The special problems of flat-owners

Required Reading


The special problems of flat-owners

In England and Wales (though not in Scotland) flats are nearly always leasehold. Building societies are in fact unwilling to lend on freehold flats in England and Wales because of problems over maintenance and squabbles about 'who should pay for what'.

Leasehold flats are not, however, necessarily a bed of roses. There are two main problems a leaseholder faces. Firstly, there may well be difficulties with the managing agents of the block, who may not be carrying out their duties properly according to the lease, or who are charging too much for what they do.

The second problem is that of a declining lease, which at some point will begin to affect its saleability and value, as leases near the cut-off point at 50 to 55 years, when a building society will refuse to lend on normal (25-year) mortgage terms.

Leaseholders in flats have two possible solutions to this problem which are discussed below, though both depend on the agreement of the freeholder, who is not obliged to help you (unlike in the case of leasehold houses, where under the Leasehold Reform Act of 1967 leaseholders have the right to buy their freehold).

Cant pay wont pay

Assuming you're not using your house in this way, but are genuinely in difficulties, you should, long before it gets to this stage, consider `trading down' as an alternative, if your financial problems look as if they're likely to persist.

With estate agents' and legal fees, it's an expensive business and you may not come out of the deal with as much as you had hoped; but it's better than having the building society conduct a forced sale where they will be primarily interested only in getting enough money to cover the loan, not in getting the best deal possible. In any case, the society will charge their legal and other costs on the sale to you.

3 You have to give up work because of ill . . .... see: Cant pay wont pay

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