Retention request - leasehold flat

[Nicolacj]

We are coming to the end of a very long six month negotiation to sell a chain free leasehold flat. New managing agents took over the lease about half way through which delayed matters, and are stating they will be doing some major works expected to cost circa £500 per flat. They have no knowledge of any other works but await any instruction from the freeholder which seems totally normal. Our service charge is up to date, which they have confirmed, and yearly cost is about £500.

The buyers solicitor has asked for a retention fee of £5,000 which we think is ridiculous. We have managed to negotiate them down to £3,000 but still think this is exceedingly high. If no section 20 has been served for the proposed works (they are gathering estimates at the moment) are we still liable to pay for the work that might happen after we complete? Also if the freeholder decides say in three months time to do some other major work are we liable for that too as the retainer is held for major works? We are worried we will lose this money if other works happen within a year of completion. Conveyancer is awful and cannot seem to confirm this one way or another - would really appreciate some advice / thoughts from anyone who has had a similar situation!

We are almost at the point of pulling the plug after all this time - buying / selling leasehold flats is a complete nightmare in this country.

I would be very wary about buying your flat as there is obviously no sinking fund for major works. Surely you can agree what the retention covers, ie only 'work outside the normal service charge for which a section 20 notice has been served by [date]'

Agreed a date should be inserted in the clause, but I would presume this would be the completion date? No formal notice will be served in time for the proposed works, which we are grudgingly happy to pay for to get things over the line so technically speaking we wouldn't be liable for this either should the date be the completion date. How long is usual, where do you draw the line?

The retention would be held pending end of year accounts being produced (definitely worth finding out when this will be). On completion there will be apportionments so that during your period of ownership you pay all due service charges/ground rent due and the new owners pay from completion date.

The buyers solicitors want a retention as there are major works to be agreed and although estimated at £500 per flat, it is an unknown at this stage. After final accounts are produced, your solicitor will pay any outstanding amounts owed out of the retention and any surplus funds will be returned to you. The amount does seem rather high though. Do you have an expensive lift in the block or whole block renovation due??

Might be worth checking your lease and/or management pack to see what major works are due to be done very soon as there are often cyclical maintenance programmes agreed.

I assume they want retention to cover the upcoming works, not just to completion date. This is the same argument as if a survey showed £5k of roof repairs, they want £5k off the price.

Thanks for all your replies!!

No lift, very basic block - brick exterior and interior on common walls and built mid 80s in good condition. We have agreed a clause that we will pay for this work that's being discussed right now, but not for anything after that.....hopefully in a years time all is well but I can see a fight on our hands.

Has been a nightmare from the beginning - will never buy a leasehold flat again. They really need an overhaul of the house buying process - the stress from all sides is unnecessary, too many layers of communication and no incentive to get things done as they process is not limited by time.

We are exchanging today on 3k retention - have decided to write off the money and if it comes back it's a bonus - anything to have this come to an end and move on with our lives.