Freeholder management company redeveloping flat above mine

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  • Freeholder management company redeveloping flat above mine

    I am a shareholder/flatowner and the freeholder management company is enabling the flatowner upstairs to construct a large dormer, reclaim a flat roof as a roof terrace and replace the existing pitched roof with a flat roof. Altering the structure of the building is not allowed by lessees but apparently nothing prevents the management company from doing it.

    I live in my flat and dread the idea of many months of having a construction site above my head. The works are permitted M-F 8am-6pm, Sat 8pm-12pm. I'm the only shareholder who is opposed to the work so the flatowner above is pushing ahead. He is relying on his contractors insurances and will not provide any form of security aside from funds held in an account to ensure completion of the proposed work. Despite the myriad of unknowns with this undertaking, no other flat owners have objected to the proposal. The management company receives no benefit aside from a new roof.

    My flat is the only one in the building with 100% party wall exposure to the area of the work. There's no way I'd want to be inside my flat while the works take place due to the noise and vibrations, not to mention a staggered period of internal works and I would be required to allow contractors into my flat so they can access the plumbing. In my lease: "The Landlord covenants with the Lessee to permit the Lessee peaceably and quietly to hold and enjoy the Flat without any interruption or disturbance from or by the Landlord or any person claiming under or in trust for him."

    Do I have any entitlement to compensation while works take place and should the flat owner indemnify the company given that it has no assets?


  • #2
    Leases are normally written so that nothing stops the freeholder from doing it. Most management companies cannot spend on improvements.

    Replacing a pitched roof with a flat roof seems retrograde, and is likely to increase maintenance costs, assuming roof repairs are shared.

    They will need full planning permission. Did you object when that was sought.

    If the lease says that alterations are not allowed, what that actually means is that the freeholder can refuse requests for alternations, without giving a reason, but might allow them. (Not without consent means the freeholder cannot refuse improvements. Not without consent, not to be unreasonably refused, means that the freeholder has to have a good reason to refuse. In all cases, the freeholder can impose conditions, and/or require compensation for the increase in value.)

    Are you are shareholder in the freeholder?

    The freeholder should ensure that it protects itself from a default, but that might be by conditions on the consent that would invalidate the licence and allow forfeiture of the lease, if things go wrong. It should also get its own surveyor to validate the design for the work, at the expense of the leaseholder doing the work. These are good practice, but I don't think there is any law that says they must be done.

    Comment


    • #3
      If they are actually working on the party wall (including party floors or ceilings), the Party Wall Act will apply as well.

      Comment


      • #4
        Originally posted by leaseholder64 View Post
        They will need full planning permission. Did you object when that was sought.
        I didn't - the letter from the council was ignored by my tenant at the time so I didn't find out until it was approved.

        Originally posted by leaseholder64 View Post
        Are you are shareholder in the freeholder?
        Yes. A majority vote is all that's required to pass decisions.

        Originally posted by leaseholder64 View Post
        It should also get its own surveyor to validate the design for the work, at the expense of the leaseholder doing the work. These are good practice, but I don't think there is any law that says they must be done.
        Agreed, I asked for this but the answer was that he didn't feel there was a need.

        Comment


        • #5
          Note to others: this seems to be another example of an RMC that is also the freeholder..

          Comment


          • #6
            Does your tenancy agreement require the tenant to forward all notices? It should do! I'm not sure you could sue the tenant successfully for your resultant losses, though, and like most leaseholders, they probably didn't read the agreement well enough to see that clause.

            Unfortunately, the planning department will have already taken into account the impact on neighbours of the building work itself, as well as the final result, and they seem to have thought it was acceptable. The hours your mention are the hours generally considered acceptable for noise, including, in fact, washing machines.

            Comment


            • #7
              is the RMC a limited company?

              If there is a limited company is the flatowner upstairs a director of the company?

              Comment


              • #8
                Is the leaseholder going into the loft, and converting the loft into a habitable area ?

                If so, Is the loft demised to the leaseholder ?
                If not, then the loft space has to be bought from the freeholder, and the shareholders can insist the payment be shared between the shareholders.
                If loft not demised to leaseholder, and he is converting the loft, and freeholder is not selling the rights to use the loft, you can site that the freeholder has no right to give away for free, that which is in essance,a valuable asset of the shareholders, and you can take them to task.

                Also, the permission to
                reclaim a flat roof needs paying for.

                Comment


                • #9
                  Originally posted by ram View Post
                  If not, then the loft space has to be bought from the freeholder, and the shareholders can insist the payment be shared between the shareholders.
                  As I understand it, the shareholders have given permission, but the OP was in a minority on that vote.

                  I suspect that the directors are all the shareholders, which seems common for small conversions, but that is not clear. The way the OP says "majority", I think that either they have all shareholders are directors, or the decision was made in a general meeting.

                  In a normally operating company, it is the directors, not the shareholders that make decisions, but the directors are required to act in the interest of the shareholders.

                  Whilst it was unwise for the company to try to avoid administration charges by not bringing in a surveyor, as far as I can see it is constitutionally valid. It will probably only make a difference if something goes wrong, in which case the OP may be able to sue, as a leaseholder, not as a shareholder.

                  Also failing to share the value uplift (or updating the service charge percentages) may not be fair to the OP, but I'm not sure on what basis he could challenge the legal validity of the decision.

                  Section 4.4 of the RICS guide doesn't say a lot, and seems to redirect responsibility onto the landlord. As appointing a manager seems to be based on failing to follow the guide, I don't see a valid cause to use that approach here.

                  Comment


                  • #10
                    Originally posted by Waterbridge View Post
                    is the RMC a limited company?

                    If there is a limited company is the flatowner upstairs a director of the company?
                    Yes and yes.

                    Comment


                    • #11
                      Originally posted by ram View Post
                      Is the leaseholder going into the loft, and converting the loft into a habitable area ?
                      Yes.

                      Originally posted by ram View Post
                      If so, Is the loft demised to the leaseholder ?
                      No.

                      Originally posted by ram View Post
                      If not, then the loft space has to be bought from the freeholder, and the shareholders can insist the payment be shared between the shareholders.

                      If loft not demised to leaseholder, and he is converting the loft, and freeholder is not selling the rights to use the loft, you can site that the freeholder has no right to give away for free, that which is in essance,a valuable asset of the shareholders, and you can take them to task.

                      Also, the permission to reclaim a flat roof needs paying for.
                      That's precisely one of my arguments against the proposal. When I sent that around, everyone went on radio silence. I think since I'm the only one against it, they just want me to work things out with the upstairs neighbor. As far as they are concerned, they won't have to pay for a much needed roof repair and any direct costs related to the whole project will be outlayed by the neighbor.

                      He's now saying he prefers to do the work as lessee, not as an undertaking by the company and is open to making provisions as long as I agree not to enforce the clause banning structural changes. I wonder what's the harm in doing that.

                      Comment


                      • #12
                        Tying into a few of the answers to various questions that the OP has provided responses to.

                        This is now a transaction with a director, i cannot profess to be an expert on Companies Acts, however see s190

                        " 190Substantial property transactions: requirement of members' approval


                        (1)A company may not enter into an arrangement under which—

                        (a)a director of the company or of its holding company, or a person connected with such a director, acquires or is to acquire from the company (directly or indirectly) a substantial non-cash asset, or

                        (b)the company acquires or is to acquire a substantial non-cash asset (directly or indirectly) from such a director or a person so connected,

                        unless the arrangement has been approved by a resolution of the members of the company or is conditional on such approval being obtained.

                        For the meaning of “substantial non-cash asset” see section 191." [there is more to s190, suggest you read it all]

                        S191 then states

                        " 191Meaning of “substantial”


                        (1)This section explains what is meant in section 190 (requirement of approval for substantial property transactions) by a “substantial” non-cash asset.

                        (2)An asset is a substantial asset in relation to a company if its value—

                        (a)exceeds 10% of the company's asset value and is more than £5,000, or"


                        I think the outcome is that at some point there has to be an independent valuation of the the demise of the loft before it is "sold" to the leaseholder in the top flat and that has to be approved by the shareholder, obviously sale at an "undervalue" to a Director would raise questions!

                        I have been looking at a vaguely similar issue: again not an expert view but to me it seems that recent case law seems to have moving towards giving some protection to the leaseholder who is suffering from the works. Note i say "moving towards giving some protection" as it is a balance between the Landlord's right to develop the property (which i see as he may of course give to another leaseholder by a License to Alter) versus the leaseholder's right to quiet enjoyment.

                        see Timothy Taylor Ltd v Mayfair House Corporation

                        and a summary of it at

                        https://www.lambchambers.co.uk/news-...hc-1075-ch.htm

                        perhaps an outcome would be that the combination of independent valuation (ie increasing the cost of purchasing the demise of the loft) and any costs of compensation paid to you, might make the project non-viable or certainly reduce the profit margin.

                        Comment


                        • #13
                          The R.M.C. company owns the freehold.
                          The leaseholders each have a share in the R.M.C. company.
                          So - in effect, the shareholders effectively own the freehold.

                          When the lease was written, it was for ( lets say ) 5 rooms in the top flat.
                          Had the flat had 6 rooms, the lease could have sold for more money.
                          The Loft for the top flat does not belong to the top flat.
                          The roof does not belong to the top flat.

                          If you are a shareholder, you can, as i said, demand payment for the the sale of the loft, ( but never sell the roof, as one leaseholder could never afford to repair it , if needed, in years to come, then leaks, then court action to make them fix it, but leaseholder goes bankrupt as it is beyond their means to fix.)

                          Added to this unacceptable state, the Directors and shareholders have put themselves in, they are refusing to ACT AS DIRECTORS, and refusing to employ a surveyor to look over the plans for top flat.
                          You NEVER accept a leaseholders surveyors report, as it just may be his mates.

                          The duty of the Directors are to ensure the building work is acceptable, and they get their own surveyor, which is invoiced to the leaseholder.

                          I understand people saying "But we wont have to pay for a new roof"
                          That's all well and good, but the directors can't even be bothered to look after the interests of the other leaseholders, or the rigidity of the building, and much more.

                          Had they sold the loft space ( never sell the roof ) and were doing it properly as above, that would be fine, but they are doing Nothing !

                          They also have to amend the lease to show 6 / 7 / 8 rooms on a new floor plan, and a deed of variation showing the loft is demised to the leaseholder, and all those costs are paid for by the leaseholder.
                          Deeds must also show that the roof is not demised to the leaseholder, but any leaks / structural failure attributed to his altering the roof, is his remit to fix, as his cost.

                          There are so many things wrong with the intended conversion, ( Administration ) that in years to come, massive headaches will ensue.

                          If the directors intend to GIVE AWAY the loft space and the roof, they cannot give it away in compensation for a new roof. ( NEVER sell the roof ) I am not 100% sure, but logic comes into play here,

                          How do you get the information on ....
                          • Are they giving away the loft space. ?
                          • Are they giving away the roof, ?
                          • Who maintains the roof if it is given away ?
                          • Are they having a revised lease drawn up ?
                          • Are they employing solicitors ( at the top flats expense ) to draw up the ins and outs of the proposed give away, in compensation for a new roof ?

                          If the loft and roof were to fall and kill some one, ( some how ) but the roof belongs to the leaseholder, questions will be asked, Why did the freeholder not have their own surveyor inspect the roof, before and after.
                          If the roof belongs to the freeholder, questions will be asked, Why did the freeholder not have their own surveyor inspect the roof, before and after.

                          Worst case is Directors get sued, company goes bankrupt, you lose the freehold, you cant sell any flats.

                          The Directors must sell the loft space, and give that money to the shareholders ( or into their service charge account to use against future charges.)

                          But you have a fight on your hands, and only you can fight it.

                          Comment


                          • #14
                            Thanks for the comments Ram. The so-called logic of not paying for independent advice for the company is that the leaseholder's surveyor is a professional and therefore the advice is not coming from the leaseholder himself. I completely disagree as the advice could be biased towards the leaseholder's interests and the management company would not otherwise know to pick up on critical limitations to the advice.

                            Originally posted by ram View Post
                            Are they giving away the loft space. ?
                            In effect, yes.

                            Originally posted by ram View Post
                            Are they giving away the roof, ?
                            No.

                            Originally posted by ram View Post
                            Who maintains the roof if it is given away ?
                            n/a

                            Originally posted by ram View Post
                            Are they having a revised lease drawn up ?
                            Yes, for the upstairs flat.

                            Originally posted by ram View Post
                            Are they employing solicitors ( at the top flats expense ) to draw up the ins and outs of the proposed give away, in compensation for a new roof ?[/SIZE]
                            So far the proposition is that legal costs are covered only to the extent of issuing the licence to alter and a new lease.

                            Comment


                            • #15
                              Thanks Waterbridge for your comments. Both topics are relevant. Additionally to your first point, if the work was to be done through the management company against my wishes, another director has to step in and engage throughout the project as otherwise it would be hard to distinguish the work as the leaseholder's alone, which is banned.

                              On the second point, the leaseholder has argued that I will benefit from the work as there would be increased soundproofing, however if the work had to be done, my position is that additional soundproofing should come as a given as no doubt there would be increased airborne and impact noise associated with the enlarged property, The inconvenience I stand to suffer and the worry if something goes wrong is not worth it in my opinion!

                              Comment

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