Buying Leasehold Flat - Are These Red Flags?

user1977

Mercurial said:

user1977 said:

Mercurial said:

"Presumably that just followed from the accounts/confirmartion statement being overdue? So doesn't really prove much more than they're a bit sloppy with admin."

Maybe, but if they can't be bothered to submit their accounts and confirmation statement on time that would lead to ask what else are they a bit sloppy with?

If you like, but I wouldn't regard it as a "red flag".

Fair enough but they are over 6 months late filing accounts which is a £1,500 fine according to gov.uk website.  No doubt that gets passed onto the leaseholders through service charges.

Have you encountered freeholders who do that? It doesn't sound like something which would be legitimate to charge to leaseholders, so I would very much doubt it. But you can check, rather than guess about it at this stage.

eddddy

Mercurial said:

Fair enough but they are over 6 months late filing accounts which is a £1,500 fine according to gov.uk website.  No doubt that gets passed onto the leaseholders through service charges.  I definitely have an issue with that. 

I doubt that the lease allows the landlord to recover penalties resulting from criminal offences from leaseholders.

It's very sensible to investigate the background of the current freeholder/landlord when buying a leasehold flat, but it probably makes sense to look at the bigger picture.

For example, the freehold company might be 

• A 'one man band' who is very fair and honest - gets repairs and maintenance done quickly at a reasonable cost - but is bad at getting paperwork submitted to Companies House.

Or it might be

• A 'professional' freehold owning company - who buy up cheap freeholds, with the intension of 'ripping-off' leaseholders - but always submit paperwork to Companies  House on time

You should do things like:

• inspect the property
• ask the seller how service charges are dealt with
• ask the seller if they ever have disputes about service charges / repairs / maintenance
• ask the seller about past maintenance and repairs
• look at past service charge demands
• look at past service charge accounts

And bear in mind that the freehold might be sold at anytime to somebody else - who might behave differently (better or worse).

Mercurial said:

Unfortunately,  in two years the ground rent will be over £250 which will mean it will be a Assured Tenancy with no option to buy freehold.

Why is there no option to buy the freehold (through collective enfranchisement)? 

Mercurial

My solicitor has advised once it becomes an Assured Tenancy ( once the ground rent exceeds £250) leaseholders don't get first refusal to buy freehold. 

eddddy

eddddy said:

Why is there no option to buy the freehold (through collective enfranchisement)? 

Mercurial said:

My solicitor has advised once it becomes an Assured Tenancy ( once the ground rent exceeds £250) leaseholders don't get first refusal to buy freehold. 

You've jumped to a misleading conclusion. (In general, it would be easier to reply to your posts if you gave a little more background info in your posts.)

It's correct that...

• Once the ground rent exceeds £250, you are excluded from the statutory 'right of first refusal' if/when the landlord sells the freehold

But it's also correct that...

• You (and the other leaseholder) can buy the freehold using 'collective enfranchisement' - at any time you like (not just if/when the freeholder sells the freehold)

So, in practice, you are probably no worse off.


(You can also informally negotiate with the landlord to buy the freehold at any time.)