Buildings Insurance - Freeholder dissolved

psvr87

Hi,

I hoping someone can give me their thoughts on this.

Im in the process of buying a small flat. It's a house converted into 4 flats. I think the conversion was done around 50 years ago as the lease has less than 70 years remaining.

It turns out that the freeholder has dissolved and that currently the owner of the flat I’m buying and an owner of one of the others is in the process of obtaining the freehold. They intend to increase the lease term to 999 years, so that the property is mortgageable.

But my issue is that there has been no management company involved. Because the freeholder has been absent there has been no ground rent or service charge.

So there is no global buildings insurance. The seller has stated that each flat sorts there own insurance out (they are yet to provide any further details on this and in theory we are moving towards completion).

In the past having had flats i know that usually you pay a service charge that contributes to maintenance, but more importantly ensures that the building is correctly insured as a whole every year.

My worry is the insurance will be very difficult to obtain individually and that the cover may not be complete in the sense if one of the other flat leaks into to mine or there is a fire for example, will i be fully covered, especially if other flats turn out to not be properly insured.

Does anyone have any thoughts on my situation and what i should do.

Thanks.

Slithery

Find another property.

AdrianC

psvr87 wrote: »

Im in the process of buying a small flat. It's a house converted into 4 flats. I think the conversion was done around 50 years ago as the lease has less than 70 years remaining.

Are you buying it in the full knowledge of that <70yr lease, mortgage-free?

It turns out that the freeholder has dissolved and that currently the owner of the flat I’m buying and an owner of one of the others is in the process of obtaining the freehold. They intend to increase the lease term to 999 years, so that the property is mortgageable.

If you need a mortgage, then that's going to need to happen before the purchase. I presume that share of freehold will be included with the flat?

But my issue is that there has been no management company involved. Because the freeholder has been absent there has been no ground rent or service charge.

OK, but that's a historical thing. Not ongoing - or, rather, won't be soon.

So there is no global buildings insurance. The seller has stated that each flat sorts there own insurance out (they are yet to provide any further details on this and in theory we are moving towards completion).

And once the freeholder changes, it'll be the new freeholder's responsibility.

If you're buying the flat for a short-lease discounted value, mortgage-free, then it's not going to be an issue for long, as soon as the freehold changes.
If you're buying after the freehold changes and the lease is extended, then it's not your problem at all.


There's a myriad of circumstances where the freeholder's building insurance wouldn't cover you for a fire or plumbing leak, anyway.

eddddy

psvr87 wrote: »

It turns out that the freeholder has dissolved and that currently the owner of the flat I’m buying and an owner of one of the others is in the process of obtaining the freehold. They intend to increase the lease term to 999 years, so that the property is mortgageable.

So are you buying on the basis that the freehold will have new owners, and it will have 999 year lease (before you complete)?

If so, presumably those new freeholders will arrange building insurance (if that's what the lease says) - and so the problem will be solved.

Is the deal that you are also buying a share of the freehold, as well as the leasehold flat?

psvr87

Im buying on the basis the lease will be extended.

No share of the freehold is included.

Doozergirl

If you buy it with the extended lease then all of the existing problems will have gone away.

There will be a freeholder, insurance can be organised by the freeholder, the lease can be extended, a service charge can be set etc.

It's an issue now, but it won't be going forward from the point you purchase with good title.