Leasehold Flat being Managed by Neighbours

[Overdon]

I am a bit green about leasehold properties (usually freehold in my area), but I have seen a lovely one for sale which I am viewing next week. However when researching who manages the property (it is a large Georgian house converted into 3 flats) it states that it is managed by the residents of the 2 other flats, they are a registered company too with the company address given as the address of the property).

Is this unusual? I would be interested to hear from anyone who has had lease in similar circumstances, and their experiences of such a set up.

No it just means that the 2 other flats bought the freehold and hold it in a limited company. This is very common.

We currently hold the freehold to a block of 4 converted flats and we don't even live in the block anymore. We are selling the freehold to all the current leaseholders and they have set up there own limited company to hold the freehold in.

They are obviously managing it themselves by the sounds of your post. We have a managing company to do all that for us as there is quite a lot to being a freeholder and you have strict legal responsibilities. We wanted that pressure off us.

Thanks @ItsSnowJokes that is reassuring, I am perhaps a little nervous of the leasehold situation, but the property looks fab!

My advice is read the lease carefully and as early in the process as possible. A lot of leases have restrictions on what you can and can't do.

Also if you did purchase don't let the freeholders bully you. They may be the freeholders but they are also leaseholders so they will have to still follow the lease as well. A lot of people think that the freeholder can just do exactly what they want but it they also own a property on the site then they will also be a leaseholder as well with all the clauses that it can entail.

No this isn’t unusual- I have been in flats with this several times. It is registered at companies house and you usually have a yearly meeting to discuss intended works to the property.

Thanks for the advice @ItsSnowJokes duly noted.

Years ago me and now DH bought a lease hold flat without knowing what it meant and legalities etc. All we knew was we had to pay £XX each month for maintenance. We were young and really regret buying it now but that's another story. Anyway, there were 5 of us in a converted house and land at back. We had a share in the freehold. 2 of them ran their own management company. However the money seemed to go on their properties / gardens and nothing in the main house. I asked when the carpets would be replaced and decorating in communal areas and they said next year but it never happened. We were also asked on numerous occasions to take over the management company as they were too old to continue. We didn't as we had too many other commitments etc. We were told if we didn't then they would find a management company and would be 100s extra each month. We no longer have it now but please check everything out and read the lease / freehold info as soon as you can. Also, find out how many years left on your least. Anything less than 100 years solicitors/ mortgage companies want it extending. It can cost £1000's to extend.

Yes @Haribosweets will be proceeding with caution, the EA said there is 900 years left on the lease but obviously will be checking. I also need to find out about a sinking fund, not sure if this is on top of the maintenance charges, or how often you have to pay into it.

You sure the flat is not share of freehold. (It would still have a lease)?

@howrudeforme Nothing has been said about a share of freehold yet, but details brief so far, will be asking though.

I would run a mile. Our management company is run by leaseholders under right to manage and it's a shitshow. The people who do it either don't understand how leasehold works/their legal duties or want to throw their weight around. Nothing gets done that isn't their pet project and they send really petty, obnoxious emails to people when they ask for them to do works required. They also share quite a lot of privileged information with other leaseholders. Obviously your situation might be run by grown ups but ours very much isn't. I hate it.

Sounds awful @broccolibush , I would prefer it if some faceless company were running the show instead of the neighbours, the property has not changed hands for nearly 20 years though, which may indicate they are ok.

Are you allowed to look through the terms of lease prior to making an offer?

I hope turns out share of freehold. In which case could be ideal. 3 May be manageable without a managing agent. maybe the current owner didn’t want to be a director.

check companies house for the shareholders and directors.

If offer but not proceed until I have had a chance to go through the lease with a fine tooth comb.

A 'faceless corporation' freeholder can see the leaseholders as easy money. You don't have much choice about where they set the service charge. So long as the costs are covered equally across the leases, fellow lease-ee neighbours are likely to be very cost conscious.

When we paid into a sinking fund it was a minimal amount (paid annually) compared to the other charges.

If the property as a whole seems in good condition then you'd hope that there wouldn't be a need for a large sinking fund for any emergency. Normal maintenance such as communal decorating should be covered under the usual leasehold payments.
With regards to seeing the lease, ask. We've just sold & had to pay a lot of money for the management company to provide all the leasehold info (management pack) showing accounts, spend etc. £600 plus for two. I'd hope that with this being a two person freehold/management company situation you'd not have to pay those costs. But worth checking if they will charge as you'll need to add that onto your solicitors fees.

Thank you all for your input. I have decided not to make an offer on the property as the leasehold arrangement seems fraught with potential issues, it'a been an eye opener reading some of your posts! Freehold is much more straightforward, as I said previously my area is predominately freehold so I will stick to what I know.

I will never buy another leasehold property again. But maybe I’m in the minority. However I know some people may not have a choice.