Opinion on an 'open ended' lease & damp issues on property I have under offer

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    Opinion on an 'open ended' lease & damp issues on property I have under offer

    Hi all,

    If anyone could give me some advice on my situation it would be appreciated.

    I purchased a 2 bedroom flat (leasehold) outright a few years ago with the intention of moving into the property after letting it out for a short period.

    My plans have changed and I am in the process of re-mortgaging this property to raise funds for deposits on additional properties to let out. My plan is to build a small buy to let portfolio.

    I will have just over £100,000 to use as deposits.

    With my current property I am happy with the management company and how they budget for the year. Usual maintenance of the development comes out of the service charge such as maintenance of the garden area to decorating the communal internal areas. There are approximately 30 flats in this development. So this is the structure I am used to.

    I have recently found a second property which I have had a offer accepted on. The development is a converted office building made up of 5 flats. This redevelopment took place only three years ago.

    So my issue:
    • I am weeks away from completion, however my solicitor has picked up on a number of issues. In consequence I now feel the goalposts have moved significantly since my offer has been accepted and I would appreciate any advice or opinions on this.
    • My solicitor has now been advised by the vendor's solicitor (please bear in mind the estate agent has never brought this to my attention) that there are significant damp issues in the development. A chartered building surveyor has inspected the internal roof and gutters. They have confirmed that the external roof and high-level wall waterproofing are required in addition to a full gutter clearance in order to resolve the damp issues emanating from the external part of the building.
    • Work is also required within the basement to construct the meter cupboard and insulate the water pipes.
    • The Lease does not allow for a reserve fund provision to be collected to cover such costs incurred so the cost of the works which will be split between all leaseholders is in excess of £2,500 + VAT.
    My main concerns are:
    • There are significant damp issues occurring on a development that was renovated only three years ago.
    • This Lease is definitely not what I am used to. I am surprised that items such as gutter cleaning is not coming out of the service charge. All of these items are classed as a special levy and are payable in addition to the service charge.
    • Now the quality of the development is in question I am concerned because the lease seems so open ended - the issues being rectified are not coming out of the service charge and I am mindful of what else I will 'have to put right' due to the questionable quality of the renovation. I could be in a position where the management company could charge any amount of money in addition to the service charge to rectify these types of issues.
    • It is worth mentioning my flat is on the top floor. When I have visited on a number occasions I have never noticed any damp and obviously I had to have a visual survey to gain a mortgage offer.
    My questions:
    • I would appreciate any opinion on whether you would proceed on this basis.
    • I would also like to hear any opinions on the structure of the service charge and lease. As I said, it definitely isn't what I'm used to and is very open ended in my opinion.
    Many thanks.
    Withdraw offer

    What is a special levy? If it is imposed on a leaseholder, it is, by definition a service charge, and only payable if the lease provides for it.

    If it is imposed on company members, you have failed to provide important information, but, in any case, it is only allowed if the Articles of Association allow it.

    It might be that the lease is defective, and the easiest way out is a proposed voluntary contribution.


      Thank you for the reply.

      The special levy is imposed on the leaseholders, not the company members.

      They call it a special levy because it is in addition to the service charge. It is for work that is not being paid for out of the service charge budget.


        It's a service charge or is void.

        On common form of lease requires a payment on account, based on an estimate, but with the option of charging any shortfall if the money runs out. If no reserve fund is allowed, that is the only way of providing for emergencies. You may get both provisions, but a a properly managed reserve fund will avoid the need to make mid-year demands.


          When you are buying into used property, you should expect there may be repair problems which require payment . Not like new build where there is usually cover by the builder..

          If it costs £2500 to put the roof and gutters right , you have to accept the cost but Tax Office will allow you to claim this cost as expense from the rental income..

          If you are not satisfied with the condition of the former office building ( it may be due to poor quality conversion work ) , then you should withdraw from the purchase.


            Purely for my benefit. What is meant by high level wall waterproofing ? Any details would be very much appreciated.


              It's not clear to me whether you are buying a flat in the building or the building as a whole?


                Sorry if my post is not clear. I am purchasing 1 flat. The development comprises of 5 flats in total.


                  You have to ask the management company or your surveyor where are the damp issues ?

                  Does it affect the top flat due to leaky roof ( missing slates ) ? or

                  ground floor flat due to deteriorated damp course , is the outside ground level 2 brick courses below the original damp course ? or

                  middle floor flat due to whatever ? cracked pvc pipe from roof gutter ?


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