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Original poster

Leasehold mess! Please advise

28 replies

biscuitblues · 07/12/2021 11:58

I am about to complete on a leasehold flat in a smallish development made up of a mix of flats and houses.

I have now been made aware (11th hour!!!) that because all owners of the properties involved have historically refused to pay towards the service charges/ground rent and as a result, the landlord and management company have said they will no longer carry out upkeep of the communal areas or carry out work on the grounds.

What should I do?? Will the bank even be willing to continue with the mortgage? And what does this mean in reality for me as an owner??

I don't know much about leasehold, but can the owners really refuse to pay, and can the landlord refuse to do work and break terms of the lease?? It sounds like i would not be bound to pay any charges as they have effectively given up on the whole place.

There are 10 properties in the development, and it looks like only one (the flat i am buying) pays towards the charges. Other flats refuse, and ground rent is not being paid by any house owners. The development is less than 25 years old and all concrete/driveways/parking - no gardens etc to be maintained.

I am a first time buyer and don't want to made a silly decision, or lose the property but feel like i have such little information here. My solicitor has said he will clarify points with the managing agent and update me, but am not sure how serous a problem this is.

if it's relevant, this is in the south west, in a very desirable village where affordable property like this is hard to come by!

Thanks in advance for any advice or support from those with more knowledge.

OP posts:
sunshinesupermum · 07/12/2021 12:14

I have never heard of such a situation. The only time something similar happened to me was one flat owner felt that the original developer hadn't completed some remedial work and refused to pay his service charge so the rest of us (12) leaseholders had to make up the shortfall for urgent work!
In your case the freeholder would be taking them to court for non payment.
What reason have they all given for non payment and is it really all of them?
How did you find out?

Palavah · 07/12/2021 12:21

A critical mass of leaseholders can decide to self-manage or appoint a different management company.

OnlyFoolsnMothers · 07/12/2021 12:36

good for them they probably are being sent astronomical bills for very little. How long have they not been paid?

prediction500 · 07/12/2021 12:53

Sorry no advise other than to speak with your solicitor and perhaps join the National Leasehold Campaign (NLC) Facebook page for potential advice

RB68 · 07/12/2021 12:54

Walk away

SixQuidGames · 07/12/2021 13:04

@OnlyFoolsnMothers

good for them they probably are being sent astronomical bills for very little. How long have they not been paid?
How can you possibly know that? People really do spout some spurious shite on here sometimes.

Personally, I wouldn’t touch this with a bargepole. Having been involved in leasehold/resident issues before, it’s a total nightmare. Usually, if a single resident refuses to pay, the managing agent can take action against them which may result in their lender being informed but I’ve never heard of a situation when all residents refuse to pay.

languagelover96 · 07/12/2021 13:28

Solicitor can help.

EdgeOfTheSky · 07/12/2021 13:28

Any number of things could be going in here.

As the development is relatively new it could be one where the ground rents and charges rose astronomically as covered in the press a couple of years ago.

The Freeholders / Mgt co could be hopeless and ineffective

The other leaseholders could be awkward, dishonest, unreasonable or too poor to pay…

It COULD be resolved by a critical mass taking in management and even buying a shared freehold. But the maintenance costs still need to be covered, and there doesn’t seem to be evidence if this happening.

Original poster
biscuitblues · 07/12/2021 13:30

The leaseholder wrote to the solicitors today to let them know, as part of inquiries I presume. They said something along the lines of 'we have therefore rejected our responsibility in this development' and admitted they refuse to hold up their side of the agreement as they're not getting any money.

The combined service charge and ground rent for 'my' property totals about £300 per year, and most of those involved are houses and so only being asked to pay ground rent, which is presumably much less than that.

I am not sure I can get much more detail as only a potential buyer, and not sure waiting until I own to see how easy these issues are to solve is a good idea :(

I could ask the solicitor to press them on why they aren't taking legal action, as they presumably are still liable as the landlords if anything happens to the building?

OP posts:
WhatAWasteOfOranges · 07/12/2021 13:32

Don’t do it! You’ll never be able to sell it. Leasehold is a nightmare at the best of times, let alone with a big dispute. You’ll find it really hard to sell in the future so if it’s a flat purchase that is a stepping stone to a larger property in the future I’d be extra wary…

Original poster
biscuitblues · 07/12/2021 13:33

Sorry, I meant management company/landlord (not sure which exactly!) not leaseholder

Thanks for advice so far, interesting to hear responses.

OP posts:
WhatAWasteOfOranges · 07/12/2021 13:33

Also if there is no payment to the management company who is insuring the whole building?

CorrBlimeyGG · 07/12/2021 13:38

Freehold houses don't pay ground rent. More likely they are paying a (vastly inflated) service charge for shared areas.

A leasehold property without a management company is likely to be unmortgageable.

BigGreen · 07/12/2021 13:40

Definitely don't buy this! Can you imagine water leaking into your flat from a damaged brick and not being able to get this repaired due to no effective managing agent (or self-management commitee)? What happens in the future to large scale repairs like roof replacement? Will you pay it alone for all of the flats?

It will be a nightmare to sell on!

NovemberNovemberDarkNights · 07/12/2021 13:45

I would walk away. I know it's hard when there's not much coming up in the area you want, but the leaseholder relationship is hard enough when it's running relatively smoothly.

They have made their inability to get the money they're owed, your problem.

It's not all about mowing lawns & replacing guttering.

Walk away. Hard though it is, you'll regret not walking away when you could.

Haus1234 · 07/12/2021 13:50

As @WhatAWasteOfOranges says, who has the buildings insurance? It’s certainly not mortgageable if there isn’t any. I think this is a walk away situation I’m afraid …

Original poster
biscuitblues · 07/12/2021 13:51

I have just checked and the freehold houses are asked to contribute to shared access parking spaces etc, and the leasehold flats pay that same cost, plus additional service charge towards the leasehold costs.
Is less than £300 per year an inflated price for the houses? I suppose they don't see any benefit?

In terms of insurance, i don't know, if only one flat is contributing, it's possible the management company paying and out of pocket? But i think it's clear i should walk away.

i don't really understand why they aren't trying to get their money as a court would enforce this!

I will speak to the solicitor and be prepared to pull out, and /or wait for the bank to refuse to lend on it, as the solicitor said he needs to send them a report detailing the new information. If the management company have written saying 'we give up because nobody has ever paid us except one family' it looks quite bad doesn't it

OP posts:
CorrBlimeyGG · 07/12/2021 13:55

i don't really understand why they aren't trying to get their money as a court would enforce this!

It's a reasonable question, but be aware that if they did, their costs would be added to the management charge.

TheTrinity · 07/12/2021 14:04

I would definitely pull out OP. No one needs this headache. Also it may mean it would be difficult or impossible to sell the flat in future.

OnlyFoolsnMothers · 07/12/2021 14:05

by the way I didnt say purchase the property whilst there is a dispute, just nice to hear some lease holders pushing back- management agents are such a con

Anaximedes · 07/12/2021 16:17

Personally, I have had leasehold problems in the past (and have come out of the other side wiser) and I would delay completion because of this. If you haven't exchanged, I'd suggest delaying with a view to pulling out. If you have exchanged, it's more difficult.

In your position I would get yourself a leasehold-specialist solicitor ASAP (ie first thing tomorrow morning) and put off completion for a couple of days while you "investigate the new information and your position" or somesuch, if you can.

PM if you want the name of someone.

HundredMilesAnHour · 07/12/2021 19:40

I wouldn't touch this with a barge pole.

SphincterSaysWhat · 07/12/2021 20:28

Run, do not walk, away.

BackBackBack · 07/12/2021 22:09

No, no, no.

I'd be very wary of anything with leasehold issues - but I'd run far and fast from a leasehold flat with problems. It won't end well. Pull out.

dalrympy · 07/12/2021 22:18

£300 a year??? That's is ridiculously low!
Is there a Fire Risk Assessment? EICR for common parts?

Who looks after the drainage, clears the gutters etc.

All sounds crazy.

Freeholder should be taking them to court.

The development should get together and go for Right To Manage. They would need to set up their own company etc.

Block Management is far more involved than just a bit of gardening.