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It seems like you have all the necessary bases covered/answered.
In summary, obtain a likely cost to bring the property to a decent/reasonable standard.(Necessary repairs AND routine preventative maintenance stated in the lease.) Please remember to add likely professional and administration fees and then VAT to get an even more realistic figure.
Broadly speaking this is what the lesees will be expected to pay. If you cant negotiate this into the sale price and/or pay for it from your own savings, then it may be an option to not proceed as it is unlikely you will be able to fulfil your lease obligations.0 -
InterestedParty2018 wrote: »It seems like you have all the necessary bases covered/answered.
In summary, obtain a likely cost to bring the property to a decent/reasonable standard.(Necessary repairs AND routine preventative maintenance stated in the lease.) Please remember to add likely professional and administration fees and then VAT to get an even more realistic figure.
Broadly speaking this is what the lesees will be expected to pay. If you cant negotiate this into the sale price and/or pay for it from your own savings, then it may be an option to not proceed as it is unlikely you will be able to fulfil your lease obligations.
Thanks - I am so grateful to you and others on this board. I don't personally have anyone in real life I can get such advice from, although my conveyancers are great and have won several awards. I'm actually going to use some of the text here to instruct my conveyancer regarding what to find out. :money:0 -
The building needs whatever work the building needs, and that's got to be paid for by the leaseholders.
Is this not a prime example of everything that's wrong with leasehold and why they should be made illegal?
I fully appreciate that in a building of flats that everyone has to contribute to the repairs - no arguments there. But when the freeholder is allowed to collect ground rent/service charges etc etc, and yet escapes a massive bill by dumping it on the leaseholders is quite obviously unfair.
In a logical world, i would say these costs should fall to the freeholder and then they have to adjust their annual service charges accordingly to build up a "sinking fund".
Playing devils advocate here, what would happen to the leasehold flats if none of the owners could pool together enough to pay for a major repair? - does ownership then fall to the freeholder?
Obviously none of the above really applies when the owners also have a share of the freehold. But it seems as in the OP's case that a 3rd party owns the freehold.0 -
Well in my (the OP's) case the freeholder has just recently changed - an older couple auctioned it off to a company. The lack of sinking fund appears to be because there is not provision for one in the lease - so presumably they are not statutory. And apparently with the service charge, the old freeholder had absolutely no record of how it had been spent. The fact that that can happen is yet another reason to reform/abolish leasehold, I think.
In a logical world, i would say these costs should fall to the freeholder and then they have to adjust their annual service charges accordingly to build up a "sinking fund".0 -
The lack of sinking fund appears to be because there is not provision for one in the lease - so presumably they are not statutory.
A sinking fund is only really a savings account that all the leaseholders pay into. You can have open own personal savings account, if you want - and call it your personal sinking fund.
Where sinking funds exist, some people are equally unhappy that their cash is tied up in a sinking fund - and they 'lose it' when they sell their flat.And apparently with the service charge, the old freeholder had absolutely no record of how it had been spent. The fact that that can happen is yet another reason to reform/abolish leasehold, I think.
If it happened that way, then every single leaseholder and the freeholder must have agreed that they wanted it to happen that way.
If even just one leaseholder had objected to things being done that way, then the freeholder would have had to keep proper accounts.
Leaseholders have a huge amount of legislation to protect their rights over stuff like this.0 -
A sinking fund is only really a savings account that all the leaseholders pay into. You can have open own personal savings account, if you want - and call it your personal sinking fund.
Where sinking funds exist, some people are equally unhappy that their cash is tied up in a sinking fund - and they 'lose it' when they sell their flat.
If it happened that way, then every single leaseholder and the freeholder must have agreed that they wanted it to happen that way.
If even just one leaseholder had objected to things being done that way, then the freeholder would have had to keep proper accounts.
Leaseholders have a huge amount of legislation to protect their rights over stuff like this.
I'd be happy to set up a personal sinking fund - but I'm not prepared to pay an enormous bill the moment I move in. I just know I'm potentially walking into a financially unsavoury situation - so although I'm checking out the likely Section 20 costs, I'll probably walk away. And all the most vital information has only been revealed to me just before exchange. Sounds like the leaseholders in the property have been very passive.0 -
I'd be happy to set up a personal sinking fund - but I'm not prepared to pay an enormous bill the moment I move in.
Yep - so you're right not to buy this flat because it's in a building that needs urgent major repairs.
You would have the same issue if you bought a freehold house that needed urgent major repairs. You would have to pay an enormous bill shortly after you move in.
(None of that is really the fault of the leasehold system.)0 -
Yep - so you're right not to buy this flat because it's in a building that needs urgent major repairs.
You would have the same issue if you bought a freehold house that needed urgent major repairs. You would have to pay an enormous bill shortly after you move in.
(None of that is really the fault of the leasehold system.)
I find it frustrating that my surveyor wouldn't give me a full structural survey because I was buying a flat. How is any flat purchaser in that situation able to make a good decision about the building overall?
And yes, finding out about the Section 20 just before exchange is the fault of the conveyancing system. It's to the benefit of conveyancers, as most people would back out about a week after their offer if such information was available immediately. But instead you go through the whole process, racking up costs. It feels like a scam all round.0 -
Hi guys
I'm the OP and today I heard from the estate agent, who is of course working for the seller.
This is what she wrote in her email (with key details anonymised):
"I have had quite a long chat with XXXXXXXX management company about XXXXXXX Road.
They have confirmed that the annual management charge will be put into a sinking fund moving forward and that a surveyor has been in to see the property but has not filed their report yet and there is no timescale for this. The lady I spoke to explained that they will request the annual interim charge yearly. As well as this, after the 25th December (year end) an invoice would be sent out to each resident with a bill for works taking place. If this figure is in excess of £250 per lessee per annum, they will have to resurvey and look to amend the interim annual charge.
They are implementing new software over the next few months in order to create the sinking fund and allow for this moving forward as they have no information from the previous freeholder as they purchased the freehold at auction.
Mr XXXXXX is concerned as he knows that you want to be in sooner rather than later and is doing everything he can to try and secure a timescale but to no avail.
Please can you confirm how you would like to proceed?"
To me it looks like she's saying that the new freeholder is about to create a sinking fund.
There's no info on the scope or estimates of the work, and no timescale for that information.
An interim charge (does she mean the sinking fund?) will be requested annually.
At year end an invoice will come for works, but if it were more than £250 per lessee per annum they would re-survey and get the money from the interim charge.
So I have some questions for you clever people:
* does she mean that a huge lump sum bill won't turn up?
* what is an interim charge?
My solicitor is still waiting to get more info on all this from the buyer's solicitor, so I hope to make decisions based on more than the word of an EA.
But I am wondering how to interpret what I have heard so far.
(I am viewing some new properties on Saturday, but have not yet decided what to do about the current one.)
Many thanks!0
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