A Management Pack which is often known as ‘Sales Pack’ containing a set of forms and documents relating to the sale of the property where a service charge is paid to a specific Management Company who maintain shared facilities especially in the cases of flats and apartment blocks. For example, the pack will include the following:

In all leasehold transactions and occasionally in freehold transactions where there is a Management Company involved, the seller will be responsible for providing the Management Pack to the buyer’s solicitors for review and is payable by the seller. It is not a legal requirement to provide the pack to the buyer’s solicitors however the buyers solicitors nor the buyer may wish to proceed with the transaction without having a review of the pack as it does include vital information which they will be required to report on to their clients due to due-diligence and compliance.

It is crucial to understand that the management pack may be required when selling a freehold property also, this is often the case where the property is a new build and is part of a larger development where the owners are responsible to contribute towards the upkeep and maintenance of the common areas such as car parking, footpaths, and any other open spaces. The details of the Management Company are usually set out within the Title Deeds under the restrictions section.

The pack will also include any requirements and fees payable to the Landlord or management company for the transaction to proceed. There may be a fee to provide a certificate to comply with a restriction on the title against selling the property without the consent of the management company.

The cost of the pack will depend on the Management Company, each Management Company have their own fee and the prices can vary between £100-£500 and is usually produced within 2-4 weeks once it has been paid for therefore it is important that this is requested at the early stages of the transactions avoiding any further delays. However, some Management Companies offer an additional charge to expedite the pack. Once the buyer’s solicitors had a review, they may wish to raise additional enquiries with the Management Company for further clarification.

You can contact our Conveyancing team here or call on 01604 936512 / 01908 953674 or email info@franklins-sols.co.uk.

 

Tenants who are not happy with how their Landlord is managing their building are potentially able to collectively force the Landlord to transfer their management functions to a special company set up by the tenants under the Commonhold and Leasehold Reform Act (CLRA) 2002 and subsequent regulations. This kind of company is known as a Right to Manage (RTM) Company. There is no need to prove wrongdoing or mismanagement on the part of the Landlord or current Management Company in order to force the transfer of their management functions.

The term ‘management functions’ includes but is not limited to:

The RTM provisions will only apply if the following conditions are met:

In order for a Tenant of a flat to be a qualifying tenant they must own the flat under a long lease i.e. one that was granted for a term greater than 21 years.

If the tenants meet the above criteria, they have the right to request the transfer of the management functions of their landlord to a RTM Company.

Our Bespoke and Commercial Property team, headed up by Jo Pusey, are able to advise on your eligibility to force the management functions to a RTM Company and draft and serve the appropriate notices. Our Corporate Department are able to assist you with the formation of the RTM Company.

For further advice and assistance please contact our Commercial Property team on 01604 828282 / 01908 660966 or email info@franklins-sols.co.uk

Typically, in the cases of flats and apartments, there will be management companies who will be involved with managing the services for the apartment block. Each leaseholder (flat owner) will need to pay for the services provided by the management company in the name of service charges.

However, there is a common misconception that these management companies apply for leasehold properties only; there can also be management companies for freehold properties.

There are two ways in which management companies can be created; one, the developer will create the company and then will appoint managing agents to provide the services. However, in cases of smaller developments with a few houses, the individual owners may take a share in the company and collectively run it.

The details of the management company can be found within the title deeds to your property and they will be responsible for maintaining common areas such as footpaths, open spaces, car parking areas, etc. Each property owner will be required to make contributions for these services in the form of service charges.

Will this impact the sale of my house?

Properties with management companies is becoming increasingly common and therefore it should not affect the sale of your property. Although, this does mean that additional paperwork will be involved.  If the property that you currently own has a freehold management company involved, you will need to obtain a Freehold Management Pack (also known as FME1) which will include vital information such as the total service charges (including the likely increases), the details of who organises maintenance arrangements for the shared areas/amenities, payment history, budgets, any fees that your buyer may be expected to pay post-completion, etc.  This pack will then need to be provided to your buyer solicitors for review.

No two management companies are the same and therefore the costs for these packs can vary and the timescales to issue them from the receipt of payment can also vary greatly. Therefore, for the smooth running of your transaction, it is important that this management pack is requested at the outset of the transaction to avoid any delays.

For further advice and assistance please contact our Residential Property Team on 01604 828282 / 01908 660966 or email info@franklins-sols.co.uk

 

A Leaseholder of a residential property is entitled to extend your Lease providing certain criteria are met including the following:

  1. They have owned the property for no less than 2 years;
  2. The original Lease was granted for a period of no less than 21 years.

As a Leaseholder this right is important because the more the term of the Lease decreases, so does the property value.

Whilst many Leaseholders are successful in agreeing an extension with the Freeholders amicably either informally or following service of a Section 42 Notice, unfortunately disputes or circumstances can arise where an application to the First Tier Tribunal Property Chamber (“the Tribunal”) becomes necessary. For example if the parties are unable to agree on the premium payable or the Freeholder simply fails to co-operate or engage in the process.

Once an application to the Tribunal has been made, the Tribunal will either decide the terms of any new Lease, including the premium payable, on the papers filed, or a final Hearing will be listed in order for both parties to present their case.

After considering each party’s case and providing the Tribunal is satisfied that the Leaseholder meets the criteria required to entitle them to an extension, it will grant an Order setting out the terms upon which the new Lease is to be granted. If either party then fails to complete the new Lease incorporating these terms within two months of the Order being granted, a further Application can be made within 2 months to the Tribunal to enforce the Order.

If you have been unable to agree an extension with your Freeholder please contact our Dispute Resolution Department for information about our fixed fee services for Tribunal applications on 01604 828282 / 01908 660966 or email litigation@franklins-sols.co.uk.

The United Kingdom and the rest of the World continues to deal with the COVID-19 pandemic, with different countries using various techniques to not only take control but keep their economies as stable as possible. Whilst the UK Government has passed emergency legislation on a number of measures including the Business Interruption Loan Scheme, many businesses are either struggling to access this through their lender or have their reservations about using it.

One of the main issues for companies is maintaining their cash flow whilst the economy is virtually remaining on hold for the foreseeable future with no certain timeframe for things getting back to normality. If you or your company has cash tied up in its assets such as property, then there are a number of ways that you can release this cash to help get you through this intense and uncertain time.

Selling property

Whilst most of the residential conveyancing market is on hold due to the issues of moving families during the lockdown period and lenders appearing to withdraw most of their higher percentage mortgages, many investment companies will still be looking to increase their portfolio with more buy-to-let properties. These companies commonly have interest only mortgages which require a much greater percentage of the purchase price to be deposited by the company before the mortgage offer is granted. There is still a market available for these types of purchasers.

Alternatively, if you have enough equity in your property and the buyer does not have enough disposable cash to be a cash buyer, you could sell the property at the market value and take the percentage of cash available from the buyer with the remainder being protected by way of a legal charge over the property for a negotiated period. This would then give the buyer time to seek a mortgage or bridging loan whilst allowing the sale to proceed and improve your cash flow at the same time.

Re-financing or additional security

Whilst many institutional lenders are restricting their availability of products, a number of finance companies are still offering mortgages or bridging loans. Whilst these are likely to be more short term and have higher interest rates, they may allow you to release the cash tied up in your property allowing you to get through this period of economic uncertainty. You may then be able to access a better product and remortgage once the economy has settled. If you have enough equity in the property, a finance company may be willing to take a second legal charge over the property subject to your primary lender giving consent to the same.

Sale of freehold with leaseback

If you own the freehold of a commercial property then you can potentially release any cash available from the equity in the property by selling the freehold reversion to an investor. There are still a number of investment companies with monies readily available such as a pension investment schemes. The freehold can then be sold with a simultaneous lease back of the premises to your company. This allows the company to receive the monies from the sale of the freehold yet still have the occupational benefit of the property. Terms of the leaseback would need to be negotiated with the buyer and further advice should be taken on this to ensure that you are adequately protected.

These options will vary depending on your circumstances and so will the implications of the same. You should take advice from your Accountant or Financial Advisor before proceeding to ensure that you do not have any unwanted tax consequences and that it benefits your business as a whole.

If you need any advice or assistance in relation to these transactions then Franklins are here to help. Please contact Reece Chapman, Solicitor in our Bespoke and Commercial Property team on 01908 660966 / 01604 828282 or by email at reece.chapman@franklins-sols.co.uk.

The government has recently announced that it will introduce a ban on the sale of new houses as leasehold, with new build houses to be sold on a freehold basis except in the most extraordinary circumstances. Ground rents will also be reduced to zero for any new leases entered into.

Communities Secretary James Brokenshire stated “We have long recognised that we have a responsibility to confront unfairness in the leasehold market”.

“We will legislate to ensure that in the future – save for the most exceptional circumstances – all new houses will be sold on a freehold basis. We are committed to taking bold action to reform the sector and will be pressing ahead as soon as parliamentary time allows.”

The new policy is in response to widespread criticism of the leasehold system of property which has left many homeowners unhappy with rises in the ground rent and service charge demanded by the freeholder, and that such charges have affected their ability to sell their property. The changes brought in however will only affect new build properties, and there is yet to be any comment from the government about reform to the leasehold system for existing properties.

For advice and assistance in selling your leasehold home, please contact our expert Residential Property team on 01604 828282 / 01908 660966.