They are never quite sure what length of time is reasonable or acceptable in the market but in real terms you are looking for over 80 years before you really need to take any action regarding your lease. Is it therefore worth considering buying the freehold?
Many leaseholders don’t appreciate that they can actually speak to their freeholder and ask whether he would be interested in selling the freehold. You may be surprised that they would be happy to sell the freehold for a set figure.
However, if they don’t then you are entitled to collective enfranchisement with your other leaseholders in the building.
Why should I buy my freehold?
With purchasing the freehold of the property it will put you in charge of all of the outgoings. Yes, it can be daunting taking over the management of a building and it is not for everyone. However, it means that you will be in control of the cost thereafter. There is no reason why you cannot employ your own managing agent in respect of a property and get them to manage it on your behalf. You may find a local managing agent that you can work with and who will be able to help you reduce your overall costs in respect of the building so that you can keep your day to day expenses as low as is possible.
We can help with your building insurance and are able to provide you with a quote at any time. Don’t be frightened of calling us on (01273) 827090 to discuss any requirements you may have.
Do I need to keep my existing managing agent if I buy the freehold?
No, you don’t have to keep your existing managing agent you can actually change at any point. What you should consider is looking at what your managing agent does. You may be happy with him already and you have no issues with them but it is the costs that are a concern. Why not speak to them and discuss how you can reduce this. One of the main areas is the building insurance. You will often find that freeholders will add huge amounts to the insurance to earn money from it. You can ask your managing agent at any point the exact amount of commission that they earn as well. This has been law for some considerable time and there is no reason why you can’t ask for this.
We have found over the years with managing agents that they don’t like to disclose the amount that they earn from the commissions that they receive. This is because lessees suddenly realise that the insurance has been inflated in order to produce them additional income. Obviously they are a business and have to earn money but if they already collect management fees and supervision fees of works then they are actually earning their money.
Why not ask them what their commission is on the insurance. You will find that they will then inform you that they have to use the commission to deal with an insurance claim. This is often an excuse that we receive via lessees when getting a quote. However, if there are no claims then there is no work to be carried out.
They also are already being paid management fees to manage the building which would include the insurance.
Don’t be frightened of tackling a managing agent or alternatively asking questions. It is your legal right to do so.
Should I extend my lease before purchasing the freehold?
It is totally a matter for you and we suspect it would boil down to the question of cost. The lease extension may cost some considerable amount of money but purchasing the freehold even more. However, you might find that when you speak to the other lessees they are also interested in purchasing the freehold so overall it would be cheaper for you. If you own the freehold then you are in total control of who manages the building and what can be done although you have to adhere to the contents of the lease at all times.
Do I need to use a solicitor for the purchase of a freehold when dealing with enfranchisement?
Absolutely yes you would need a solicitor to deal with not only the purchase of the freehold but also the legal documentation in serving the relevant notices for any form of enfranchisement.
We would suggest that you speak to your local solicitor in this regard.
I am unhappy with my managing agent but my freeholder won’t do anything what do you suggest?
You can always look at a right to manage. We have done lots of articles on this site to explain to leaseholders what a right to manage is and how this will help you. It is a no fault system so you can automatically have the management transferred over to yourself so that you can deal with it.
I have problems with my managing agents regarding the service charges do I have any rights?
There are rights for leaseholders to deal with service charges and these are all laid out by law.
Your lease will also set out obligations that the landlord has to adhere to with the contents of your service charges.
You have a right to ask for the first tier Tribunal (The tribunal that deals with service charges) to determine whether you are liable to pay service charges for service, repairs, maintenance, improvements, insurance or management. You may make a request before or after you have paid the service charge.
If the Tribunal determines that the service charge is payable then they may determine the following:-
- Who should pay the service charge and who it should be paid to.
- The amount
- The date it should be paid
- How it should be paid
When you seek a determination from the First Tier Tribunal you will have to pay an application fee and the matter proceeds to a hearing. The total fee payable depends on the application but it doesn’t normally exceed £500.00.
The first Tier Tribunal does have power to award costs not exceeding £500.00 against any party but only on the basis that the application is frivolous, repracious or abuse of process.
There are various other rights that you have laid out and you should consult a solicitor who specialises in landlord and tenant to help you.
The freeholder and/or managing agent are writing to me demanding monies but I don’t feel the demand looks correct is there a requirement to have this laid out properly?
Yes, you are entitled to have a written summary of all of the costs which make up the service charge from the freeholder/managing agent.
These will consist and be laid out as follows:-
- They will cover the last twelve months used period for making up the accounts relating to service charge ending no later than the date of your request.
- They will cover the twelve month period ending on the date of your request where the accounts are not made up to a twelve month period
- The summary must be with you within one month of your request or six months at the end of the period to which the summary relates to
The freeholder has to lay out any ground rent demand in a very specific way and specific wording. It has to notes on for leaseholders as well as notes on for freeholders on exactly what you can and cannot do. These are absolutely critical.
I have received a Section 20 Notice from my managing agent to proceed with work can I object to it?
Yes, you can object to any Section 20 Notices but the best thing to do is to communicate with your managing agent on why you do not believe the work should take place. They will serve this in various forms and please see our articles on our site in this regard.
However, they will first serve a Notice of Intention on all of the leaseholders. The notice must be in prescribed form.
The notice must state what works that they are intending to do and give at least 30 days from the end of the notice and that they will invite nominations from contractors to give estimates.
Estimates will then be obtained and served on the lessee. There are various processes in this regard which the managing agents/freeholders have to go through. If they do not they are not entitled to charge the money that is due.
I have obtained a quote from you for the insurance and it is substantially cheaper than what the freeholder is charging me.
What do I do next?
The best thing to do is to discuss this with your managing agent and why it is so much more expensive. They will normally come up with a list of excuses which is what we have often found. They will list out additional items of cover that they have within their existing insurance. However, some of the items being covered may not be required. No insurance policies can be on a like for like basis. These do not exist. Insurance companies will always differ in their policy amounts but we can always try and tailor the quote that you require to as close as is possible.
If they still do not wish to transfer over then you can challenge the insurance to the First Tier Tribunal. If the saving is substantial which we often find is the case, then you may find the Tribunal will agree with you and force the freeholder to either change the insurance or reduce the premiums payable. Don’t be frightened to challenge the insurance with the freeholder. It is often a huge cashcalc for freeholders and/or managing agents and there is no reason why you can’t have the benefit of the reduction for the whole building.
Obviously be aware that they will do everything in their power to ensure that you don’t change the insurance otherwise they will lose the income however our advice is to be tenacious and let them know that you are not prepared to let it drop. If they are charging huge amounts more on the insurance then what else are they charging more on?
Please don’t hesitate to contact us on (01273) 827090 if you require a quote. We also deal with solicitors that specialise in this area.