No service charge, maintenance on as and when basis

SR24

Hi. If a leasehold property has ground rent but no service charge, and the maintenance is deemed payable on an as and when basis decided by the freeholder, with the cost being split between leaseholders, this sounds more precarious than what I would expect in terms of service charges, managed maintenance and hopefully a sink fund.

Am I missing something please? 

eddddy

It works ok for lots of properties.

It reduces the amount of admin involved in managing the property, which means you don't have to pay for that admin through the service charge.

The important question is whether the freeholder does a good job of repairs and maintenance, and whether leaseholder's have a good record of paying promptly.

For example, if a leaseholder reports a leaking roof, does the freeholder act swiftly to get quotes, and do the other leaseholders pay their share quickly - so that the roof can be quickly repaired?

I guess there's also the question of how emergency repairs are handled - e.g. if the communal front door falls off its hinges and is insecure. Will the freeholder pay for repairs and reclaim, or insist that the leaseholders pay first - resulting in the property being insure in the meantime?



Sinking funds have their pros and cons. Unless the sinking fund is managed by a competent professional management company (with indemnity insurance etc) I think I'd prefer not to have one.

SR24

@edddy Thank you, great information to consider. I appreciate your advice and points of importance.

Mildreds_Earrings

We used to live in a leasehold apartment with two other leaseholders. Whenever there was a repair that affected the building, we would each provide 2-3 quotes and then choose the contractor to carry out the work, then split the invoice three ways. We chose the Gardener and would split the grounds maintenance and communal lighting charge three ways.

It CAN work but only if the leaseholders in the building are responsible and willing to pay when repairs are needed. You might want to look into what happens when a leaseholder can't or won't pay. Make sure your Solicitor goes through each clause of the lease with you thoroughly BEFORE you purchase the property. All the best. 

user1977

It is the money-saving option, after all - better to look after your own "rainy day" fund than pay into somebody else's bank account which you might never get any benefit from.

For some perspective (and I know there are other differences), this is the norm for flats in Scotland, at least as far as any significant costs are concerned, and people don't run screaming away from it. The risk is of course that not everybody else can (or will) pay up immediately when money is needed.