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  • FIRST POST
    • fussyhumanbeing1
    • By fussyhumanbeing1 17th Apr 18, 9:37 AM
    • 4Posts
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    fussyhumanbeing1
    How to Split GR/Building Insurance
    • #1
    • 17th Apr 18, 9:37 AM
    How to Split GR/Building Insurance 17th Apr 18 at 9:37 AM
    Hi,

    I'm currently working with a vendor/freeholder to finalise the terms of my lease for a property that has been recently converted (freehold house converted into three leasehold flats by a developer).

    1) It has come to my attention that the Ground Rent is the same for all flats (400 pa), even though my flat is 150k-175k lower in value than the other two flats (as it is smaller), which are valued near 600k. Is this fair? And do I have an argument to get the freeholder/seller to reduce this?

    2) Building insurance is apparently a separate payment to be paid, outside of the service charge. How should this be fairly distributed between the three flats? Surely it should be aportioned based on floor area/flatvalue and not just divided by three?
Page 1
    • eddddy
    • By eddddy 17th Apr 18, 9:47 AM
    • 6,336 Posts
    • 6,193 Thanks
    eddddy
    • #2
    • 17th Apr 18, 9:47 AM
    • #2
    • 17th Apr 18, 9:47 AM
    1) It has come to my attention that the Ground Rent is the same for all flats (400 pa), even though my flat is 150k-175k lower in value than the other two flats (as it is smaller), which are valued near 600k. Is this fair? And do I have an argument to get the freeholder/seller to reduce this?
    Originally posted by fussyhumanbeing1
    You can propose it - but there's nothing you can do to make the freeholder do it.

    FWIW, different size flats in the same block often have the same ground rent.

    2) Building insurance is apparently a separate payment to be paid, outside of the service charge. How should this be fairly distributed between the three flats? Surely it should be aportioned based on floor area/flatvalue and not just divided by three?
    Originally posted by fussyhumanbeing1
    There are different 'models' for apportioning the management fee, repair/maintenance costs, insurance....

    for example:

    - It could be a 3 way split on everything

    - Each flat could pay a percentage, based on size of the flat

    - Each flat could pay a percentage of maintenance/ repair /insurance costs based on size of flat, with the management fee split evenly 3 ways


    Essentially, it's whatever the freeholder chooses.
    • davidmcn
    • By davidmcn 17th Apr 18, 9:52 AM
    • 7,665 Posts
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    davidmcn
    • #3
    • 17th Apr 18, 9:52 AM
    • #3
    • 17th Apr 18, 9:52 AM
    It's pretty commonplace for everything to be split equally among flats, irrespective of their relative size/value.
    • shortcrust
    • By shortcrust 17th Apr 18, 11:15 AM
    • 1,905 Posts
    • 2,793 Thanks
    shortcrust
    • #4
    • 17th Apr 18, 11:15 AM
    • #4
    • 17th Apr 18, 11:15 AM
    I think it's a non starter. You'd be asking the freeholder to take the time and trouble to change something that's going to really upset the majority of the leaseholders. I know what my response would be, especially as the current arrangement is fairly standard.
    • Tom99
    • By Tom99 18th Apr 18, 4:23 AM
    • 2,070 Posts
    • 1,393 Thanks
    Tom99
    • #5
    • 18th Apr 18, 4:23 AM
    • #5
    • 18th Apr 18, 4:23 AM
    This will be your one and only chance to negotiate a lower rent but more importantly service charge %age. If your flat is the smallest but your SC %age the same as larger flats that may put off future buyers even more so than the 400 ground rent.
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