Buying a flat whose freeholder is a housing association

xiaq

I've found a pretty nice flat and am considering to make an offer, but I noticed that the freeholder is a housing association. I looked it up on Google and they seem to have a lot of negative press and a lot of tenants complaining about terrible service on their Google Maps listing.

I've since found out that virtually all housing associations in the UK have a lot of negative reviews on their Google Maps listings, so it probably doesn't say much about this particular association.

Still, is the fact that the flat's freeholder is a housing association something to consider? I was told that they also have a lower service charge compared to similar properties, is that a red flag that the building might be poorly managed?

NameUnavailable

Is it an ex local authority property? A lot of councils transferred their housing stock to HA's.

I think the only consideration would be how many of the other flats are owner occupied v's HA tenants. Does it look well maintained and does it look like neighbours are generally tidy/considerate?

xiaq

NameUnavailable said:

Is it an ex local authority property? A lot of councils transferred their housing stock to HA's. 

I think the only consideration would be how many of the other flats are owner occupied v's HA tenants. Does it look well maintained and does it look like neighbours are generally tidy/considerate?

Re ex council: doesn't look like it, but I did notice that the walkway (sorry, not sure if this is the correct 

UK term) for accessing the flat was exterior instead of interior (which is typical of council properties) but really nothing else says "council property".
The building itself also looks fine, and I didn't notice anything messy outside other units. I only spend a short while in the building though.
I suspect that the flats in the building might all be sold privately with no HA tenants, because this particular HA has a subsidiary that does private sales. I don't know how to check that though.

The doubt I really have is whether HAs tend to make bad freeholders compared to others, but from what you said it sounds like a negligible concern? The fact that they have lower-than-usual service charge does raise some suspicion though.

NameUnavailable

xiaq said:

NameUnavailable said:

Is it an ex local authority property? A lot of councils transferred their housing stock to HA's. 

I think the only consideration would be how many of the other flats are owner occupied v's HA tenants. Does it look well maintained and does it look like neighbours are generally tidy/considerate?

Re ex council: doesn't look like it, but I did notice that the walkway (sorry, not sure if this is the correct 

UK term) for accessing the flat was exterior instead of interior (which is typical of council properties) but really nothing else says "council property".
The building itself also looks fine, and I didn't notice anything messy outside other units. I only spend a short while in the building though.
I suspect that the flats in the building might all be sold privately with no HA tenants, because this particular HA has a subsidiary that does private sales. I don't know how to check that though.

The doubt I really have is whether HAs tend to make bad freeholders compared to others, but from what you said it sounds like a negligible concern? The fact that they have lower-than-usual service charge does raise some suspicion though.

No, it just means they're not out to make a profit from leaseholders, HA's are non profit organisations, management companies are there as businesses purely to make profit from charging leaseholders for their services and commissions on works carried out.

davidmcn

NameUnavailable said:

xiaq said:

NameUnavailable said:

Is it an ex local authority property? A lot of councils transferred their housing stock to HA's. 

I think the only consideration would be how many of the other flats are owner occupied v's HA tenants. Does it look well maintained and does it look like neighbours are generally tidy/considerate?

Re ex council: doesn't look like it, but I did notice that the walkway (sorry, not sure if this is the correct 

UK term) for accessing the flat was exterior instead of interior (which is typical of council properties) but really nothing else says "council property".
The building itself also looks fine, and I didn't notice anything messy outside other units. I only spend a short while in the building though.
I suspect that the flats in the building might all be sold privately with no HA tenants, because this particular HA has a subsidiary that does private sales. I don't know how to check that though.

The doubt I really have is whether HAs tend to make bad freeholders compared to others, but from what you said it sounds like a negligible concern? The fact that they have lower-than-usual service charge does raise some suspicion though.

No, it just means they're not out to make a profit from leaseholders, HA's are non profit organisations, management companies are there as businesses purely to make profit from charging leaseholders for their services and commissions on works carried out.

Could also mean that (as is common with local authorities) they're not charging for a sinking fund (because there isn't one) - which means everyone will be expected to come up with funds for works whenever they arise, rather than dipping into the sinking fund. Not necessarily a problem if you can manage your own "rainy day" fund but there's the risk that not everybody else does.

HampshireH

I don't think anyone can tell you whether it's good or bad.

Personally I'd say good. You know who they are. You always have correct contact details and quite possible a consistent point of contact.

They will have a maintenance team or contractor set up and should be fully aware of the legal s.20 process.

There is no personal relationship / friendship which could cause a conflict later down the line if one parties disagrees with something.

Quite often HAs allowed repayment plans.

Very common to run into a least one of the above as an issue if the freeholder was say another resident or absent freeholder.

princeofpounds

The main problem that upsets people about HA freeholders is that the private leaseholder has very little influence about how the freehold is run. In some ways, that's not so different to any third party private sector freeholder, but the HA is probably a bit less anonymous than some letterbox company owner and a managing agent. 

There was a particular issue that caused a wave of complaints. There was a huge upgrade program of social housing in the last decade or two - things like installing double glazing, cladding, renewing lifts etc. I forget the name of it. These major works meant a lot of people who had bought ex-social housing were presented with large and unexpected bills by the HA freeholders. There often wasn't much of an attempt to forewarn, explain, or demonstrate value for money, because the HAs knew they would push the work through, fund it for all the social tenants, and get their favoured contractors to do the work. And yes, in many cases they didn't have sufficient sinking funds built up to smooth the impact, as the HA itself had no need to do that.

Perhaps there was some validity to the complaints, but I think a lot of people who bought these flats didn't really know this could happen in this way.

Then the other more general perception problem is that the private owners will see the HA coming and going, doing various types of even minor repair for social tenants, and yet sometimes neglecting larger freehold issues that affect everyone.

I'd be ok buying an HA freehold property as long as there weren't impending major works.

leonj

I think its a positive to have a housing association as the landlord or whatever, they keep the service charges really low and don't rip you off like private companies would.

xiaq

Thanks for everyone who has replied! I'm much better informed now.

One thing I'm still unsure about is - do HAs provide subpar services (I'm most concerned about repairs in the building) compared to other freeholders? I've read a lot of bad reviews about the HA not repairing properties for HA tenants in time, does that mean, say, they may also not repair a bad lift or leaking main pipe in the flat I'm buying in time? I know these are not exactly the same thing, but reading those bad reviews just left me with an impression that HAs are poorly run organizations in general.

princeofpounds

xiaq said:

 I know these are not exactly the same thing, but reading those bad reviews just left me with an impression that HAs are poorly run organizations in general.

I think they tend to be much like any other public sector service that doesn't have to rely on you as a customer - somewhat sluggish and indifferent.

However, private sector freeholders (and in particular, the agents who work for them) can be very variable in their quality - it's not like you can vote with your wallet the way you can with e.g. McDonalds or Tesco. Indeed the ultimate 'beneficiaries' of their services - the leaseholders who live in the building - are not the ones who get to appoint them, most of the time. Excluding when they exercise a right-to-manage or collective enfranchisement, which are routes that will probably not be available to you in an HA situation. That sets up a classic agent-principal problem that sometimes leads to subpar service.

So I don't think it's clear-cut who is better or worse on average. The best private sector freeholders will be better, but the worse will be worse. 

Just be aware that there is a difference between an HA organising services for their tenants and organising services as freeholders.

davidmcn

Also bear in mind housing associations vary hugely in size - some are tiny, others took over the whole of a council's housing stock, so I don't think you can generalise too much.