Buying Flat with no management company?

koolpc · 22 Mar 2018 at 22:02

Looking at buying a flat i am interested in. Put offer in which has been accepted.

It is in a terrace, 3 stories. Flat i am looking at is at the top.

4 flats in the block owned by 3 people (one guy owns 2).

Person selling the flat is getting together a legal agreement for all the owners ( of which they all agree) to put in writing that they all will share costs in general maintenance of the building. Now, usually i know that a management company are the ones who sort this out of which one pays a yearly fee to.

These owners want to sort it themselves but without setting up their own company. Estate agent has confirmed that the vendors solicitor is drawing up the paperwork regarding the responsibilities etc.

Now, i like the flat! Should i run away from this? I know my solicitor will make sure all is legal and in my interest too but anyone on here been in this situation?

Any advice would be very welcome. Ta

Glaucus · 22 Mar 2018 at 22:15

you'll find a lot of old flats like this, so not much point running away and it does save you service charges.

it all comes down to how cooperative they are.
ideally, as well as them signing to say any communal repair is split,
ideally you want everyone to pay x amount a month, to cover building insurance and start building up a repair fund.

I don't know the exact details but I know this is the way my brother went with one of his properties.

koolpc · 22 Mar 2018 at 22:37

Who is going to look after the repair fund? Trust is a big thing there i guess. Hopefully the vendors solicitor will be including that in the legal agreement?

Glaucus · 22 Mar 2018 at 22:55

koolpc said:
Who is going to look after the repair fund? Trust is a big thing there i guess. Hopefully the vendors solicitor will be including that in the legal agreement?

you do it all legally, not just some random person holding on to funds.
a quick google suggests it might be a residents management company or association they formed to take care of it.

blueboy2001 · 22 Mar 2018 at 22:59

Is the flat freehold or leasehold? Sounds like its freehold, if so it may be difficult to get a mortgage on.

koolpc · 23 Mar 2018 at 00:50

blueboy2001 said:
Is the flat freehold or leasehold? Sounds like its freehold, if so it may be difficult to get a mortgage on.

Its leasehold and i dont need a mortgage.

mrbazmondo · 23 Mar 2018 at 01:09

Its better than a normal leasehold as it will be cheaper - no one is making a profit from it.
Its worse if you're the one on the top floor and the roof needs repairing and the others don't want to pay to get the roof fixed.

koolpc · 23 Mar 2018 at 01:15

mrbazmondo said:
Its better than a normal leasehold as it will be cheaper - no one is making a profit from it.
Its worse if you're the one on the top floor and the roof needs repairing and the others don't want to pay to get the roof fixed.

If an agreement is in place then they will have to pay their share!

Derek W · 23 Mar 2018 at 08:40

I'd be aware of how they split the costs. If one guy has two flats I'd insist he's paying 50percent with you and the other person paying 25percent each. Rather than a 3 way split.

Glaucus · 23 Mar 2018 at 09:02

koolpc said:
If an agreement is in place then they will have to pay their share!

An agreement ~ physically getting money out of them.

All the time while the roof is leaking. Then do you pay yourself which may be many thousands, then pursue legal action which can take many many months and still doesn't force them to hand over money untill well down the line

This is why a fund is better, also means people aren't hit with big costs that they simply might not be able to afford.

koolpc · 23 Mar 2018 at 12:01

Glaucus said:
An agreement ~ physically getting money out of them.

All the time while the roof is leaking. Then do you pay yourself which may be many thousands, then pursue legal action which can take many many months and still doesn't force them to hand over money untill well down the line

This is why a fund is better, also means people aren't hit with big costs that they simply might not be able to afford.

Paying into a fund may not be easy for some on low wages though. I guess its much like any other householder in that if an emergency arises one has to get the money from somewhere.

koolpc · 23 Mar 2018 at 12:02

Pringle W said:
I'd be aware of how they split the costs. If one guy has two flats I'd insist he's paying 50percent with you and the other person paying 25percent each. Rather than a 3 way split.

Yes, i hope that is common sense to the solicitor that is drawing up the contract.

Glaucus · 23 Mar 2018 at 12:14

koolpc said:
Paying into a fund may not be easy for some on low wages though. I guess its much like any other householder in that if an emergency arises one has to get the money from somewhere.

paying £25 a month into a fund is far easier than finding £2k and more importantly puts you less at risk.

trouble is you are relying on other people just to find the money from somewhere.

koolpc · 23 Mar 2018 at 12:26

Glaucus said:
paying £25 a month into a fund is far easier than finding £2k and more importantly puts you less at risk.

trouble is you are relying on other people just to find the money from somewhere.

Yea, i agree. Maybe they will want to save separately in their own account. I will have to wait and see i guess. Going to look at the flat again on monday for 2nd time to make sure i am 100% happy with it before i start spend money on survey and solicitor fees.

mrbazmondo · 23 Mar 2018 at 13:03

You've also got to watch out for that one person that is oh so helpful offering to administer the leasehold just so they can profit from it.

koolpc · 23 Mar 2018 at 13:20

mrbazmondo said:
You've also got to watch out for that one person that is oh so helpful offering to administer the leasehold just so they can profit from it.

Guess it can be a minefield

DrCheese · 23 Mar 2018 at 18:28

What if the fund doesn't have enough cash in it for the repairs - i.e one year into it you get a leaky roof that needs replacing? Sounds a bit risky imo

Glaucus · 23 Mar 2018 at 19:11

DrCheese128 said:
What if the fund doesn't have enough cash in it for the repairs - i.e one year into it you get a leaky roof that needs replacing? Sounds a bit risky imo

you revert back to splitting costs equally between the flats. It's not risky in the slightest compared to no proper management.

also means you are probably all paying for full building insurance rather than buying it as a group, amongst other things.

one person cant decide the fate unless you let them, most set up so that you are all the same and have an annual vote on insurance policies etc.

koolpc · 23 Mar 2018 at 23:39

Plus, its the same if one owned a normal freehold house and the roof needed replacing. Money would have to come from somewhere!

Glaucus · 24 Mar 2018 at 06:27

koolpc said:
Plus, its the same if one owned a normal freehold house and the roof needed replacing. Money would have to come from somewhere!

Yes, but you seem to be missing the point. You are in control of that. You are not in controll or 3 other people or how ever many flats there are, and larger roof and thus more cost.