Maisonette with Fully Repairing and Insuring lease

[Templeberry]

Hello, I am in the process of buying a ground floor maisonette. Everything about the property itself is great, very liveable, in a good location near to outstanding schools and I have some pressing issues to move due to separation etc. However, my solicitor is more than nervous about this and is asking me to really consider all the legal pitfalls as it were. They have said that this isn't an easy property to sell.

Firstly the lease which is 999 years is fully repairing and insuring along with the upper maisonette. The freeholder management company charges a peppercorn tax only of £10 per year. All repairs therefore need to be agreed with the upper maisonette.

The building itself, according to the full building service requires some significant work to the roof, rendering, guttering etc. I am getting some quotes for this and plan to ask for a reduction on the offer price (I paid over the asking price to begin with).

Has anyone had any nightmares with a fully repairing and insuring lease? My worry would be any future issues when I come to sell it, though accept there are buyers who are more risk averse than others.

TIA

That should say full building survey, not service

Odd, I’d never advise a client to that extent.

Are there similar properties in the area? You could ask around about how quickly they sell.

I suppose the only pitfall is that you’re reliant on the owner of the top maisonette repairing their bit properly/paying their share.

Has your solicitor checked their lease to make sure the repairing obligations match?

Thanks @MinnieMountain

Yes the lease for the top maisonette is the matches. I've also been in touch with the owner (who doesn't live there) and they seem reasonably open to the idea of discussing any future repairs.

The properties in the area sell very quickly.

It's like a house in that you have to repair it yourself but if the person upstairs is difficult, or the next one who lives there is, then you have a problem.

I'd be a bit wary.

Hi OP,

I keep seeing similar threads pop up and have had a similar experience recently myself. I posted on a thread last night so I'll just copy and paste what I wrote to another poster...

I've recently withdrawn from a purchase, 3 months down the line. A two bed flat/maisonette. The freeholder has been absent along with the management company for at least 15 years and no maintenance or repairs have been carried out on the block for over 10 years. No service charge or ground rent taken for at least 15 years either. It also said on the paperwork that mine was a peppercorn. My solicitor didn't find this out until the 11th week. There is no official agreement in place to outline who pays for what and there is also the issue of buildings insurance and how that works. I briefly spoke with some of the neighbours who were very forthcoming and told me not to bother. They've struggled to sell their properties for years and the people who managed to did so at a reduced price. Most of the properties that have been sold over the last few years have been bought by cash buyers and now the majority of the development, which has around 12 flats and 10 houses (some of which are also leasehold) are now owned by landlords. People who need a mortgage just can't buy there. The flat that I tried to buy had several issues which would have cost me quite a bit to repair had it gone ahead. The vendor inherited it from her brother and supposedly he did not pay for anything and the flat itself needs the roof repairing along with other things. As a first time buyer struggling to get on the property ladder, I'm just not in a position to afford to pay for lots of repairs so soon after moving into a property. I want to move into a property knowing that it's safe and isn't going to cost me an arm and a leg years down the line or be a legal nightmare. My solicitor advised me that it's a money pit and a really bad investment, and even if I'd had the green light from my mortgage lender, I'd probably struggle to sell it on later down the line. I'm just lucky that I had an amazing and very vigilant solicitor.

It sounds as though your situation is quite similar to mine although the freeholder is still around but isn't taking responsibility for the repairs and maintenance. Is that right?

@MaybeYes thanks for your reply. Sorry to hear your experience but sounds like you dodged a bullet.

Yes that's right, the freeholder is still around but has zero interest in the property, it's down to the two flats leaseholders to sort all the repairs and maintenance in terms of agreeing and paying for it so it all depends on the upstairs leaseholder agreeing to do the work and split the costs. The freeholder can't mandate the work so that's a big risk.

Yes the other issue is the lender agreeing to this, though my solicitor said that this may largely be a formality. It would be so much easier if the bank turns around and says no!

This is literally keeping me awake...

The area is very popular and properties for rent and sale go like hotcakes. However when I've looked up this and the immediate neighbouring properties (all similar maisonettes) there hasn't been a sale since 2018. I wonder if this is due to a same arrangement being in place and no one wanting to touch with a barge pole.

Anyone else have experience of buying a leasehold property with this sort of set up?
Am I worrying for nothing or should I just pull out??

In my first flat the freeholder did nothing and just let us get on with it. This was OK for inside communal areas where we split the bill between the three flats and were all in agreement. I moved before the outside was repainted.

The problem is that you all have to be in agreement and whilst you may be, the current other owner may not and any future other owner may not. You say you have had a preliminary chat with the other owner and they are reasonably open to discussing future repairs but once presented with a huge bill they may then change their mind especially if you negotiate a slice off your sale.

The fact that you already know of some significant works required just add another level to this.

It's a risk and would make me wary. I would do some more digging with the neighbours. It could merely be chance that nobody has wanted to sell up in the last 3 years.

I had a flat like this - small block of 4 maisonettes with a disinterested freeholder. All they did was collect £24 a year in Ground Rent and send a bill for the (overpriced) buildings insurance once a year.

I was fortunate that there were no major costs when I lived there, but any roof works or anything like that would have needed to have been agreed by all leaseholders and paid separately.

Again, perhaps fortuitously, all the lessees were very good and we came up with an informal arrangement between all of us to contribute towards maintaining the shared land. When something needed doing (fencing needing replacing, etc), one of the guys that lived there did the work and we each just paid him our share for doing it.

The problems come when you have a lessee that doesn't want to pay their share for things. You say the upstairs owner is agreeable at the moment but, unfortunately, they won't necessarily be there forever.

You have to consider the "what if" scenario of what would happen if they refused or couldn't afford to pay for, say, roof repairs.

If I were you I wouldn't necessarily discount it on the basis of what you've said, but go in to it with your eyes open.

It all depends on how willing the other person is to have repairs carried out.

Thanks for the replies.

Yes it's definitely an added challenge with the "essential" repairs identified in the survey. I'm arranging for a roofer and builder to provide a proper quotation and idea of the urgency. This at least gives me some bargaining power to reduce the price. I know that won't address the issues of the lease and reliance on the other owner in the longer term.

@friendlycat - this sounds silly but I've no idea how to do more digging with the neighbours! Should I just hang around until I see people going in and out of their homes?!

You could try sending letters to the other owners? Maybe someone would reply.

We have a similar set up with our maisionette, but freehold is split between owners. We're in Scotland so it might be different, but my understanding is that if our neighbours refused to pay we could persue them for the costs. Would that not apply in your case? Or would you have to involve the freeholder? It's extra hassle though. If it's a popular area and rather expensive the sort of neighbour you're likely to get in future would probably also care about upkeep to maintain house value!

Buying flats is always a bit more risky in that way because you're relying on other people to do the right things. Good luck with your house hunting!