The best sort of lease is a share
of the freehold. In this scenario the leaseholders themselves have control and although
a managing agent is often employed if it is bigger than a house conversion) the
managing agent acts for the leaseholders themselves.
The next
is where the leaseholders don't have a share of the freehold, but have a Right to Manage agreement in place.
This again put leaseholders in control of their own destiny.
The next
is where there the freeholder has agreed for the leaseholders to have a management
company to which they all
have one share. Although, through the management company, the leaseholders are
beholden to the freeholder, they do have some say in management through the AGM
of the company and who is appointed to manage and on what terms.
Bringing
up the rear, and where leaseholders have no control is where the freeholder has
created a head
lease, usually with beneficial clauses to himself, and the leaseholders have
sub-leases (or even sub-sub-leases!) under the head lease. In this scenario,
leaseholders have little power to control costs, and the purchase of these MUST
be avoided for any investor.
I am
involved in one, trying to get more than 50% in one block of 12 flats out of
eleven to exercise the Right to Manage. All bar one are buy to let and managed
by local agents who just will not play ball and pass information to the owner.
Land Registry has the flat itself as the point of contact. Five want to go
ahead, and just one more is needed. The reason is that it is a new build, five
years ago, and leaseholders are currently paying over £1,200 a year. The
mandatory social housing section only pay £271 a year. The reason is that the
head-lessor has a contract with a legally unconnected company (but where two of
the four directors are common with the head-lessee company!) that underakes all
maintenance. It is this maintenance company that really rakes in the money. The
head-lessee works the system with the right s20 notices etc, but unless the
leaseholder work together what is proposed is approved.
Despite
frequent changes in legislation, the law is still heavily skewed in favour the
freeholder. Finding your flat at
any location .Click on allindiayellowpage.com..