The dreaded "C" word

cc58

Hi Folks,

 looking for a bit of advice. My partner and I bought a house shared ownership on a development in london 6 years ago. We then staircased in 2017 to 100% and as such bought the freehold to the property. There is still a ground rent of £10pm and a service charge of £100pm for the upkeep of the development.

On the development there's about 10 houses and about 200 flats spread over about 5 or 6 blocks. Last year a few residents were struggling to sell their flats as post grenfell a lot of lenders now ask for a certificate to say the flats are cladded in safe materials, anyway after about 18 months we finally got a report saying that the cladding on 3 of the blocks were unsafe and would require changing. After reading horror stories like the below of residents being asked to fork out £100k + to repair the cladding im understandably worried!
https://www.theguardian.com/money/2020/jul/17/leaseholders-billed-up-to-115000-each-to-remove-grenfell-style-cladding


My question is, as we are freeholders now, would we be exempt from any costs incurred for the recladding of the flats? or because we purchased the house originally on a leasehold would we still incur some costs? our Housing associate are dreadful to work with so id rather not ask them as im sure the default position is we will be liable but just looking for some advice at this stage.

thanks in advance

princeofpounds

It depends on the specific terms of your service charge. What does the lease say?

Probably, would be my guess, as the cladding on the flats is as likely to be a communal area owned by the freeholder.

The term you are looking for is 'fleecehold'.

davidmcn

I wouldn't have thought you'll be liable for charges relating to items which are communal parts only of the flats rather than the whole development (should be obvious from your service charge bills what you're being charged for), but you'd need to check the titles to make sure.

AdrianC

princeofpounds said:

The term you are looking for is 'fleecehold'.

No, it isn't. Not unless you want to look melodramatically clueless. "Fleecehold" is usually used to refer to 10yr doubling ground rents, by people who didn't bother reading what they were buying.

OP... You need to look at what your service charge liability is calculated on. Is it just on the common areas of the estate? Or does it include fabric of the blocks, too? You should get annual documentation and accounts sent by the management company.

RelievedSheff

As others have said you need to read the documentation that you signed as part of purchasing this flat and see what it says about the liability for repairs to common areas and the fabric of the building.

No one here can give you any answers because we can not see the terms and conditions that you signed up too.

cc58

Thanks for all the responses, so I wouldn't call it "fleece hold" however one of the reasons I was keen to staircase in the first instance is that our "rent" on the part owned by the H.A was going up 3% every year. The first 2 years it was pretty cheap but by year 3 it was on parr with out mortgage and rising with no end.

The Titles I have in my possession but I think I need a degree in ancient greek to work them out, the part I think is relative is:

Estate Costs
Sixth Schedule;
2. Repairing maintaining inspecting and as necessary reinstating or renewing the service installations forming part of the communal facilities
"communal facilities" means all the communal areas and facilities forming part of the estate which are intended to be used in common by the owners of the dwellings with all others entitled to a similar right and to remain in private ownership and are not intended to be adopted for maintenance at the public expense incliding
a) access ways
b) all service installations forming part of the estate and not exclusively serving any of the dwellings.


now looking at my annual service charge costs we have quite a few lines I pay 0.32% towards, ive attached a picture below, nothing specifically about fabrics of blocks?
 

davidmcn

Nothing in the titles referring specifically to the blocks of flats? The fact you're paying towards lifts, water pumps and internal cleaning (presumably all within the blocks of flats) suggests you probably would also be billed for work to the exterior of the flats.

DoaM

cc58 said:

 looking for a bit of advice. My partner and I bought a house shared ownership on a development in london 6 years ago. We then staircased in 2017 to 100% and as such bought the freehold to the property. There is still a ground rent of £10pm and a service charge of £100pm for the upkeep of the development.

How? The service charge I understand, but how can a freeholder be liable to ground rent? Rent for what - land they already own?

And before anyone says "search for the term fleecehold" ... I have. The results I've found talk about service charges/estate fees, not ground rent.

cc58

There is nothing in the title that refers to the block of flats, there's just "dwelling" and "communal areas" spoken about often, im guessing as we're on a development they're classing all the properties as the same? 
if you have a specific area of the title you think I should look then do let me know but as I said im hard pushed to make a huge amount of sense from the title.

blue_max_3

DoaM said:

cc58 said:

 looking for a bit of advice. My partner and I bought a house shared ownership on a development in london 6 years ago. We then staircased in 2017 to 100% and as such bought the freehold to the property. There is still a ground rent of £10pm and a service charge of £100pm for the upkeep of the development.

How? The service charge I understand, but how can a freeholder be liable to ground rent? Rent for what - land they already own?

And before anyone says "search for the term fleecehold" ... I have. The results I've found talk about service charges/estate fees, not ground rent.

I am considering a shared owner ship property and having read the lease, it appears there is a 'head lease' and then a housing association who sub lease. Or at least that is what it looks like to me. My understanding is that the developer owns the head lease and leases the property to the HA. Who then grant individual leases. 
However, I don't think any flat can be truly freehold. You may be released from certain obligations when you reach 100%, such as conditions about reselling and permissions etc.
But I would say with some certainty, that you would be equally liable for the cladding. If 99 out of 100 were 'freehold', it is unlikely that 1 would be liable for the total cost. It would be cheaper to buy 100% and get excluded.

eidand

blue_max_3 said:

DoaM said:

cc58 said:

 looking for a bit of advice. My partner and I bought a house shared ownership on a development in london 6 years ago. We then staircased in 2017 to 100% and as such bought the freehold to the property. There is still a ground rent of £10pm and a service charge of £100pm for the upkeep of the development.

How? The service charge I understand, but how can a freeholder be liable to ground rent? Rent for what - land they already own?

And before anyone says "search for the term fleecehold" ... I have. The results I've found talk about service charges/estate fees, not ground rent.

I am considering a shared owner ship property and having read the lease, it appears there is a 'head lease' and then a housing association who sub lease. Or at least that is what it looks like to me. My understanding is that the developer owns the head lease and leases the property to the HA. Who then grant individual leases. 
However, I don't think any flat can be truly freehold. You may be released from certain obligations when you reach 100%, such as conditions about reselling and permissions etc.
But I would say with some certainty, that you would be equally liable for the cladding. If 99 out of 100 were 'freehold', it is unlikely that 1 would be liable for the total cost. It would be cheaper to buy 100% and get excluded.

surely things are different if the OP has a house, not a flat.