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kaiser78
13th September 2011, 18:39
Has anyone ever bought a freehold flat, as opposed to leasehold ? If so did you have any problems with the purchase, mortgage or selling ?

We are looking at flats currently and have seen a flat on a freehold basis, but very few places offer mortgages on freehold flat basis.

Any experiences would be interested.

doodab
13th September 2011, 19:10
Ms doodab's experience is that most lenders won't touch it and it's easier to give up and find somewhere else. As I understand it that's because you won't necessarily have any sort of legal framework regarding responsibility for common areas and shared walls and so on, so if anything complex needs doing it can quickly become an expensive nightmare.

Paddy
13th September 2011, 19:15
Has anyone ever bought a freehold flat, as opposed to leasehold ? If so did you have any problems with the purchase, mortgage or selling ?

We are looking at flats currently and have seen a flat on a freehold basis, but very few places offer mortgages on freehold flat basis.

Any experiences would be interested.

I would be surprised if the flat is freehold. It is more likely to be leasehold with all the flat owners owning the freehold jointly usually under a limited company. There are more problems with Leaseholds where the freeholder is a separate landlord so I am surprised if it is difficult to get a mortgage for a "freehold" flat.

Many flat owners are under the misapprehension that the landlord is responsible for repairs etc. In fact the landlord will charge the leaseholders for repairs and make a huge profit on top.

The whole law on leasehold and freehold together with the L&T act is so out of date. Landlords (not short lets etc) have rights like it is the Middle Ages.

kaiser78
13th September 2011, 19:20
I would be surprised if the flat is freehold. It is more likely to be leasehold with all the flat owners owning the freehold jointly usually under a limited company. There are more problems with Leaseholds where the freeholder is a separate landlord so I am surprised if it is difficult to get a mortgage for a "freehold" flat.

Many flat owners are under the misapprehension that the landlord is responsible for repairs etc. In fact the landlord will charge the leaseholders for repairs and make a huge profit on top.

The whole law on leasehold and freehold together with the L&T act is so out of date. Landlords (not short lets etc) have rights like it is the Middle Ages.

They do exist although not as common as freeholding flat - the flat we have seen is essentially a house that has been split into 2 flats each with the own freehold and covered by covenant. As per other post, sounds a bit risky so we think we will find a flat with leasehold.

Paddy
13th September 2011, 19:25
Ms doodab's experience is that most lenders won't touch it and it's easier to give up and find somewhere else. As I understand it that's because you won't necessarily have any sort of legal framework regarding responsibility for common areas and shared walls and so on, so if anything complex needs doing it can quickly become an expensive nightmare.

"shared walls" (party walls) there is already an act of parliment to cover that just as in a terrace house.

"anything complex needs doing it can quickly become an expensive nightmare"

The same would apply to a Leasehold except the landlord and his management company would add a big chunky profit on top.

doodab
13th September 2011, 19:34
I would be surprised if the flat is freehold. It is more likely to be leasehold with all the flat owners owning the freehold jointly usually under a limited company.


There are such things as true freehold flats with no lease or superior landlord as well. They are rare though.


There are more problems with Leaseholds where the freeholder is a separate landlord so I am surprised if it is difficult to get a mortgage for a "freehold" flat.

Many flat owners are under the misapprehension that the landlord is responsible for repairs etc. In fact the landlord will charge the leaseholders for repairs and make a huge profit on top.


That's not strictly true. The ones that are managed by a third party generally just send you bills, with receipts, and occasionally requests for big wodges of cash for major works. If you feel you are being screwed you can dispute the charges at a tribunal and they will have to justify everything they are charging for, with the tribunal deciding what is acceptable and the decision being binding. They make their money on the lease extensions, not the service charges.

On the other hand places where you own or are trying to buy a share of the freehold often suffer from all sorts of problems due to the ineptitude and egos of your fellow leaseholders not to mention frequent delays in getting essential repairs made due to those who query every item of expenditure and don't or won't pay their share of costs and so on. It's the bane of my ******* life and I don't even own the places in question.

DimPrawn
13th September 2011, 19:46
Sounds like a nightmare. Flats, leaseholds, shared things, etc.

My advice would be to buy a massive detached house set in 5 acres of land instead. A lot less hassle.

AtW
13th September 2011, 19:48
My advice would be to buy a massive detached house set in 5 acres of land instead.

WIS

Paddy
13th September 2011, 20:00
If you feel you are being screwed you can dispute the charges at a tribunal and they will have to justify everything they are charging for, with the tribunal deciding what is acceptable and the decision being binding. They make their money on the lease extensions, not the service charges.

.

Just had a tribunal for that in May that lasted two days! They don’t have to justify everything they are charging for and the LVT have a very narrow remit. Out of a £10k bill, £250 was removed. The main criteria it for charges must be outlined in the Lease but basically the Landlord can screw for anything.

The management companies make a fortune and most of them have offshore companies. They uplift costs of repairs and get kickbacks from the insurance companies and builders.

Eg: Cost of works = £10,000
Uplift for costs £2,000
Admin charges for works £2,000
H&S advice £500
Inspecting works £2,500
Kick back from builder £2000.

SueEllen
13th September 2011, 20:07
Just had a tribunal for that in May that lasted two days! They don’t have to justify everything they are charging for and the LVT have a very narrow remit. Out of a £10k bill, £250 was removed. The main criteria it for charges must be outlined in the Lease but basically the Landlord can screw for anything.


If there are enough of you in the building then you should see if you can arrange to buy the freeholder out.

Though this means you could end up with endless squabbles ending up with threats to take leaseholders who are also directors of the management company to court, or one person doing everything .........

doodab
13th September 2011, 20:25
"shared walls" (party walls) there is already an act of parliment to cover that just as in a terrace house.

That doesn't provide for sharing costs the way that the covenants in a leasehold will.



"anything complex needs doing it can quickly become an expensive nightmare"

The same would apply to a Leasehold except the landlord and his management company would add a big chunky profit on top.

If that has been happening to you then you can do something about it. Have a google for "leasehold valuation tribunal". You can challenge any costs you feel are unreasonable, including administration fees and suchlike. Major work requires them to consult all leaseholders in advance, you can nominate your own contractors that they have to obtain estimates from, and you have the right to see all of the estimates they obtained. That should stop them trying it on, and if they don't follow the rules regarding consultation they cannot recover the costs of the work.

The flip side of this particular coin is that you invariably get people who either have no idea or don't want to pay their service charge who decide that some piece of work ought to cost much less than it does. They usually get a shock when they obtain their own quotes. They also tend to think that all administrative and project management work ought to be done for free. I've even seen one guy describe scaffolding as unnecessary for a job, despite the fact that 3/3 building firms itemised it on their quotations.

When you really have a problem is if a subset of leaseholders are managing their own freehold and get stuck with a couple of these types, as it may end up that you have one set of leaseholders taking you to court forcing you to undertake work you are legally obliged to do, meaning you need to cover the cost of works, and another set who won't pay their share, meaning you have to take them to court. The legal fees and hassle can soon start to make dealing with a professional landlord, even a sharky underhand one, seem like quite good fun.

Paddy
13th September 2011, 20:50
If there are enough of you in the building then you should see if you can arrange to buy the freeholder out.

Though this means you could end up with endless squabbles ending up with threats to take leaseholders who are also directors of the management company to court, or one person doing everything .........

The problem is most of the Leaseholders just don’t even understand the Lease and how it works with the freeholder. They prefer pay high service charges from their credit card and go to the pub rather than getting involved and saving money




That doesn't provide for sharing costs the way that the covenants in a leasehold will.



If that has been happening to you then you can do something about it. Have a google for "leasehold valuation tribunal". You can challenge any costs you feel are unreasonable, including administration fees and suchlike. Major work requires them to consult all leaseholders in advance, you can nominate your own contractors that they have to obtain estimates from, and you have the right to see all of the estimates they obtained. That should stop them trying it on, and if they don't follow the rules regarding consultation they cannot recover the costs of the work.

The flip side of this particular coin is that you invariably get people who either have no idea or don't want to pay their service charge who decide that some piece of work ought to cost much less than it does. They usually get a shock when they obtain their own quotes. They also tend to think that all administrative and project management work ought to be done for free. I've even seen one guy describe scaffolding as unnecessary for a job, despite the fact that 3/3 building firms itemised it on their quotations.

When you really have a problem is if a subset of leaseholders are managing their own freehold and get stuck with a couple of these types, as it may end up that you have one set of leaseholders taking you to court forcing you to undertake work you are legally obliged to do, meaning you need to cover the cost of works, and another set who won't pay their share, meaning you have to take them to court. The legal fees and hassle can soon start to make dealing with a professional landlord, even a sharky underhand one, seem like quite good fun.

As I said; I had a two day hearing with the LVT "leasehold valuation tribunal". The problem comes in the interpretation of “unreasonable,”. The LVT take charges to be reasonable if the same sort of charges were made in the past. So if the Landlord or managing agents had overcharged for the past ten years, then this years figures are judged to be reasonable. The admin costs for a small block of mainly holiday studio flats were the same as the admin fees for the most expensive block of flats that sell for £500,000. The LVT said that was reasonable even though a block opposite had fees 2/3 less!

The main problem is that work is paid for but never done but the LVT said that has to be dealt with by the County Court and not the LVT.

doodab
13th September 2011, 21:26
If there are enough of you in the building then you should see if you can arrange to buy the freeholder out.

You can also look into the "right to manage" which lets you take over management but doesn't involve buying the freehold. This is much cheaper to execute and while it won't offer any financial benefit when it's time to extend your lease you may save some money on management fees and so on.

doodab
13th September 2011, 22:13
As I said; I had a two day hearing with the LVT "leasehold valuation tribunal". The problem comes in the interpretation of “unreasonable,”. The LVT take charges to be reasonable if the same sort of charges were made in the past. So if the Landlord or managing agents had overcharged for the past ten years, then this years figures are judged to be reasonable. The admin costs for a small block of mainly holiday studio flats were the same as the admin fees for the most expensive block of flats that sell for £500,000. The LVT said that was reasonable even though a block opposite had fees 2/3 less!

The main problem is that work is paid for but never done but the LVT said that has to be dealt with by the County Court and not the LVT.

Ms doodab has had a couple as well as getting involved with some of the other tenants in one of her blocks. The first one was successful, in that there was a clearly bogus charge with no receipt eliminated and management fees were reduced. The others were failures, but having seen the accounts for the block concerned I concluded that these were simply vexatious attempts by various people to avoid paying their bills, largely on the advice of a single self appointed ringleader and barrack room lawyer. A couple of them have ended up with CCJs because of it.

The "work paid for but never done" will often turn out to be delayed because not everyone has paid. This isn't allowed AFAIK but seems to be a common excuse.