Maisonettes and lack of a Management Company
Discussion
A question for the property bods please.
My nephew is selling his maisonette. 4 dwellings in a block, several identical blocks around his estate.
Each dwelling has it own separate front door and there are no common areas. Ground rent is paid to a firm of solicitors in London I believe.
The mortgage company of his purchasers are adamant there must be a management company in charge of the estate and are dragging their heels.
There is no management company, there never has been and there never will be. His solicitor is hopeless.
Has there been a change of legislation to require this? I see the situation the same as if you lived in a row of terraced houses. Each occupier has their own insurance (or not!) and in the event of a fire, or other catastrophic loss, your own insurer will pay out and then argue the toss with the negligent party.
Any ideas on a way forward please?
My nephew is selling his maisonette. 4 dwellings in a block, several identical blocks around his estate.
Each dwelling has it own separate front door and there are no common areas. Ground rent is paid to a firm of solicitors in London I believe.
The mortgage company of his purchasers are adamant there must be a management company in charge of the estate and are dragging their heels.
There is no management company, there never has been and there never will be. His solicitor is hopeless.
Has there been a change of legislation to require this? I see the situation the same as if you lived in a row of terraced houses. Each occupier has their own insurance (or not!) and in the event of a fire, or other catastrophic loss, your own insurer will pay out and then argue the toss with the negligent party.
Any ideas on a way forward please?
Does he hold the maisonette on a Freehold or Leasehold basis.
If the former, then that would be the equivalent of owning your own house independently. However, if the latter, then by definition, there will be an overall owner of the block, who would usually be responsible for insuring the whole block, as well as maintenance and repairs to the block, the costs of which are recovered from the Leaseholders via a service charge.
Thus, the ownership status should help to determine what the way forward ought to be.
If the former, then that would be the equivalent of owning your own house independently. However, if the latter, then by definition, there will be an overall owner of the block, who would usually be responsible for insuring the whole block, as well as maintenance and repairs to the block, the costs of which are recovered from the Leaseholders via a service charge.
Thus, the ownership status should help to determine what the way forward ought to be.
northwest monkey said:
One of our rentals is in a maisonette exactly as you describe & we have no management company. Never bothered anyone when we bought it. Seems like the mortgage company is being a bit excitable.
It's a relevant question because someone has to be responsible for the maintenance and insurance of the block.Mandat said:
northwest monkey said:
One of our rentals is in a maisonette exactly as you describe & we have no management company. Never bothered anyone when we bought it. Seems like the mortgage company is being a bit excitable.
It's a relevant question because someone has to be responsible for the maintenance and insurance of the block.Insurance is the responsibility for each leaseholder.
northwest monkey said:
My lease says that we're all responsible for the maintenance & upkeep of communal areas (paths/fences etc)with the upstairs flats being responsible for the roof & gutters.
Insurance is the responsibility for each leaseholder.
That's exactly the same as the lease on my nephew's place. Seems to have worked OK since the late 60s when they were builtInsurance is the responsibility for each leaseholder.
Seems there is a default assumption that "something must be done"
Properties like this can be a real nightmare when something goes wrong and someone isnt insured properly. Some lenders will be weary of such property because of the risk if repairs needs to be done after a fire etc. Mortgage lenders generally like to see buildings insured communally.
spaximus said:
So if the responsibility for the roof and gutters is the top floor, what happens if they don't do anything to keep it water tight and in good repair?
Genuinely interested.
Luckily, the situation has never arisen where something major needs sorting. We've had blocked gutters/downpipe come loose & a quick word to the agent of the upstairs flats has got it sorted.Genuinely interested.
As it's in the terms of the lease, I would imagine if it was something major, the freeholder would have to force the issue with the leaseholder.
55palfers said:
Same as in a terraced property I guess where a defective roof next door could allow water ingress to your property, particularly in the area around chimneys.
Not sure that's the same when one property is on top of anotherI think the ground rent issue raised earlier is more important?
used to work as a solicitor and also managing agent for blocks of flats for my sins.
If your Nephew has a leasehold - a charge will be required from each flat each year/month. This is to pay for the communal maintenance and insurance ie the structure of the building/roof/car park/ etc
Who insures the building? Who maintains the roof? etc Did your nephew buy the flat using a solicitor?
I would doubt Nephew can insure the building on a leasehold yourself as you are not the owner of that building. The freeholder is the owner and thus is the one to insure the building and to arrange maintenance or they appoint a managing agent to do that on their behelf.
You said he pays ground rent that's most likely to the freeholder. Thus it sounds like the freehold has not been purchased by the leaseholders.
It may be the freeholder has not insured the building or build up any maintenance fund. The maintenance is a bit of a red herring as it gets passed down to each flat anyway but the insurance is vital to find out about.
Have a read of the lease that will say who should be paying maintenance. who will insure.
If no one has been insuring the building/maintenance then your Nephew will have a flat that will be very difficult to sell.
Its not like a terraced row of houses as they are more likely to be freehold. Freehold you own the property/land. Leasehold you own a "lease" to live in the property for 99yrs or 999 yrs or whatever but you don't own the land or building. There are lots of laws about the right to buy if you are a leaseholder and want to buy the freehold but doesn't sound applicable here.
We took on one block of new flats and the new owners/leaseholders hadn't a clue the maintenance fee they were told by the builders was so low that it didn't even cover the insurance cost ! let alone managing agents fees or any maintenance. Their fee trebled as it was set too low by the builders to entice people to buy thinking its a low maintenance but they didn't even think about the real cost to highlight that it could not be sustainable.
Sounds like your Nephew will lose the sale and will have to sort out the insurance side asap.
If your Nephew has a leasehold - a charge will be required from each flat each year/month. This is to pay for the communal maintenance and insurance ie the structure of the building/roof/car park/ etc
Who insures the building? Who maintains the roof? etc Did your nephew buy the flat using a solicitor?
I would doubt Nephew can insure the building on a leasehold yourself as you are not the owner of that building. The freeholder is the owner and thus is the one to insure the building and to arrange maintenance or they appoint a managing agent to do that on their behelf.
You said he pays ground rent that's most likely to the freeholder. Thus it sounds like the freehold has not been purchased by the leaseholders.
It may be the freeholder has not insured the building or build up any maintenance fund. The maintenance is a bit of a red herring as it gets passed down to each flat anyway but the insurance is vital to find out about.
Have a read of the lease that will say who should be paying maintenance. who will insure.
If no one has been insuring the building/maintenance then your Nephew will have a flat that will be very difficult to sell.
Its not like a terraced row of houses as they are more likely to be freehold. Freehold you own the property/land. Leasehold you own a "lease" to live in the property for 99yrs or 999 yrs or whatever but you don't own the land or building. There are lots of laws about the right to buy if you are a leaseholder and want to buy the freehold but doesn't sound applicable here.
We took on one block of new flats and the new owners/leaseholders hadn't a clue the maintenance fee they were told by the builders was so low that it didn't even cover the insurance cost ! let alone managing agents fees or any maintenance. Their fee trebled as it was set too low by the builders to entice people to buy thinking its a low maintenance but they didn't even think about the real cost to highlight that it could not be sustainable.
Sounds like your Nephew will lose the sale and will have to sort out the insurance side asap.
Edited by superlightr on Saturday 30th April 08:40
Edited by superlightr on Saturday 30th April 08:41
northwest monkey said:
spaximus said:
So if the responsibility for the roof and gutters is the top floor, what happens if they don't do anything to keep it water tight and in good repair?
Genuinely interested.
Luckily, the situation has never arisen where something major needs sorting. We've had blocked gutters/downpipe come loose & a quick word to the agent of the upstairs flats has got it sorted.Genuinely interested.
As it's in the terms of the lease, I would imagine if it was something major, the freeholder would have to force the issue with the leaseholder.
Who insures your building? Who deals with the communal maintenance of the roof?
I would urge you to sort this out BEFORE a major issue occurs.
The blocks we looked after we built up large maintenance funds over many years to deal with communal areas. We had a plan of work for roofs ie 15yrs replacement cycle/ cladding /windows/ asbestos management etc. Many hundreds of thousands of pounds being build up so we didn't have to surcharge flats if we could help it and spread the cost over all leaseholders over many years.
Edited by superlightr on Saturday 30th April 08:48
Thanks to all who have responded.
In answer to some of your questions;
He did use a solicitor for the purchase (about 7 years ago??)
He did buy it via a mortgage.
He has got both buildings and contents insurance.
He just pays £24 pa ground rent to a local estate agent acting for landowner.
The situation is same with all the others on his estate. There are 3 identical maisonettes for sale and I have spoken to the selling agents asking "...how much is the management charge?" and was told for each property that "there is no management company".
It's an unusual situation, but he is not unique it seems.
In answer to some of your questions;
He did use a solicitor for the purchase (about 7 years ago??)
He did buy it via a mortgage.
He has got both buildings and contents insurance.
He just pays £24 pa ground rent to a local estate agent acting for landowner.
The situation is same with all the others on his estate. There are 3 identical maisonettes for sale and I have spoken to the selling agents asking "...how much is the management charge?" and was told for each property that "there is no management company".
It's an unusual situation, but he is not unique it seems.
superlightr said:
northwest monkey said:
spaximus said:
So if the responsibility for the roof and gutters is the top floor, what happens if they don't do anything to keep it water tight and in good repair?
Genuinely interested.
Luckily, the situation has never arisen where something major needs sorting. We've had blocked gutters/downpipe come loose & a quick word to the agent of the upstairs flats has got it sorted.Genuinely interested.
As it's in the terms of the lease, I would imagine if it was something major, the freeholder would have to force the issue with the leaseholder.
Who insures your building? Who deals with the communal maintenance of the roof?
I would urge you to sort this out BEFORE a major issue occurs.
The blocks we looked after we built up large maintenance funds over many years to deal with communal areas. We had a plan of work for roofs ie 15yrs replacement cycle/ cladding /windows/ asbestos management etc. Many hundreds of thousands of pounds being build up so we didn't have to surcharge flats if we could help it and spread the cost over all leaseholders over many years.
Edited by superlightr on Saturday 30th April 08:48
WRT to insurance, each flat has to insure their flat & we have to provide a copy of the insurance to the freeholder annually. It costs a few quid a year more because it's unusual, but not much.
If it was a large block though I wouldn't touch it with a dirty pole without a management company. I've looked at one once & although the flat was great, the block was terrible - graffiti everywhere, broken windows in the foyer etc.
Right there are TWO scenarios:
1) It is a leasehold flat and there will be a freeholder who may or may not have a managing agent... this could be an individual or a management company owned by the residents...
This setup I would expect annual accounts and maintenance charges. This is what the solicitor is looking at and is normal for most flats in the UK.
2) The flat is leasehold and the freeholders are also the flats. You can in the UK jointly own a property by upto 4 people. I sell small 4 blocks this way as it then doesn't require a management company, rents etc..
This would normally require an undertaking for the first named leaseholder to be the joint freeholder..
Without checking the paperwork you won't know.
Just realised if you are being charged a ground rent they are the freeholders...
1) It is a leasehold flat and there will be a freeholder who may or may not have a managing agent... this could be an individual or a management company owned by the residents...
This setup I would expect annual accounts and maintenance charges. This is what the solicitor is looking at and is normal for most flats in the UK.
2) The flat is leasehold and the freeholders are also the flats. You can in the UK jointly own a property by upto 4 people. I sell small 4 blocks this way as it then doesn't require a management company, rents etc..
This would normally require an undertaking for the first named leaseholder to be the joint freeholder..
Without checking the paperwork you won't know.
Just realised if you are being charged a ground rent they are the freeholders...
Gassing Station | Speed, Plod & the Law | Top of Page | What's New | My Stuff