Questions about 100% share of freehold

eddddy

pieroabcd said:

Is the freeholder obligated to keep services charges fair and to justify the expenses showing invoices on request?

The law says that you have the right to see invoices, bills etc.

The law also says Service Charges must be 'reasonable' - but doesn't specifically define 'reasonable'.


If you thought a service charge wasn't 'reasonable', and the freeholder wouldn't back down, you can challenge the service charge at a tribunal.


Examples of of things that might result in unreasonable service charges include:

• Paying to get things done that don't need doing
• Paying contractors too much for doing jobs
• Paying for things that aren't stated in the lease

So

• maybe if the communal lawn was mowed 3 times a week - maybe that's unreasonable. Once a week might be reasonable.
• maybe the freeholder  paying a handyman £100 per hour to do minor repairs is unreasonable, if other equally competent handymen in the area only charge £30 per hour
• installing a new water feature in the communal garden and adding it to the service charge is very likely to be unreasonable, because most leases wouldn't allow the freeholder to do that

If neither side would compromise or back down, you might want to go to tribunal. You would present your argument for why a service charge wasn't 'reasonable' and the freeholder would probably present their argument for why it is reasonable. And the tribunal would make a decision.

NameUnavailable

pieroabcd said:

Is the freeholder obligated to keep services charges fair and to justify the expenses showing invoices on request?

In theory yes, as above the law states that charges must be reasonable but unfortunately from my experience it is very difficult and expensive to actually challenge an unreasonable freeholder.

If the freeholder decided they just wanted to make life difficult for everyone and started dishing out section notices for works they wanted to carry out and issue high service charge bills, you can challenge it but you still need to be able to pay any demands in the meantime. Then you need legal advice, you need to pay for expert witnesses, maybe a survey, etc. etc.

Property management companies are there primarily to made a profit as a business, many earn a cut of any work that's carried out.

You want a property to be well maintained, but within reason. As I said above a shared freehold arrangement should at least mean that everyone has a vested interest in keeping work and charges to a sensible level.

eddddy

NameUnavailable said:

If the freeholder decided they just wanted to make life difficult for everyone and started dishing out section notices for works they wanted to carry out and issue high service charge bills, you can challenge it but you still need to be able to pay any demands in the meantime. Then you need legal advice, you need to pay for expert witnesses, maybe a survey, etc. etc.

I'm not disputing that might happen. I'm sure there are some 'nasty' freeholders and managing agents out there.


But again for balance - people can win their case at tribunal by representing themselves, with no expert witnesses, no surveyors etc.

Here's an example where the freeholder...

• did a s20 consultation on repainting windows, doors etc
• charged the leaseholder £822 for their share of the repainting doors/windows and a management fee

But the leaseholder claimed

• The quote was too expensive
• The job was done badly

The tribunal ordered that...

• the leaseholder should be charged only £269 (with no management fee)
• the freeholder must pay their own legal costs - they can't claim their costs through the service charge

Link: https://assets.publishing.service.gov.uk/media/6026bef28fa8f5037b34208a/71_Vanguard_Chase_-_JA.pdf



I'm sure it was hard work for the leaseholder to prepare the case.


But it might be equally hard work for the owner of a freehold house to fight a court case - where a painter was claiming £822 for painting some doors and windows, but the homeowner thinks they've done a bad job.

theoretica

What does happen when the lease on a flat exceeds the lifespan of the block? 

user1977

theoretica said:

What does happen when the lease on a flat exceeds the lifespan of the block? 

In theory, it doesn't, because the lease will anticipate the building being continually maintained/renewed as necessary. But if that stops being economic then I suppose the freeholders and leaseholders could decide to do something else with the building. 

pieroabcd

Why, 20 years after its introduction, hasn't the commonhold ever taken place?
Here https://www.lease-advice.org/advice-guide/commonhold/
it reads that there's no limit to the ownership duration and that  "forfeiture will not apply."

Basically it's how home omwnership works in Europe, with some difference on your percentage of ownership.

eddddy

pieroabcd said:

...and that  "forfeiture will not apply."

Again just to keep things in perspective...  forfeiture very, very rarely happens.

The freeholder would have to take the leaseholder to court, and courts generally 'bend over backwards' in giving leaseholders opportunities to avoid forfeiture. The courts never want to take people's homes away from them.


But maybe it's a good thing, if...

• Your neighbour is running a brothel in their flat, and the freeholder can say to your neighbour "if you don't stop, I'll forfeit your lease"

• Rain is leaking into your flat, but the roof can't be repaired because your neighbour won't pay their share. So the freeholder says to your neighbour "pay-up or I'll forfeit your lease and sell your flat to pay your share of the roof repair".

(But there is a nasty 'loophole' in the law which has emerged. If ground rent is over £1000 pa in London, or £250 pa elsewhere - and you don't pay it, your lease can be forfeited relatively easily.  Parliament has said they intend to close the loophole, but it's not clear when. )

pieroabcd

eddddy said:

pieroabcd said:

...and that  "forfeiture will not apply."

Again just to keep things in perspective...  forfeiture very, very rarely happens.

The freeholder would have to take the leaseholder to court, and courts generally 'bend over backwards' in giving leaseholders opportunities to avoid forfeiture. The courts never want to take people's homes away from them.


But maybe it's a good thing, if...

• Your neighbour is running a brothel in their flat, and the freeholder can say to your neighbour "if you don't stop, I'll forfeit your lease"

• Rain is leaking into your flat, but the roof can't be repaired because your neighbour won't pay their share. So the freeholder says to your neighbour "pay-up or I'll forfeit your lease and sell your flat to pay your share of the roof repair".

(But there is a nasty 'loophole' in the law which has emerged. If ground rent is over £1000 pa in London, or £250 pa elsewhere - and you don't pay it, your lease can be forfeited relatively easily.  Parliament has said they intend to close the loophole, but it's not clear when. )

All things that in the case of a commonhold can be sorted recurring to the justice, as it happens everywhere else.

As for the loophole, wouldn't it be better to use a system where the loophole isn't even possible?