Is it worth purchasing the freehold on my flat?

13 May 2013

Q

I own a first-floor maisonette and have been contacted by the leaseholder of the ground-floor flat as they object to the high fees of our freeholder (a management company). I, too, baulked at the latest rise, especially as there's been no work on the property in two and a half years. The ground-floor leaseholders have suggested we contact the freeholder to question the latest rise and floated the idea of jointly buying the freehold. I'm hoping I'll be moving within the next two years, so is it worth me purchasing the freehold?
From
CT/London

A

The service charge may be fixed at such a level so a reserve or sink fund is built up, rather than to reimburse for costs of work incurred. This helps smoothe the costs in an effort to guard against large or unexpected bills.

If you are not sure what the funds are paying for, then it makes sense to seek more information. Then, if you feel you're not getting good value for money, you can at least ask the management company to justify the level of service charges.

The advantage of the leaseholders buying the freehold is it puts them in control of expenses and costs. What you don't know is the value a buyer would place on having a share of the freehold when you come to sell.

That has to be balanced against the cost of purchasing the freehold and the legal work involved, assuming the freeholder wants to sell.

In some cases, there are rights to acquire the freehold or to contest the level of service charges. The Leasehold Advisory Service website has a wealth of useful information (lease-advice.org).