Disputes with present freeholder

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    Disputes with present freeholder

    Hi there,

    It's really a nightmare if the freeholder is bad enough!

    When I purchased the property in 2006, the freehold was held by the Council. In August 2007, the Council sold the freehold of the building to a housing association. Major works of the building were planned in April 2012, and the maximum that the housing association can charge me as a resident leaseholder for major works was capped at £5K as per the Stock Transfer Cap.

    In November 2012, unexpectedly, the housing association sold the freehold to the present freeholder (former leaseholder) without giving me any notification in advance. In 2015, a £10K bill was sent to me by the present freeholder for the major works without mention the Stock Transfer Cap.

    Can anyone kindly advice me please:
    - Is it legal for the present freeholder to charge me major works without imposing the conditions that have been agreed with the former freeholder?
    - How can the former leaseholder buy the freehold from a housing association without informing me?

    Any suggestions will be appreciated, thank you in advance!

    #2
    Google doesn't return anything useful on "stock transfer cap", so you will need to tell us what you lease actually says.

    Housing associations are immune from a lot of landlord and tenant law. I suspect the HA is an exempt landlord for L&T 1987 1(4). https://www.legislation.gov.uk/ukpga/1987/31/section/1 In particular see 58(1)(ca).

    Comment


      #3
      Take a copy of your Lease to your local CAB office and ask them for the dates that drop in solicitors come and make an appointment with them to get a free half hour advice from a legal person...

      Comment


        #4
        Originally posted by leaseholder64 View Post
        Google doesn't return anything useful on "stock transfer cap", so you will need to tell us what you lease actually says.

        Housing associations are immune from a lot of landlord and tenant law. I suspect the HA is an exempt landlord for L&T 1987 1(4). https://www.legislation.gov.uk/ukpga/1987/31/section/1 In particular see 58(1)(ca).
        Thanks leaseholder64, do you think that is to do with the lease? The stock transfer cap is because of the council sold its freehold to a housing association. The issue is the housing association sold the freehold (without informing me) and the present freeholder didn't apply the conditions that the housing association has agreed with the council.

        Comment


          #5
          That doesn't answer what "stock transfer cap" means. Please provide the words that define the term.

          The freeholder doesn't have to do anything that is not in the lease, other than the general duties of a landlord of leasehold property.

          Comment


            #6
            Originally posted by Stacker View Post
            Take a copy of your Lease to your local CAB office and ask them for the dates that drop in solicitors come and make an appointment with them to get a free half hour advice from a legal person...
            Thanks Stacker, I have been to CAB office twice, I don't find they are helpful sadly. They said I have to find a solicitor. They did give me a few law firms where offer some free advice. However, I called and they referred me to law centres instead of giving me any advice. And the law centres told me they don't deal with individuals, I need to be referred by an organisation such as CAB. I am being a ball kicked around, so sick.

            Comment


              #7
              Originally posted by leaseholder64 View Post
              That doesn't answer what "stock transfer cap" means. Please provide the words that define the term.

              The freeholder doesn't have to do anything that is not in the lease, other than the general duties of a landlord of leasehold property.
              Thanks leaseholder64, "the Stock Transfer Cap" was mentioned by the housing association (former freeholder) in a letter that was sent to me in 2012. It said that the maximum that they can charge me as a resident leaseholder for major works was capped at £5K as per the Stock Transfer Cap.

              I understand stock transfer is a process whereby the ownership of council housing is transferred to a housing association. And the stock transfer cap is leaseholders' benefit, it's an agreement between the organizations and leaseholders.

              The problem is the housing association sold the freehold again, and the present freeholder didn't apply the conditions and the charges are 10K, doubled.

              Comment


                #8
                I think you should go back to the CAB as they may not know that their referrals are being refused.

                For us to help, you need to provide the details of your lease.

                Please note that it is unusual for leases to specify upper limits on service charges.

                On the other hand, there is a limit of £250, above which the manager must consult with leaseholders before doing work. At one time, that was a limit on what was chargeable, but the courts re-interpreted it, and now you can be charged the full amount, providing it is permitted by the lease and you cannot demonstrate that, if you had been consulted, the work would have been done for less.

                There are proposals to set a limit above which a majority vote by leaseholders can stop the work, but I think that is £10k, and it is only a proposal.

                Was the work that was done something that was needed?

                Comment


                  #9
                  Unless the agreement forms part of the title deeds, and covenants with the leaseholders, I'm not sure how it is enforceable by you. If you are lucky, it will be in the freehold deeds, and you may be able to get a copy from the Land Registry. It may contain wording that makes it binding on subsequent freeholders.

                  Incidentally, a couple of problems with social sector leases are that they typically don't provide for reserve funds, which can smooth out service charges, and they typically do allow for improvements.

                  Comment


                    #10
                    Originally posted by leaseholder64 View Post
                    I think you should go back to the CAB as they may not know that their referrals are being refused.

                    For us to help, you need to provide the details of your lease.

                    Please note that it is unusual for leases to specify upper limits on service charges.

                    On the other hand, there is a limit of £250, above which the manager must consult with leaseholders before doing work. At one time, that was a limit on what was chargeable, but the courts re-interpreted it, and now you can be charged the full amount, providing it is permitted by the lease and you cannot demonstrate that, if you had been consulted, the work would have been done for less.

                    There are proposals to set a limit above which a majority vote by leaseholders can stop the work, but I think that is £10k, and it is only a proposal.

                    Was the work that was done something that was needed?
                    I don't think I explained the housing stock transfer well. Hope this link can give you some idea https://www.publiclawtoday.co.uk/lex...ers-key-issues

                    Local authorities should consider the impact a stock transfer may have on leaseholder service charges when ownership of the freehold transfers from the council to a housing association. The government wishes to ensure that, where additional capital works are made possible by transfer, leaseholders are protected from excessive charges in relation to these works. The Secretary of State will therefore require local authorities to include in the transfer contract a stipulation that service charges for leaseholders of the transfer landlord, relating to capital works, should be capped.

                    Comment


                      #11
                      The transfer to the current freeholder wasn't a "stock transfer". Without seeing the original transfer contract, we cannot see whether it imposes a duty to impose a similar condition on subsequent transfers, and if it does do so, we cannot determine whether or not the leaseholders have any power to enforce that condition.

                      I suspect, for the leaseholders to have any rights, there would have to be a deed that was included when the title was transferred to the current leaseholders, although I suppose it could be a freehold covenant. Whether freehold covenants are inherited when the freehold is assigned is a complex issue, so I'm not sure if a covenant imposed by the council would inherit to the current freeholder.

                      I'd be more concerned, in practice, that there doesn't seem to have been a section 20 consultation.

                      I think the reason that things like your cap are considered necessary when bulk transferring is that social landlords tend to do works to the standards they set for their social renters. That means that the work on the flats that haven't exercised right to buy comes from the housing associations funds,but the long leaseholders have to match this, without the benefit of a reserve fund to spread the cost.

                      When you assign to a private freeholder, I think the assumption is probably that leaseholder affordability will factor into spending plans.

                      Comment


                        #12
                        Also, I suspect the Daejan ruling, that makes the £250 limit a paper tiger will also apply here. The compensation awarded will be the loss to the leaseholder,and simply having to pay a lot of money in one go will not be seen as a loss if not spending it now would result in greater costs in the future.

                        Comment


                          #13
                          Originally posted by hexu View Post
                          Can anyone kindly advice me please:
                          - Is it legal for the present freeholder to charge me major works without imposing the conditions that have been agreed with the former freeholder?
                          - How can the former leaseholder buy the freehold from a housing association without informing me?
                          As has been said already by others, what it says in the lease (and any associated legal documents) is the important consideration here.

                          I would hope that the 'former leaseholder' (who I am assuming is likely to still be a leaseholder, in addition to now being the freeholder) made sure that they were fully aware of all applicable terms before buying the freehold, and they should definitely have done so before demanding any payments - although, unfortunately this isn't always (often?) the case.

                          It is possible that you should have at least been told that sale of the freehold was being considered before this went ahead, but I would consider that to be irrelevant in this case - if you can't afford to pay more than a maximum of £5000 towards major works you would have been in no position to consider purchasing the freehold (especially if it is possible that leaseholders might only be required to contribute £5000 towards major works for which the freeholder might have to pay far more).



                          I'm afraid that I have no sympathy whatsoever for your position.
                          Buildings need to be properly maintained for the benefit of all occupiers, and the money to pay for this has to come from somewhere. If major works are necessary on your building, and will cost each leaseholder £10,000 if all pay a reasonable share, who will pay the remainder of the costs if one (or more) of the leaseholders only has to pay £5000?

                          In some cases it might be reasonable for the freeholder of a building to bear some of the costs of work themselves, but usually it will be fair for all leaseholders to contribute their relevant proportion.
                          In cases where the freeholder will not be able to recover all of the costs of carrying out necessary work you are likely to end up in a situation where work is not being done, and the state of the property will deteriorate as a result.

                          I support the provision of subsidised 'social housing' for people who genuinely can't afford their own property, but home ownership comes with costs. It is completely unreasonable to expect someone else to subsidise the costs of maintaining a property that you own. Owners of 'stand alone' properties can allow their property to deteriorate (with a resulting loss in value) but owners of leases also have a responsibility to the owners of other leases in a property, as the potential sale value of all the leases will suffer if the property isn't maintained.

                          As said though, regardless of what is 'fair', if your lease, or a legal deed (or other legally binding document) does say that the freeholder is restricted to charging you a maximum of £5000 for any major works, then that is all that you are legally obliged to pay (even if you should perhaps morally accept paying more).

                          Comment


                            #14
                            Originally posted by leaseholder64 View Post
                            I'd be more concerned, in practice, that there doesn't seem to have been a section 20 consultation.
                            I'd say that we have insufficient information regarding whether or not section 20 consultation has been carried out, because only the receipt of a bill has been mentioned with no comment on what might have preceded this.

                            It wouldn't surprise me if the sums were invoiced without any appropriate consultation (this wouldn't be unusual and happened when the roof to my block was replaced), but this is an assumption without evidence.

                            I agree that the Daejan ruling effectively means that freeholders can get away with ignoring section 20 consultation (in most cases).

                            Comment


                              #15
                              Originally posted by leaseholder64 View Post
                              Without seeing the original transfer contract, we cannot see whether it imposes a duty to impose a similar condition on subsequent transfers, and if it does do so, we cannot determine whether or not the leaseholders have any power to enforce that condition.

                              Whether freehold covenants are inherited when the freehold is assigned is a complex issue, so I'm not sure if a covenant imposed by the council would inherit to the current freeholder.
                              These are the questions that I am trying to figure out. The stock transfer cap will help and protect resident leaseholders from being charged a lot of money for major works. That is one of the conditions why the leaseholders voted to agree to the council to sell the freehold to the housing association. But now, whose responsibility?

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