no formal maintenance agreement making selling on an issue.

Are you saying that your solicitor has read the lease, and advised you that the terms of the lease make the flat unmortgageable?

If so, why do you doubt your solicitor?

And nobody here can read your lease.



Or... was your solicitor making a general statement, without having read the lease?

If it's the latter, I would bet that, in reality, the lease does have formal maintenance terms - but the current leaseholders choose not to follow them.

Tom99

Also what is the length of lease on the flat. A share of the freehold but a 68yr lease is not nearly as good as a share of the freehold and 999ys lease.

Ask for a copy of the lease so you can see the repairing obligations for yourself.

messes

I purchased a flat as part of a block of 4 using a mortgage, there were no problems with this during the conveyancing process. I don't have a freehold share, but the lease doesn't include maintenance fees.

Instead the lease makes each owner responsible for the upkeep and maintenance of their quarter of the building, further it defines a schedule by which internal and external upkeep should be done (like painting).

For example as an 1st floor flat I am responsible for maintenance of the roof and so when I lost a tile in the storms I paid to get that replaced. This didn't affect the other 3 flats in any way, so there would be no shared costs.

Buildings insurance is maintained by each owner on their portion of the building.

iansl2000

Thanks for the responses.
I've spoken to the solicitor who explained that there is no maintenance agreement at all so no documents for me to read.
The freeholder is a company that I would have a 25% share in and then the company issues a lease to the 4 flats in the block. The lease is for another 970 years.

The mortgage problem is down to the lack of maintenance agreement rather than the share of freehold.

I know it's daft to ignore a Solicitors warnings but I was hoping that someone with mortgage experience might be able to contradict them.

Whilst looking for flats I've come across quite few that have an informal maintenance agreement so thought they can't all be unmortgagable-can they?

Thanks
Ian

G_M

Either your solicitor is a dork, or you've misunderstood.......

iansl2000 wrote: »

I've spoken to the solicitor who explained that there is no maintenance agreement at all so no documents for me to read.

The freeholder is a company that I would have a 25% share in and then the company issues a lease to the 4 flats in the block. The lease is for another 970 years.

So there IS a document to read. The lease.

As advised in post 2 above, read it.

Time2go

I an selling a share of freehold leasehold flat. Currently service charge is just insurance and we split maintenance costs as an when. Buyers have had no problem securing a mortgage. With share of freehold you can also influence how it's done in futures

ProDave

I owned a freehold flat (In Scotland)

It was really quite straightforward. I jointly owned the ground the flat sat on (50% share with the flat above, ours was ground floor) I owned a 1/8 share of the entrance area, shared with the other 7 flats. I wholey owned my garden and parking space.

The "common parts" (foundations and roof mainly) were the joint responsibility of me and the flat above and repairable at our joint expense. No repairs were needed in the time I was there.

Other parts of the flat were entirely mine. I chose to pay for new windows in my flat entirely at my own expense.

There were no ongoing fees, nor "company" or other management body. and no lease, it was freehold. I paid my own buildings and contents insurance.

Apart from the shared responsibility of the roof and foundations with the flat above, it was in all other respects just like owning a house.

This was in Scotland and we had a mortgage.

Time2go

Oh and I bought my flat with a mortgage and we have two new owners in the block that all have secured mortgages under this arrangement in last two years.

davidmcn

ProDave wrote: »

There were no ongoing fees, nor "company" or other management body. and no lease, it was freehold.

This was in Scotland and we had a mortgage.

Same as my current flat. Obviously different legal set-up in England, but in the OP's case it sounds like all the flat-owners can enforce the respective obligations (by swapping freeholder and leaseholder hats) so I'm also not sure why there would be a mortgageability issue. Unless the solicitor has spotted something problematic.

Mobeer

It's probably best to ask the solicitor direct, and have a read of the lease yourself.

It sounds as if the lease does not specify any arrangement for how maintenance costs will be divided up. For example if the roof leaks water into person A's top floor flat and the lease says nothing about who pays, then B,C and D might refuse to contribute anything.