Not sure who this advice is for, or if it is coherent. It is
more a call to arms. We need to find a better way to manage leasehold property
in England.This goes along with my advice - if you have a choice don't work for a lawyer, unless you are a lawyer.
On Saturday I got into a heated discussion with my friend
Simon. He was furious at the service provided by the Housing Association
managing his block. They kept making mistakes in his service charge and then
there was this issue of the paladin bins. He and his friend Reg had done some
research and discovered that they could buy the bins more cheaply than the
managing agents were renting them from the council.
My view is that the managing agents were probably managing a
huge number of blocks, that the management fee income they were getting was
probably not covering their costs. Basically they were probably getting more
than they paid for. I asked, would you pay more, say three times as much if they guaranteed
to not make mistakes and take an interested in betters ways of procuring the
bin? Well, no not really.
Would they want to enfranchise and manage the building
themselves. Well no because it is only me and Reg who cares.
The dovetails with the experience another friend was having
with major works. Significant works is required to the balconies in her
building. They have enfranchised and therefore the management company is made
up of residents. Should be straight forward? Well no, because not all the
leaseholders are resident. Some are buy to let landlords who do not want to
foot the bill of the work. Others are on fixed income and don’t have the money
up front.
The work is now much delayed and more than one shouting
match has taken place.
But if they had collected a provision then there would be no
problem. Well not that easy. Provisions work best if collected over a long
period of time to fund replacements. On a new build block recently I had to
manage complainants unhappy about the level of the service charge. In
particular the provision for future replacement. Typical of the comments;
'I am not going to be here in 50 years time, I don’t want to
pay for the roof replacement.'
Of course go back to what the lease says. This normally only
leads to lawyers who spend money that does not exist enforcing terms. Or the
Commonhold and Leasehold Reform Act 2002. Again a short trip to legal expense.
Basic problems with how we manage flats
1)
For the individual leaseholder. While have right
to be consulted has limited control over the timing of major works. If
provision has not been collected they can be many thousands of pounds. However
those selling flats try to keep provision low to enable sale, therefore
inadequate funds are collected. Also unlikely that block will be managed to reflect their personal desires an prejudices.
2)
For the private managing agent- while one can
charge a management for on what is spent this does not generate the kind of surplus
that enable to do more than the minimum. Few leaseholders will pay for ‘more’
service.
3)
For the enfranchised management company- Not all
residents are on the same page, and getting agreement from your neighbours can
be a fraught place.
Net result is everyone is dissatisfied.
So, don’t buy a flat. Or we should find a better was of managing
leasehold.
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