Buying share of freehold - should we manage it ourselves?

[coconutfeet]

We are 3 flats who have an absentee landlord - basically the ground rent hasn't been collected for at least 15 years. So far we've managed by sharing costs to the joint areas and generally being reasonable, but we all agree that it's time to formalise things. We are looking into the costs of buying the freehold between us (a fairly straightforward procedure in our case, I believe).

So now, we're thinking about the practicalities and I'm interested to hear about people's experiences, good and bad, from people who have either managed the company themselves or employed a managing agent to do it for us. Which would you advise, based on you experiences?

I used to run my own small business so am reasonably familiary with the basics of running a company but I don't have a huge amount of spare time.

I'm also going to post this in money, so sorry for any repetition.

We bought our freehold in my previous flat ourselves - negotiated with the landlord and then transferred the freehold. In my current flat we have a share of freehold between 4 flats. Good thing is that we all have a vested interest in keeping property up to scratch but it can be difficult if you have one flat owner who doesn't want to shell out for stuff, won't pay their ground rent etc. We take it in terms to be co. sec and hold all the files. I do the accounts every year - they are very straightforward.

Thanks ladybiscuit. That's really helpful.

its fairly straighforward and given you have only three you should be ok. just make sure you have very sound legal advice about drawing up t's and c's for company which you will form to buy the freehold and manage the property to cover ALL eventualities. you mighgt all be good friends now but who is to say a new buyer will be as accomodating.

With only 3 flats why not? You will just be doing what you are doing now. My recommendation would be to start a sinking fund to save up for future capital items like roof repairs or new windows.

Our flat is one in a shared freehold block of 8. There is a management company owned and run by the owners and we are all shareholders in the company. We all also have long leases of our flats which set out how we interact and block maintenance.

Before we bought, the block was in a pretty awful state as the guy we bought off was a complete arse and nobody could face dealing with him. It is now more or less up to scratch. One of the first things we did was go through the lease and set out what had to be done and the frequency e.g interior decoration every 7 years.

We now have a sensible budget, a programme for regular meetings and works and most of the big stuff is done. There does need to be someone who keeps control of it all and can take action if one owner is a complete git though. We tend to do monthly payments and work only happens once the money is in the sinking fund.

I don't want to unneccesarily complicate things, but have you thought about a commonhold arrangement? This was a new type of legal ownership strucure introduced in 2002 iirc, and aims to get round some of the problems commonly incurred by owners of shared freehold/ long leasehold flats. See:

www.lease-advice.org/commmain.htm

I have to be honest and say if I was a buyer (imagine you were selling in a few years' time) I would be actively put off by a share of freehold arrangement, especially if that arrangement was not properly drawn up by a qualified and indemnified legal professional. I have a hunch that this is one area where it's probably not a good idea to 'do it yourself'.

Thanks everybody.

Narmada, I will look into the commonhold arrangment. I'm not familiar with this.

We would definitely get it all done by a qualified professional. At the moment, because there's no landlord in charge we are doing it all ourselves and we all recognise the need to formalise it. Can I ask why it would put you off?

If I was a buyer I would be put off by a commonhold because it is very very rare. The scheme has had a virtually zero take up and most solicitors have never come across one.

Share of the freehold with the freehold held by the management company is far better than an absentee landlord with no interest in maintenance.

Share of freehold was a prime motivator for choosing this flat - it means we have control over the maintenance and when and what gets done rather than the landlord suddenly deciding to do some spurious 'work' and charge us an arm and a leg for it which is what used to happen in my old place. And it also means we know one another well and act like a true community within the one house which is really nice, even though we are all very different

Lady Biscuit - That's what I'd hoped. I thought it would appeal to people who want to have a real stake in the property. An absentee landlord with no interest in the property is surely more offputting.

So, if commonhold isn't very well known, presumably it's likely to make the conveyencing more expensive for any buyers as the solicitors will have to do more work to sort it out.

When you sell a property with a share of the freehold, the buyer buys the share of the freehold, and with that purchase signs the contract agreement that is in place, therefore taking on all the responsibilities we've agreed on, right?

I have ordered a book on this from Amazon, and will obviously get proper legal advice, but I'm just trying to get my head around this before we have a preliminary meeting to discuss our options.

Thanks for eveyone's feedback!

Because we have a management company that manages the flat and we are all directors, as well as a share of the freehold, you get shares in the company (which are worth £1 each or something minimal). You can't own shares if you're not a freeholder so once you sell your property, you have to resign as a director and the new flat owner is appointed as one. It's all on the Companies House website - you can do pretty much everything you need to do online now