FTB Leasehold - to buy or not to buy?

A_piece_of_cake

Hi folks, I’d love some opinions on my scenario!

I’m a FTB in the process of purchasing a leasehold (101 yrs remaining) conversion flat (2 contained units in a house), where the freeholder lives in one of the units. The ground rent is £100 p/a and there is no annual service charge. Instead, the leaseholder & freeholder split the buildings insurance 50/50, and would also split any costs of any works / maintenance/ decoration etc 50/50. For example the roof had work done a few years ago and they split the final invoice, and the exterior brickwork needs some minor works done and is due to happen in the summer, so I will have to pay half of that cost. 

Our solicitor has flagged what he thinks are the key issues:

1. Splitting everything 50/50 with the freeholder
2. He has been unable to find any documentation relating to the original conversion of the house into two flats. The original lease title is dated in 1981. The surveyor questioned whether modern fire safety regulations have been met (contained interior staircase to the maisonette, mainly).
3. The somewhat short lease remaining.
4. The seller of the flat seems unable to provide evidence of any gas safety checks since 2019, and are not agreeable to having the system checked over prior to completion (I am aware it is not a legal requirement to prove maintenance, but you would think it could be provided if they had been doing it, and might we be inheriting a costly boiler issue?)

Does anyone with more experience see red flags here, and if so, would you mind explaining why? Or, I'd be grateful for suggestions on what I should query further?

anselld

1.  The things which are shared responsibility will be specified in the lease so things cannot be added willynilly.  There doesn't seem any reason for things to be anything other than 50:50.  

2.  You either do further investigation of the construction or accept the risk.  Is there an alternative exit if the stairs are on fire?
3.  This will shortly become cheaper and easier to remedy when the Leasehold reform bill takes effect.
4.  Speak to the agent.  Tell them you need access to test the boiler otherwise any reduced offer you make will have to assume that it is not functional.

Jemma01

You can ask the seller to certify the conversion, this will come up for every buyer. Same goes to checking the gas appliances.

Don't know much about leaseholds. Who decides what needs fixing and what is nice to fix? Who decides how much they charge for ground rent? Can they introduce a service charge after the fact?

bouicca21

How long is the lease?  What does it say about the decision making process for repairs?  What happens if the two of you disagree about what is needed?

Of course it doesn’t meet modern safety standards.  How would anyone in 1981   have been able to predict what would be required in 2024?

eddddy

A_piece_of_cake said:

1. Splitting everything 50/50 with the freeholder

As a leaseholder, you would have 2 broad options:

Option 1

Insist that the freeholder follows the lease and the law - to the letter:

• Only pay for things the lease says you have to pay for

• Insist that the freeholder does section 20 consultations whenever he wants you to contribute more than £250

• Insist that the freeholder issues valid service charge demands, and keeps proper service charge accounts

• Potentially take the freeholder to tribunal, if you think a service charge demand is unreasonable

Option 2

Agree everything informally with the freeholder. For example...

• The freeholder says "The insurance renewal bill has come through for £850, can you transfer £425 to my account please?". And you say "OK".

• The freeholder says "The roof is leaking. My mate Pete says he'll fix it for £600. If you agree, can you transfer £300 to my account?. And you say "OK"

If you want, you could refuse to follow Option 2, and insist that the freeholder follows the formal processes in Option 1.

The downside might be that your neighbour is annoyed that you're making their life more difficult. And they might end up hiring an agent to do the extra work - and you'd probably have to pay 50% of the agent's fee.

user1977

A_piece_of_cake said:

He has been unable to find any documentation relating to the original conversion of the house into two flats. The original lease title is dated in 1981. The surveyor questioned whether modern fire safety regulations have been met (contained interior staircase to the maisonette, mainly).

Older buildings/conversions only need to be built to the standards of the time, they don't get upgraded every time the regulations change. I live in an 1880s house which was converted in the 1980s - no doubt I could make a vast list of ways in which it doesn't meet current regulations! If you want 2020s building standards, you need to buy a newbuild.

The lease won't have started any earlier than the date of conversion, and while it might be interesting, you shouldn't expect to see paperwork for works done 40+ years ago.

Albermarle

1. The seller of the flat seems unable to provide evidence of any gas safety checks since 2019, and are not agreeable to having the system checked over prior to completion (I am aware it is not a legal requirement to prove maintenance, but you would think it could be provided if they had been doing it, and might we be inheriting a costly boiler issue?)

We can see from many threads on here ( and experience with my own family) that FTB's often focus too much on gas boiler issues that solicitors and surveyors often raise.

An official gas safety check and boiler servicing/maintenance are two separate issues. Your average homeowner would not have the former done on any kind of regular basis, if at all. Although it might get done unofficially, if for example a new gas appliance was fitted.
Some homeowners will have the boiler serviced yearly, some at longer intervals, some not at all.
Although regular servicing is a good idea, it does not in any way guarantee that the boiler will not break down.
In reality probably what you really want to know is if the heating is actually working, and how old the boiler is.

Brie

One problem I'd worry about with the boiler is who controls the settings on it?  What if the freeholder wants it tropical mid winter or like an icebox?  Is it shared electric heating too?  I'd want my own controls over my heat and electric so I could heat or not and pick my own tariff.

eddddy

Brie said:

One problem I'd worry about with the boiler is who controls the settings on it?  What if the freeholder wants it tropical mid winter or like an icebox?  Is it shared electric heating too?  I'd want my own controls over my heat and electric so I could heat or not and pick my own tariff.

I don't think there's any suggestion that the 2 flats share the same heating system (or share an electricity supply or share a gas supply).


When the OP says "Splitting everything 50/50 with the freeholder", I imagine they mean the normal service charges that you have with almost all leasehold flats. (i.e. insurance, maintenance, repairs, communal area electricity, etc.)

Royoftherovers2024

I personally would never buy leasehold again.

The ground rent can be increased year on year.
If you sell up in 10-15 years you'll need that lease renewal and at what cost.
No control on invoice totals for any work needed in future. 
No informal arrangements should be in place, everything needs to be agreed in writing before purchase.
Who decides what needs replacing.
Can you have access to quotes and question those quotes.

I was pleased to sell my leasehold property, costs were spiralling compared to when I purchased it. No transparency on invoices/quotes. Lease was fortunes to extend and when I sold it I had to jump through hoops and extra cost to sell due to leaseholder pack. Really would not recommend.

dimbo61

As a Landlord I have to get a Gas Safe Certificate done every year on our rental.
As a owner occupier I have Never had a GSC done on my own home !
Did you look at the boiler ? Have you got a photo of the boiler or know the make and model ? How old it is ?
There is a Huge difference between being a leaseholder in a large block of flats with a management company and service charges for lifts, garden maintence, fire safety etc and owning half a house with the freeholder living in the building.
Did you meet the freeholder  and speak to them.
In many big cities you can't afford to buy a freehold house and end up being a leaseholder of a flat or house conversion