Leasehold, flat new roof £32,000, have to pay in advance

PoliticsNerd yes we are all owner occupiers. There are a few tenanted flats but their owners pay the management charge and contingency fund. The residents committee deal with a factoring company on the behalf of residents. Residents can vote for their representatives. In practice most people are glad that someone is looking after the building and don't want to get into the nitty gritty of building maintenance.

Like others, I thought there had to be a sink/sinking fund, so I looked it up. They say every day's a school day and I found that, in UK law, there is no general requirement for all freeholders to create a sinking fund (also known as a reserve fund) for their properties. However, as I expect many are aware, establishing a sinking fund can be common practice especially in residential blocks of flats, where it is used to cover future maintenance and repair costs.

Leaseholds are a minefield - that is definitely the case - and sadly, the work in Parliament seems to have slowed, quite possibly because of that very complexity.

Aveline

PoliticsNerd yes we are all owner occupiers. There are a few tenanted flats but their owners pay the management charge and contingency fund. The residents committee deal with a factoring company on the behalf of residents. Residents can vote for their representatives. In practice most people are glad that someone is looking after the building and don't want to get into the nitty gritty of building maintenance.

So is that committee is the committee for the commonhold you each have? (I'm really out of my depth with this).

I had a friend who lived in a block of flats where each flat owner had bought out their lease. It seemed incredibly complicated to run and she was an accountant, and there was also a solicitor owner which gave them a head start!

We have a very good freeholder (so far) and are in the process of having our roof replaced. The money has come from the sink fund but I'm now hoping nothing big needs doing soon as the would be able to come to us.

There's no leaseholder problem here. It's in Scotland. It's just a building with individually owned flats. We elect a committee to deal with the factoring company we've appointed to organise maintenance.

I feel that the owner is doing more than necessary as it revalues their property at the leaseholders expense.
But I was the only one to speak up so I don’t have a leg to stand on.
The management have now sent this to reassure the leaseholders.

Leaseholder contributions are protected under Section 42 of the Landlord and Tenant Act 1987, which mandates that all service charge funds are held in a designated trust account. Additionally, protection up to £85,000 per account is guaranteed by the Financial Services Compensation Scheme (FSCS) for funds held by FCA-registered institutions.

Payments made to the contractor will be rigorously monitored, with all sums subject to valuation and certification by the appointed surveyor and the accounts administrator. This ensures transparency and safeguards your contributions

Aveline

There's no leaseholder problem here. It's in Scotland. It's just a building with individually owned flats. We elect a committee to deal with the factoring company we've appointed to organise maintenance.

You did have leasehold, didn't you though Aveline? I thought you did but it had been changed?

loopyloo

Hmm .my experience is that management companies need to be watched, not just left to get on with their jobs.
Excuse my cynicism.

Definitely they do need to be watched. The original management company may have been sold, over and over, to companies in management purely for the profit

I have been involved twice, first as part of a big development when DH, as part of a small team, was instrumental in buying the freehold, when every property owner had a share. That gave us the right to manage ourselves. We ensured that we kept a ring-fenced sinking fund. The previous freeholder had emptied that fund

I would also not ever buy a leasehold managed property, unless it was self-managed by the owners

A sinking fund is also good when for when a property is sold, the funds paid into the sinking fund are not transferred back and the new owner will not suddenly have to find potentially £000s for a big repair eg lifts, windows, roof

Mokryna, there is a mass of information online, leaseholders have a lot of rights.
www.lease-advice.org/topics/

Yes there may not be a sinking fund but you should have been given a breakdown of how your fees have been spent. Not having a sinking fund is sloppy management

We took the freeholder to court, he actually employed a barrister but we, 42 owners ,won

It’s standard practice when buying a leasehold property for your solicitor to see the accounts, including the sinking fund, and to enquire what major works are anticipated in the foreseeable future. You then know if there’s likely to be a call for money. Not doing so is, I would say, negligent. Also of course a survey should pinpoint anything likely to need attention.

PoliticsNerd no. We never had a leasehold. Doesn't happen up here.

There was I thinking you had come up with a solution England could use Aveline

PoliticsNerd

Aveline

There's no leaseholder problem here. It's in Scotland. It's just a building with individually owned flats. We elect a committee to deal with the factoring company we've appointed to organise maintenance.

You did have leasehold, didn't you though Aveline? I thought you did but it had been changed?

How odd to get a Factoring Company to organise your Maintenance!

The interest (over and above your maintenance costs) is calculated daily and must be quite a sum to have to pay.

The factoring company employ our resident care taker for us as well as arranging our buildings insurances, gardening and maintenance. It's a big job and would be impossible to expect volunteer residents to do it. Apart from anything else, all blocks of flats and residential developments here use factoring companies.

In France there is no leasehold, it is only England and Wales who have this feudal system.
I live in a small block of 6 flats. We are unusual in that we don’t employ a ‘syndicate’ to deal with the paper work and employment, like Aveline but deal with it ourselves.
However, as I said this is rare and of course impossible for larger blocks of flats and commercial premises.

As I've said mokryna I feel out of my depth with this although I have been taking note of what is (or isn't) being discussed in government.

I think what you are doing is very similar to my friend, where everyone had bought their lease. I think much the same would happen here and very few would run the commonhold areas, services, etc., themselves.

I wonder if the problem with changing the law is the cost of buying out the leases?

PN each household paid around £2000 in 2007 as a share of the freehold and each then had a legal share certificate. The share certificate went into the house legal pack and was very attractive to any potential property buyer

We managed ourselves for three years ie employed whoever we wanted, did whatever repairs that the residents needed. Then we contracted out to a management company to do the donkey work of organisation, while we the freeholders, held the reins. That process is still working.

We were no longer leaseholders but we were freeholders, in having that share

Thanks karmalady, that is really useful. Clarification over this is hard to find.

A solicitor can help by telling you exactly what your legal position is. It's not cheap but, when we had huge problems with a tradesman a couple of years ago, we gladly spent £250 to find out where we stood from someone who knows about this stuff. It didn't help us with the tradesman (we'd signed our money away without reading the small print - PLEASE, everyone, DO read the stuff in tiny font at the bottom) but at least we knew what we couldn't do, as well as what we could. Leasehold contracts are apparently riddled with small print now - that doesn't help you now, of course, but I really would recommend finding a solicitor, preferably one who deals in conveyancing, renting, etc.

I would not pay the sum in advance, your solicitor is the best bet to help you.

Are all the flat owners paying as that sounds rather excessive. The flat I lived in Exeter which was one of 48 we all paid about £1000 each to replace ours. You should be paying a maintenance charge each year which most management companies would ensure had a sinking fund for emergencies. Also no flat owners can be allowed to refuse because they don't live under the roof. I paid when asked and I was on the middle floor. Ask your management company if everyone is paying else it becomes very unfair.

Is that £32k each? How many flats are there? That seems a lot of money for one roof. Check your leasehold documents with a fine tooth comb to see what it says. How do they expect someone, let alone several people to hand over £32k at the drop of a hat? Have the 'management' got the quotes for the residents to look at? How many quotes did they get? Sorry for all the questions I worked in construction for many years and it doesn't sound right to ask for that amount of money without a breakdown of costs.

They all have to pay but getting money from some is blood from a stone. They will be liable for the cost if ever they sell, which would be the cost plus interest which is calculated at base rate plus a % over and above. It is compound so could add up to a significant amount at the end.

The selling solicitor will send a letter to the management secretary and will ask if any money is owed. This amount will then come out of property selling price as well as various fees, before the seller receives anything

Yes it does come back one day but there are people who will never move and will not care a jot about the other leaseholders

When I was a director of our buildings freehold management company we had this. The roof failed unexpectedly after regular inspections. We did all the legals correctly with quotes etc One person refused to pay and delayed things, the builder couldn't accommodate the change in time scale at the same price so we had to get new quotes and an independent surveyor in to manage it, doubling the cost. You have to pay upfront in case people decide to default. It's a nightmare and we also had to get an outside management company in as this one person, a Director who owned one of the flats, was so obstructive and rude to anyone suggesting she had to pay her share according to the lease that nobody could deal with her - we'd have saved thousands of she'd cooperated as prices of materials rose and the condition of the roof got worse. I guess much depends on whether you own a share of freehold or have a landlord you think is trying to line their pockets. The cash should be paid from your funds in stages by whoever manages it.

My mother is going through the same as you at this very moment the roof was done ten years ago and needs replacing again and the company that did it has gone bust.there are 55 flats in there building of which ten are rented out by the management company they are not required to pay but there rents will go up next year. the owners have not got enough in there fund so are having to make up the difference a few of them can not afford it and are ill with worry it's not right at this point in there lives they are having another meeting this afternoon I will let you know how they get on

We inherited a retirement property when my MIL died. The leaseholders applied to the Court for a Right to Manage and several companies came to talk to the leaseholders putting forward their proposals. After researching the different proposals, the committee members chose who they thought would be the best. The chosen company worked well initially. Then they began to drag their heels when things needed fixing or planned re-decoration didn't happen, making various excuses, for instance, they were trying to get the most competitive quote etc. . The committee members weren't pushy enough and let things drift. After 18 months, they broke the news that the 46 leaseholders had been shafted by the management company they had appointed had stolen the service charge funds which amounted to thousands of pounds, and liquidated their company. We found out that they'd done the same to a lot of other sites they were "managing". We couldn't sue them as they were in liquidation. I could never truly trust a management company again after such a bad experience.