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Any advice on recovering freehold repair costs from leaseholders?

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Author Topic: Any advice on recovering freehold repair costs from leaseholders?  (Read 61 times)

TWPaul

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« on: June 23, 2022, 04:03:28 PM »
Afternoon all from a brand newbie!

I won't bore you with the reasons why but I have ended up as a freeholder of a block of 6 flats in a building long overdue an overhaul of internal communal areas and a general external overhaul. Costs to carry out could easily run to six figu8res, will certainly be mid to high 5 figures, so probably at least £8-10k/flat. I say approximately as I did get some estimates 2 or 3 years ago and with that plus inflation and current trade costs...

Two leaseholders (who between them own 4 of the flats, one has 3 as BTL's (my ex-wife, don't ask) are keen to see works undertaken. Two of the others says they can't/won't pay.

I obviously have an obligation to maintain the building, but I can't possibly run the risk of not receiving 1/3rd of the expense for doing so.

Is my only recourse seeking cost recovery after the event via legal means (ie courts)? I appreciate I may be able to contact leaseholders mortgage lenders and tell them that their clients are breaking lease terms but again, unsure how that will go?

Any advice - especially if based upon similar experiences - very gratefully received!

Thank you.

heavykarma

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« Reply #1 on: June 23, 2022, 11:45:08 PM »
Has there not been any kind of fund set up to cover communal repairs? How have things like fire alarms and communal lighting been paid for? I am a freeholder of 3 flats in a small block. We have a fund,but if anyone failed to pay their contributions we would have to go to court to claim the money owed. 

Hippogriff

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« Reply #2 on: June 24, 2022, 12:18:36 PM »
If the "long overdue" overhaul has not happened for such a long time, has it reached a point where it absolutely must happen now?

In these things it sometimes feels like a choice. And - as you know - we are in a cost of living crisis at the moment. It's going to be a challenge to hit people with a - almost unexpected - non-elective £10,000 bill.

Any block of properties, that is being managed in some way, should have something called a Sinking Fund... whereby a premium is added to the Service Charge costs annually, so some is unspent and accumulates for large things... like replacing a roof or something.

If this block doesn't have one - then maybe it is time to introduce one, let it build up over the next few years and then dip into it (along with further, smaller, demands from the Leaseholders) to do the work. You have an obligation to maintain - absolutely - but is there a blurred line between "maintain" and "improve"?

I would just try to be aware of the pressures some people are under and, potentially, warn people to get ready and then delay for a reasonable time. And, if you're lucky, WWIII will commence and conclude, taking 45 minutes at some point, and then it won't be worrying to you any more (or the Leaseholders).

TWPaul

Newbie
Posts: 3

I like property
« Reply #3 on: June 27, 2022, 01:32:17 PM »
Quote from: Hippogriff on June 24, 2022, 12:18:36 PM
If the "long overdue" overhaul has not happened for such a long time, has it reached a point where it absolutely must happen now?

In these things it sometimes feels like a choice. And - as you know - we are in a cost of living crisis at the moment. It's going to be a challenge to hit people with a - almost unexpected - non-elective £10,000 bill.

Any block of properties, that is being managed in some way, should have something called a Sinking Fund... whereby a premium is added to the Service Charge costs annually, so some is unspent and accumulates for large things... like replacing a roof or something.

If this block doesn't have one - then maybe it is time to introduce one, let it build up over the next few years and then dip into it (along with further, smaller, demands from the Leaseholders) to do the work. You have an obligation to maintain - absolutely - but is there a blurred line between "maintain" and "improve"?

I would just try to be aware of the pressures some people are under and, potentially, warn people to get ready and then delay for a reasonable time. And, if you're lucky, WWIII will commence and conclude, taking 45 minutes at some point, and then it won't be worrying to you any more (or the Leaseholders).

Thanks for your reply. Yup, I get all those suggestions. As for whether a sinking fund 'should' have been set up, bit irrelevant, it wasn't (main reason being that pre-divorce I used to own all the flats as well, and costs were settled on an 'as and when' basis) fact is that others now own all the leases and have done for need for repairs to go from a 'really should do soon', to 'soon flats will be far less unsaleable if works aren't done/, I own the freehold only. A couple of the flats have changed hands in last few years and each time it was mentioned that a hefty charge was coming soon. But being aware and being prepared to actually fund are clearly two different things. I also get that times are pretty tough now for many.

I've asked everyone for feedback on a short timescale so will wait until I have definitive answers.

TWPaul

Newbie
Posts: 3

I like property
« Reply #4 on: June 27, 2022, 01:35:06 PM »
Quote from: heavykarma on June 23, 2022, 11:45:08 PM
Has there not been any kind of fund set up to cover communal repairs? How have things like fire alarms and communal lighting been paid for? I am a freeholder of 3 flats in a small block. We have a fund,but if anyone failed to pay their contributions we would have to go to court to claim the money owed.

Thanks for your reply. Buildings insurance and fire alarms (plus the odd essential repair) are invoiced annually, insurance in advance, repairs in arrears - which was how leases were originally set up, there is no provision for a sinking fund. This has worked fine to date, but there's a difference between settling a bill for maybe £400 and committing to fund a bill of potentially £10k.
« Last Edit: June 27, 2022, 01:36:46 PM by TWPaul »
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