New freeholder

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    New freeholder

    I have purchased a leasehold flat in a converted block of three and also am the freeholder of the three flats.I have arranged buildings insurance and understand that I have to write to the other two leaseholders with my name and address details. The leases state how the service charge should be apportioned but the previous freeholder kept no records of amounts paid and when or ground rent asked. Could someone point me in the right direction for advice on what I need to do please Many thanks for any help

    #2
    1. The RICS Residential Management Code sets the standard for administration of service charge accounts and should be your guide..

    http://www.legislation.gov.uk/uksi/2...0160518_en.pdf

    2. The starting date due for annual ground rent will be stated in your lease. The demand ( invoice ) for annual ground rent should show the name of freeholder and address for serving legal notices , is served one month before the due date.

    3. You should prepare a budget for annual spending of the service charge to show leaseholders what you expect are expenses to pay during the year.
    e.g
    buildings insurance £ 900
    replace 3 panels lap fencing £ 150
    roof gutters £ 450
    reserve fund ( ext painting ) £ 600
    Total . £2100.
    The demand for payment of service charge has to be sent , with a summary of leaseholders rights.

    Comment


      #3
      Service Charges – Summary of tenants' rights and obligations. This summary, which briefly sets out your rights and obligations in relation to variable service charges, must by law accompany a demand for service charges. Unless a summary is sent to you with a demand, you may withhold the service charge.

      Comment


        #4
        The demand for ground rent has to be in a very specific form.

        However, I read the question as really saying that the previous freeholder had maintained inadequate accounting records, and probably other business records, such as health and safety files, etc.

        My initial thought is that all this should have come out in the conveyancing,. Given the OP bought a leasehold, the failure to get answers to most LPE1 questions should have rung alarm bells. I'm also concerned that the conveyancer has allowed the OP to buy a leasehold and the superior freehold in the same name.

        Comment


          #5
          Thank you all that is very helpful and yes my solicitor has advised the various safety checks that should be done but never mentioned any problems with the freehold of the block of 3 and our top floor flat being in the same name as there is no finance on the flat. The flat was sold as freehold but was actually leasehold with the freehold in his mother's name because the leasehold was under finance. There was a delay in completion due to the freeholder not serving the correct notices to the other leaseholders for the right to buy the freehold.
          The leases are for 999 years from 2006 with a peppercorn ground rent and the service charge was only about £500 per year in total with no sinking fund left or financial records kept.
          I want to do things correctly going forward so appreciate all your help and advice

          Comment


            #6
            I recommend that you change the ownership of the flat or the freehold into a different name. It can be you and someone else jointly.

            If there is no ground rent payable, there is obviously nothing to demand.

            You should apply service charges in accordance with the lease ie on the dates and in the manner specified. You can only charge in advance if the lease permits you to do so. The service charge accounting period should be specified in the lease and you should prepare a summary of the accounts up to that date.

            Comment


              #7
              The lease and the freehold are both registered individually. They are both registered in my husband and my name jointly. Please could you explain why they should be in different names as our solicitor didn't forsee a problem. Many thanks

              Comment


                #8
                If the ownership is the same, the titles merge, so you should change one of them as suggested. It can be your name only, your husband’s name only, you and someone else eg a child or a friend, or you can put it in the name of a company in which you and your husband own the shares.

                Comment


                  #9
                  I don't quite understand why they would merge if land registry are not requested to do this? Thanks

                  Comment


                    #10
                    I believe it is considered bad practice rather than an absolute must not, but I also believe it can cause problems with lenders.

                    Comment


                      #11
                      They merge because you cannot grant a lease to yourself

                      Comment


                        #12
                        Thank you . We wanted to keep them separate as if we did decide to sell the flat in the future at all (we are in the process of renting it out) it's easier to sell freehold as most lenders will not lend on a freehold flat. Our solicitor never pointed out that there would be a problem with the lease being issued to us. If one name was removed from the freehold then so that the flat is in both our names and the freehold in just one of them would that be a good solution although one of our names would be on both titles ?
                        Thank you all for your help and advice I'm wondering if I need to check back with our solicitor re her advice.

                        Comment


                          #13
                          Originally posted by eagle2 View Post
                          They merge because you cannot grant a lease to yourself
                          I believe that Lawcruncher has said that the merge is not automatic.

                          Comment


                            #14
                            As long as the names are different that will be fine. You should definitely check with your solicitor.

                            Comment


                              #15
                              LH64 - it is not automatic in the sense that the Land Registry will not necessarily pick up the point as appears to be the case here. It is of course a nonsense to agree with yourself to pay yourself monies so that you can carry out obligations for yourself.

                              Comment

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