Maisonette fully repairing and insuring lease

Mintygardener

I'm in the process of buying a ground floor maisonette with 999 lease, but is also a Fully Repairing and Insuring lease with the responsibilities for maintenance and repairs solely split between the leaseholders. I've been able to have a discussion with the upstairs owner who rents their property out. They seem reasonably receptive to the idea of future works (obviously time will only tell). The survey picked up extensive work required including replacing the roof, gutter etc. I've got costings now and looking at around £15k each. The work isn't urgent but would need doing in the coming years. The vendor has offered a small price reduction. 

This legal aspect of FRI lease and reliance on the other leaseholder is the only issue with the property. Its in a great location, very popular area, close to outstanding schools, requires no work inside and has great garden and separate front door. If it's relevant I need to move soon due to personal circumstances so all the ducks are lined up well.

So, is this one to proceed with or chuck it back due to the potential headaches of not being able to agree future repairs? My solicitor has warned me that when selling this may be a barrier again. Are FRI leases not to be touched with a barge pole?

Thanks for reading. Sorry long post! 

anselld

FRI leases are common in commercial properties but unusual in residential.  The first question is if it is mortgageable on normal terms?  Even if you are a cash buyer it will restrict the ability to sell if it is difficult to mortgage.  As you say the other issue is getting repairs done and it perhaps does not bode will if the survey indicates that there are already significant repairs outstanding.

Mintygardener

Yes good point about the mortgage. My solicitor is waiting for a response. In a way, if they now refuse, I guess I'll have my answer. And yes my worry is selling it in the future. 

The property upstairs has had the same owner for 20 years. The vendor of property I'm buying bought it off his family (presumably been in the family for god knows how long). That's a slight red flag to me too. 

eddddy

Maisonettes often have 'unusual' leases.

More often the upstairs leaseholder is responsible for insuring and maintaining the upstairs part of the building and the roof - and the downstairs leaseholder is responsible for insuring and maintaining the downstairs part of the building and the foundations.

But it sounds like you're saying your lease makes you jointly responsible for the whole building.

In many ways, your lease arrangement is similar to a 'Right to Manage' arrangement or 'Shared Freehold' arrangement, which give leaseholders control over insurance, maintenance, repairs etc.  Many people think those are good arrangements, and prefer them to having a 3rd party freeholder controlling those things.

Obviously, the challenge is if your neighbour is unreasonable, uncooperative etc. Even if your current neighbour is OK, they may sell, and your new neighbour might be less OK.

user1977

eddddy said:

In many ways, your lease arrangement is similar to a 'Right to Manage' arrangement or 'Shared Freehold' arrangement, which give leaseholders control over insurance, maintenance, repairs etc.

Or every flat in Scotland (where there's no separate freehold interest).

Mintygardener

My solicitor has responded to say that the lender has given this the green light. The caveat is the sellers solicitors provide the upstairs owners contingent building insurance policy.

I've weighed up the pros and cons and whilst there are many pros, the main con is around this legal aspect.

Oh so stressful! 

eddddy

Mintygardener said:

My solicitor has responded to say that the lender has given this the green light. The caveat is the sellers solicitors provide the upstairs owners contingent building insurance policy.

In that case.. are you sure you've understood the lease correctly?

If you need contingent building insurance...

• That suggests the upstairs leaseholders are responsible for insuring the upstairs part of the house (and roof)

• And that suggests the upstairs leaseholders are responsible for maintaining and repairing the upstairs part of the house (and roof)

• And that suggests you don't have to contribute £15k towards roof repairs. The upstairs leaseholder is responsible for the full £30k

If the above isn't correct, why is your solicitor saying that you need contingent building insurance?