Buying a flat in a
block, whether its a converted house or a purpose built building, may seem
like a fairly straight forward process, and generally it is, providing the
freeholder is contactable and you can provide evidence of
flat insurance,
the process should be no different from buying a property on a freehold basis.
Your solicitor should be able to complete matters for you with the minimum
amount of fuss or anxiety. Once you become an owner, there are other matters
that will need your attention, in particular the management of your block.
When you buy a flat in a block building, you will instantly as owner, share a
common interest with the other owners in your block. You may have nothing else
in common with these other individuals, you may not even see them on a regular
basis but you will certainly have one major thing in common. The management of
the flats in your building or block and the maintaining of your investment.
Leaseholders do not own the fabric of the building or the land on which it
stands,( these being in the ownership of the freeholder) however, all will all
want to make sure that the building is run and kept in as good a condition as
possible. Your relationship with the other others can de described as
symbiotic, you all should help each other. By maintaining your own flat, you
are contributing to maintaining the whole building, everyone benefits from
this. Your investment is tied up in your lease and in order to protect this
investment, you will undoubtedly have to meet and discuss issues with your
fellow flat owners at some stage.
It will soon become apparent that living or owing a flat in a block will need
a certain amount of planning and management, if you own your own home with a
freehold, your pretty much able to make your own decisions, how and when you
please. Owing a flat is a bit different, for one, if you don't own the
freehold, the person or organisation that does, will have a large part in
issues affecting your property and secondly, you will almost certainly have to
consider the respective rights and interests of the other flat owners in the
block. When buying a flat, many owners move in or buy the flat then rent it
out, sit back and let things happen, Adopting a pro active stance from the
beginning, can help protect the saleability of your property. You can do it
yourself or your solicitor may be able to help but finding out the management
structure of the building. It may seem like common sense, but there are still
countless blocks where individual owners have no channel of communications
with the other owners, surprising since the well running of the block is in
everyone's vested interest. By ensuring a proper structure is in place( if
there isn’t one in force, you could arrange a meeting to discuss this with the
other owners, they may even be grateful that somehow is prepared to do the
organising), you can then start to discuss each owners obligations and discuss
any areas where you are not happy.
In may smaller blocks of flats, management is often on an informal, ad-hoc
basis and this generally works very well, as with only a few leaseholders,
decisions can be made relatively quickly and the owners will probably know
more about their fellow flat owners .
However, once the number of flats in a block reaches 5 or more, it is often
very difficult to keep track of all the owners in the building and in most
cases, there will be a least one or two owners that do not even live on the
premises. If any problems arise with the freeholder, it is often important to
be able to get hold of other owners quickly to discuss issues, in simple
terms, the larger the block the more complex the issues and problems can
become. Of course, many blocks have very proactive freeholders and they may
even use the services of a managing agent to look after the property. However,
it cannot be assumed that either of these will simply act in you, the
leaseholders best interest.
There will be times, as many flat owners will tell you, that you will find
yourself in the position of having to write in a formal manner to them and
having a mechanism in place where you can all speak for all flat owners as one
voice is of paramount importance. Many owners of leasehold flats have found to
their cost, that a freeholder who has been ignoring letters for quite some
time has gone in to liquidation. Some freeholders even discover that following
a serious loss at the building that no
flats insurance
policies are in force and in many cases have not been so for many years.
One of the biggest complaints from leaseholders is the inability to obtain
documentation from freeholders, particularly with regard to insurance
documentation and the importance of obtain proof of building insurance cover
cannot be stressed enough. Many owners of flats have found themselves in the
position of needing to provide evidence of insurance quickly, this scenario
arises when a flat is about to be sold. Often, insurance is the last thought
and it is not until very near the date of exchange that the vendors solicitor
will ask for evidence to be provided. The purchasers solicitor will usually
refuse to exchange contracts until adequate proof of valid insurance has been
received and many sales of individual flats in blocks have fallen through,
because proof of insurance could not be obtained in time.
Whilst the terms of the releases state that the freeholder is responsible for
arranging the cover, in many cases this does not happen and if the freeholder
enters liquidation it is often to late. Don’t assume that just because someone
is supposed to do something they will, obtain proof and always keep copies. It
may seem a little extreme but with the collective values of individual flats
now reaching very sizeable amounts of money, one sure fire way of finding out
if your insurance policy is in force is to obtain your policy number along
with the name of the insurance company, and give them a call, ask if the
policy is in force. Whilst they may be a little reluctant to release a large
amount of detail, they should be able to confirm if the building insurance is
in force or not.
Apart from the issue of insurance, lack of management at you building can
result in other issues. In accepting a lease from the freeholder, you will be
personally obligated to certain issues. In the main this will relate to paying
the building insurance premiums, paying ground rent and an obligation to
behave in a certain fashion towards the other owners and residents of the
block. A form of management will have to be in place to make sure that these
obligations are carried out. Someone will have to collect the ground rent and
building insurance, make sure that the common parts of the building are kept
clean, and in order and make sure that all parts of the building are
adequately maintained. If these tasks are not carried out on a regular basis,
it may be a pointer to other problems.
