Compensation for changed lease terms

[2Margaret]

We are negotiating to buy small 2 bed ground floor flat in purpose built block of 8). We were advised annual maintenace charge of around £380 (a lower figure than that paid by the upstairs flats who benefit from a lift). The annual lift costs are met by the 6 upstairs flats. However, at the eleventh hour we have discovered that the rules of the residents association have recently been changed so that all flats share the cost of the lift. This means a hike of approx £175pa for the two groundfloor flats and a reduction of £50+ for each of the 6 on upper floors. The original lease does state that all costs shall be shared equally between the 8 flats but when the freehold passed to the block in around 2005 the rules stated that the 2 ground floor flats would not pay for the lift as they received no benefit from it.

It appears an AGM recently had a proposal which was passed to the effect that all flats should share the cost equally.

It appears little legally can be done because of the original lease, however it has been suggested that we renegotiate the purchase price (currently £142,500).

Does anyone have any ideas as to what would be a fair reduction? It's not just the extra annual £175 which will obviously increase each year, but also the possible extra cost should the lift need major surgery! At the moment the lift maintenance cost is the largest single item on the annual charge.

[redcrx]

you can offer any figure you want, they may turn it down but may not, its the chance you take.

but it does sound right that all flats pay same amount. After all, ground floor flats would never have damage from leaks in roof, or have use of upstairs carpets either, or need to worry about the decoration on top floor landings, and top floor flats would not really need to worry about floods etc and yet i expect they all pay same insurance and maintenance costs for those

[2Margaret]

Thank you redcrx - I understand the point you make - however, this change in the RA's rules has only just been made and seems to coincide with the flat being sold and the other ground floor flat sold in the last 12 months and not occupied full time. There's no way a vote could be 'fair' as obviously 6 would be in favour and 2 against. Given that we have only just been made aware of this (last 24 hrs) and exchange and completion due within 10 days, it seems to be an attempt to make the change when no-one is around to challenge it. The flat we are buying is empty and apparently the vendor has no knowledge of this change. The options we have are to pull out, accept the situation or renegotiate on price. Because we are cynical about the way this amendment has been brought in we feel our only options are 1 or 3 but it is difficult to come up with a figure that is fair to both sides.

[bednobs]

as red says, you can offer, but if they don't accept, are you really really going to pull out for the sake of £175 a year? There will probably be a sinking fund if major works need doing to the lift, and at least you have found out before exchange.

[2Margaret]

Yes, we would be prepared to pull out. It is the principle and the fact that this change appears to have been brought in at this time. Perhaps we are being over cynical. The sink fund is not large and if there is major work on the lift required the cost will be very high. What we would like to know is if you were in the same position, what price reduction would you go for.

[2Margaret]

Incidentally, the AGM appears to have been brought forward from November to sometime recently, hence our cynicism.

[ladybirder]

Is there a Sinking Fund in place for any large repairs which now would include the lift?

[ubasses]

If you are taking a mortgage you could find out how much smaller mortgage you would need to be to recoup £175 per year in interest. Then make a new offer based on reduced mortgate. This will not give you any protection against future increases in maintence charges or big repair fees.

[ladybirder]

To be fair to both seller and buyer I don't think you should be looking to recoup more than say, the next 5/6 years extra maintenance costs. Why should the seller in effect be contributing to your costs for longer than that?

[2Margaret]

Ladybirder- thanks for your input. The reason possibly why the seller should contribute more is that the vendor did not advise us of this and says did not know. However, this seems unlikely - even if did not attend the meeting suspect that the vendor would have been advised of this. If we had known of this at the beginning it would have influenced our offer and our decision.

[redcrx]

so you should base you offer and decision on what you know now, as if its a new purchase. Thats all you can do

[Eve]

If the flat is empty and the vendor is not living there it's possible (unless they asked otherwise) that any notices have been sent to the flat and they haven't got them to be aware.

Cynically speaking, could there be anticipated works due to the lift or a hike in maintenance contract or similar in the very near future (or already but put off), hence the swift rule change to spread the cost?

Could you ask for copies of the most recent and last few AGMs and maybe some info about the lift eg last service report/maintenance log if they are available, current condition, any known or reasonably anticipated increase in costs in the next "x" months/couple of years etc... see if that sheds any further light. I'd get your solicitor to ask some further questions.

[bednobs]

i was thinking about this a bit more last night, and was thinking, you may have been in the position where the agm was in november like normal but you'd already bought the place. By the sound of it the outcome would be the same, so you'd just be in exactly the same position

[Skyline D]

Unless the decision to change could be vetoed by a single vote I fail to see what difference it makes when the AGM was. You'd be outvoted 6 - 2 whenever it was anyway as bednobs says.

It's up to you how much to offer of course but if you really are prepared to lose the flat over it then, I'd be tempted to reduce my offer by at least ten years costs. Not that it really means a lot but does the lift look like it may need repair soon? To be fair, lift repairs unless the whole thing need renewed are unlikely to run to thousands per flat not be reuired too often in an ownership period. I'd probably drop to £140k and if the seller isn't willing to drop that far walk away. But that's just an opinion in the blind!

[2Margaret]

Thank you all for your comments and advice. The lower maintenance charge was a big factor in deciding to buy the flat - we are only going to be there for odd periods to be near family and it seemed to make sense that the charge would be lower for the ground floor with no need for the lift. The change to the rules at this particular stage just seemed questionable to us. We have now asked for copies of the 2011 and 2010 Minutes to try to ascertain how and why this change came about at this time and why the vendor was not apparently advised of this. It's hard to believe that she would not have been told. We've also asked for a copy of the latest Lift report. Although no flats are available on the upper floors, now that we would be paying for the lift in a way we would prefer an upper flat (better views etc). The compensation for this was that the ground floor flat had lower maintenance charges. We must now wait to see what comes from the Minutes etc. If we hadn't made a point of asking to see the Resident Associations rules, we would not have know about the change.

[Suetheramble]

I personally would never buy a flat with a lift on the premises the maintenance can be enormous. The insurance argument does not stand if the upper flat were not there the leak would be in the lower flat so some benefit is gained.
There will be an higher than average electricity bill for all to pay.