When you buy a flat, it can be easy to forget that what you are actually buying is a lease; a contract which contains extensive obligations and which can, in certain circumstances, be terminated. It will eventually expire and in the last 80 years or so of its term it will decrease in value and will probably be unsellable, other than to cash buyers. There are however good reasons why flats are sold as leasehold, the main one being to ensure that there is a uniform system for keeping the building and common parts in repair. We have extensive experience advising both occupying and investment flat owners and also building owners on a wide range of contentious issues that arise in connection with flats and the buildings in which they are situated.
Service Charge Disputes
Typically flat owners pay a regular service charge to the building owner or their management company, who in return will spend this money keeping the building and common parts such as entrance halls, lifts and stairwells in repair, as well providing services such a maintaining communal gardens, security and concierge. Often a ‘sinking fund’ is built up to cover big non-routine costs anticipated such as major roof repairs, installing a passenger lift or replacing cladding. Problems can arise where the building owner is perceived to be overcharging or charging for things not covered by the lease, or where flat owners are sent a big bill out for the blue for some major work, that they may not even consider necessary.
We can assist flat owners in challenging excessive service charges by negotiation or through the first tier tribunal, which has the power to reduce service charges to what it considers a reasonable sum. In some cases, where an excessive service charge is not an isolated incident, tenants may wish to consider exercising statutory rights to take over the management of the building or to acquire the freehold.
We can assist building owner landlords in recovering unpaid service charges from defaulting flat owners and defending challenges to service charges which are sometimes spurious and used as an excuse for not paying the charges.
Major Works Consultations
Where major non-routine works are required to the building, the landlord building owner has a statutory duty to consult with the leasehold flat owners on the works required and the choice of contractor(s). We advise landlords on how to correctly follow that process and we advise tenants on what do when that process is not followed correctly. In urgent cases, a landlord can apply to the tribunal for permission to skip the consultation (known as ‘dispensation’) , but leaseholders have an opportunity to oppose. We act for both landlords and leaseholders (including groups of leaseholders) in both bringing and opposing dispensation applications.
Almost all flat leases require the landlord building owner to keep the building in repair. However sometimes landlords neglect to do this, engage poor quality contractors or simply do not have enough service charge payments ‘in the pot’ to pay for the necessary works. Ironically this is sometimes because flat owners have refused to pay their service charge because of the condition of the building. We assist flat owners in bringing housing disrepair claims to force building owners to carry out building repairs and to compensate the flat owner. We also assist building owners in defending such claims.
As flats are typically leasehold, they can be forfeited (i.e. brought to an end prematurely) if the lease is breached. In practice this is not easy, but is not impossible either and there are reported cases of this happening. Long leases are protected by statute, such that a landlord wishing to forfeit would first need to either procure an admission of breach or a court or tribunal determination of breach. The landlord would then need to serve a s.146 notice, before issuing possession proceedings and finally evicting with the assistance of a court bailiff. If at any time prior to eviction, the tenant remedies the breach they will be able to stay. However, taking action will often lead to the tenant stopping doing the act complained of and, in the case of service charge arrears, the flat owner’s mortgage company will usually pay at some point during the process to avoid losing their security over the lease, which would evaporate upon forfeiture. We work with both building owner landlords and leasehold flat owners in relation to these matters.
Few things can be more disruptive and worrying for flat owners or their tenants than water leaking through the ceiling. In a block of flats this is not uncommon, but the difficulty is understanding who is responsible. Is it the flat above, the landlord, the building owner or someone else? These situations need addressing quickly and insurers (and their panel solicitors) often cannot respond or get to the heart of the matter quickly enough. We work closely with expert water ingress specialists and able to respond promptly, if necessary injuncting the party responsible to force them to fix the leak, before seeking compensation for damage to your property, alternative accommodation and inconvenience.
When living in close proximity to others, issues with noise and other nuisance from time to time are inevitable. There has to be some ‘give and take’. Sometimes though things can go too far. A loud house party until 11pm every so often is one thing; partying every night until 2pm is another. There can also be issues in mixed use premises were flats are built over a bar, nightclub or live music venue, particularly where there is inadequate noise insulation. We are able to assist flat owners in taking action against nuisance neighbours or their tenants, if needs be obtaining an injunction or persuading the problem occupant’s landlord to terminate their tenancy
Right to Manage
Unfortunately some building owners or their managing agents do not look after their buildings properly. Where this is not a ‘one off’ issue, a more dramatic solution is required. Sufficient numbers of flat owners acting together are often able to exercise statutory rights to force the building owner to hand over the management of the building to a service company set up by them. We are able to advise flat owners as to whether these rights can be exercised in specific cases and how to exercise them.
Flat leases will eventually expire and if allowed to expire, the asset will become valueless and disappear. Fortunately most flat owners have statutory rights to extend their lease by 90 years in exchange for the payment of a premium to their landlord. If the premium cannot be agreed it can be determined by a tribunal. To qualify a leaseholder must have owned their flat for at least 2 years or have taken an assignment of a notice served by the previous owner exercising these rights. Whilst a lease extension can take place at any time prior to expiry, the premium payable will be higher when the remaining term falls below 80 years and it would be difficult if not impossible to sell the flat to anyone other than a cash buyer. We are able to advise flat owners as to whether these rights can be exercised in specific cases and how to exercise them.
In certain circumstances, groups of flat owners can team up to exercise a statutory right known as collective enfranchisement, which enables them to force the building owner to sell the freehold of the building to them or a corporate vehicle set up by them. This often becomes attractive when the building owner is not looking after the building properly or is perceived to be charging excessive service charges. However a premium is payable to the current freeholder which can be assessed by the tribunal if not agreed. These premiums can be substantial. We are able to advise flat owners as to whether these rights can be exercised in specific cases and how to exercise them.
Right of First Refusal
Generally, if a building owner wishes to sell the building, he must give the leasehold flat owners the opportunity to buy the freehold first. If a building owner sells the building without providing the flat owners with this opportunity, he will, without a reasonable excuse, be committing a criminal offence and the flat owners will be able to compel the purchase of the building to sell it to them. We assist building owners in complying with the statutory notice procedure and flat owners in actioning their right of first refusal, or where they have not been given first refusal, to force the new building owner to transfer the property to the flat owners.