Freeholder owns flats as freehold and not paying service charges?

Freeholder owns flats as freehold and not paying service charges?

11:13 AM, 23rd March 2022, About 2 months ago 12

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Hello, there, I’m looking for some advice, please. I own a flat in a block of 160 flats where the Freeholder owned the management company that dealt with the service charge, after a battle for many years we eventually got the RTM.

We found out that the Freeholder owns quite a few flats within the building that are Freehold and not Leasehold like everyone else’s, there’s nothing to state that they pay towards the running costs or maintenance of the building.

They even charged rental for the wiring of the intercom system at 10k per year.

I’ve owned my flat since 2002 when the building was first built, but it looks like they have never paid anything in the last 20 years.

They said they will pay an agreed amount towards the service charge, but this never happened

The problem is, freeholders are the only ones that can force foreclosure.

The building is in a very bad state and desperate for the money, on top of all that, we have the cladding issue to deal with and balconies that are made with wood platforms which looks like the Leaseholders will have to pay as well as a new fire alarm system.

Our solicitors are looking for a sit-down mediation, but they are a big property development company with deep pockets, and they don’t mind delaying or referring things because the amount of money they owe is far less than their solicitor’s costs.

My questions are has anyone been in the same position as this and if so what did they do?

These are shared facilities in the building, surely they have an obligation to contribute, and how should this be calculated fairly?

Can we hold back facilities on their flats, i.e Need to get their own buildings property insurance, can’t use the lifts or concierge services and parking enforcements etc.

Any advice would be much appreciated.

PH



Comments

by Mike in Worthing

15:48 PM, 23rd March 2022, About 2 months ago

First you need facts. "It looks like they have never paid..." won't get you very far in court! You must find out how much they haven't paid.
LTA 1985 s21 gives you the right to information about service charge costs.
LTA 1985 s20C allows you to apply to a FTT not to have to bear the Landlord's legal costs.
LTA 1987 s35 allows you to change your lease if it fails to make satisfactory provision for maintenance of the building. Unfair apportionment qualifies.
You have succeeded with RTM, now it is time to go further and apply the above. (I've abbreviated deliberately, you must be au fait with the statutes to pursue the matter).
You will have to raise funds in readiness for battle. Although only freeholders can forfeit, leaseholders (provided they obtain judgement in their favour for money owed) can apply for a charge on the freehold title if the freeholder refuses to pay.
My immediate thoughts. Good luck
Mike

by Jaye

16:48 PM, 23rd March 2022, About 2 months ago

Speak to Bernie Wales, he's a member here and a 1st class expert in this field.

by SE

11:54 AM, 24th March 2022, About 2 months ago

Thank you all, some great information, it's much appreciated. looks like it's going to be an expensive journey.

by Suresh Parikh

14:17 PM, 24th March 2022, About 2 months ago

I find it difficult to understand that some flats within a block of flats are "freehold."
That does not seem right.
When there is a development, the developer says all leases will be the same mutatis mutandis.
If they are different, then you were put on notice when you purchased your flat at the beginning.
Something is not right about the statement of the problem.

by SE

14:34 PM, 24th March 2022, About 2 months ago

When I purchase of flat I wasn't given any notice that there were developer's own flats that was freehold and no indicating they wouldn't have to contribute to the maintenance etc

by Suresh Parikh

14:43 PM, 24th March 2022, About 2 months ago

Reply to the comment left by SE at 24/03/2022 - 14:34
I am sorry I still do not understand.
Does the developer flat say, for example, that the term is 999 years and the rent is one peppercorn?
More importantly, from your point of view, does the Lease have a clause or a paragraph in a schedule that the demise (i.e., the flat) is exempt from any service charge which is payable by the other flats?
You need to check the Title of the "Freehold Flat" and obtain a copy of the Lease from the Land Registry.
Compare the provisions with those in your Lease.
It is virtually impossible in England to have a mix of freehold and leasehold flats in a single development.

by Mike in Worthing

14:46 PM, 24th March 2022, About 2 months ago

Suresh, a developer is under no obligation to sell all the flats, nor indeed to create leases for those retained. That is perfectly proper. What isn't is for those flats to escape contribution to the service charge. As I said, there is abundant legislation to tackle unfair apportionment. Sadly it's often up to one or two individuals to take the freeholder on. Remember David did kill Goliath.

by Mike in Worthing

15:01 PM, 24th March 2022, About 2 months ago

No. If the developer does not sell the flats they are freehold. They form part of the whole. So it IS possible to have a mix. Trust me - I owned one once!

by Suresh Parikh

15:11 PM, 24th March 2022, About 2 months ago

The development is said to be one of 160 flats.
We are not told how many "vertical heraditaments" make up these 160 flats.
If you have one hereditament with mixed flats, then you were badly advised when buying a flat there without explicit statements as to the retained parts, and whose responsibility it is to maintain them and what is your proportion.
The Land Registry's Prescribed Particulars ask you to state this proportion.
BTW I am not a Conveyancing Solicitor, but one who was taught English Land Law by the great Megarry QC himself. He was not a Chancery Judge then.

by SE

15:21 PM, 24th March 2022, About 2 months ago

The developer has 7 flats within the building that are all Freehold. The property is all residential with no commercial parts.

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