No sinking fund

eddddy

Ogriv wrote: »

* does she mean that a huge lump sum bill won't turn up?

Nope - it doesn't mean that. If major works (repairs or maintenance) need doing, there would be a section 20 consultation, and you might end up with a big bill.


This following stuff sounds like the EA doesn't really understand what she is talking about:

They have confirmed that the annual management charge will be put into a sinking fund moving forward and that a surveyor has been in to see the property but has not filed their report yet and there is no timescale for this. The lady I spoke to explained that they will request the annual interim charge yearly.

I suspect they mean that they will collect a contribution to the sinking fund annually (at the same time that they collect the service charge).

Ogriv wrote: »

* what is an interim charge?

I'd guess she means 'provisional charge' (or 'estimated charge'). i.e. They will collect an estimated service charge at the beginning of the year. If it turns out to be an underestimate or overestimate of what is actually spent, they will make an adjustment at the end of the year.

That is very normal. Almost all management companies work like that.

Ogriv

Thanks Eddddy
So I suppose the only good thing is that they are planning a sinking fund.
I'll wait to see what my conveyancer can discover about imminent costs.
Thanks so much

Mickygg

You have these concerns now, don't buy it. Yes losing money to date is so upsetting but pulling out could save you thousands.
Why is the top floor flat for sale as well? Is not unusual for 2 out of 5 to be for sale but it would make me stop and think.

Ogriv

Thanks Mickeygg
I think if my solicitor can't get some kind of ballpark figure for imminent costs I'll pull out. I do have lots of new property viewings lined up for Saturday. I think in a week I'll have a better idea what I'm doing.
Speaking as a previously naïve potential leaseholder, while you can always be hit with a large bill, certain types of properties make it more likely.

[Deleted User]

Leasehold is always a risk because you can be hit with large bills at anytime and have no control over them, don't believe the gumpf about Leaseholders having legislation to protect them because in reality its a token gesture as all those deciding / ruling have vested interests in Freeholds themselves. They are not transparent.


Yes Freehold properties need maintenance but the big thing is you have absolute control over everything, costs, spec, and when works get done ie when you can afford it.


My advice is pull out, everyone you are speaking to has an interest in you going ahead but you could be jeopardising your whole financial security for life. If you cant afford Freehold then rent until you can.

Ogriv

Thanks BBH123
On Saturday I'm actually seeing a share-of-freehold flat, which is appealing.
I think I'll wait till I have seen it, then decide.
As for houses, it'd take me a couple more years to save enough for one, and I'm afraid the market will pull away from me in that time.
Same old story.
I have definitely taken on board your story of horrendous bills, though.

[Deleted User]

Share of Freehold or Right to Manage is so much better as you have a bit more control over things.


I know I am vehemently against Leaseholds and it may seem OTT but I have seem my neighbour have a nervous breakdown over the treatment he had at the hands of our managing agents / Freeholders, We were in the fortunate position of having the funds but he didn't and nearly and still may lose his home.

Ogriv

Yeah and there was that recent research saying that leasehold issues were people's number one headache.
I must also take my personal circumstances into account: I have no family or partner to ask for a bailout. So I don't think I should take undue risks.

InterestedParty2018

My comments on the EA note:

All she seems to be saying is that there is no sinking fund, and that one will be set up going forward.

The point of a sinking/reserve funds is that over a number of years it (reasonably) slowly builds up to a large sum of money, which can then be offset against a specific planned big project or a general large project.

Whilst starting to collect one is good, it seems a bit late for the work which is required now!

The surveyor has been around, which means the ball has started rolling for a major works project.
Surveyor needs to write a specification, agree project with freeholder, send out to tender.
(Notice of Intention is sent to lessees about the work at the early part of the above, but no figures will be available.)
Once the tenders are obtained and reviewed, this will be presented to the freeholder with a recommendation. (ie which tender to go for and why).
Only at this stage will the Freeholder/Managing Agent have a genuine indication of costs. (Project sum, CDM, Professional fees, admin fees + VAT).

You may be able to get a very crude figure from your own surveyors about what to expect, but this would only be a guide.

Assuming the issue was a new roof, your surveyor could perhaps broadly tell you: " a new roof for this type and size of property is going to cost circa £xxx, plus professional & admin fees & CDM of circa 15%, plus 20% VAT means about £xxx... and your proportion of this cost is x%, therefore be prepared for a bill of circa £X"

deFoix

What’s the point of getting a full structural survey? If the Freeholder wants to levy a heafty service charge he can always find something to claim as a “reasonable” set of maintenance activities (with a nice kickback from the contractors of course). We just had our freehold transferred from out block of 4 flats. We reduced our buildings insurance by two thirds overnight.