Richardo
07-03-2010, 16:48 PM
I bought a B2L flat in a block similar to another flat I have in neighbouring blocks. In both cases F is the L's own CE Company, but separate Companies.
With new flat SCs are £880 pa. Original flat's SC is £660. Managing agent is the same. In both cases flats are cavity brick, pitched concrete tiled roofs and PVC windows gutterboards/soffits etc. Buildings are 35 years old lease has 64 years left but as above I have share of F.
New flat has cash of £22,000 (for 16 flats) due to SCs overfunding maintenance requirements. Original flat has £2,500 cash for 8 flats no overfunding.
Directors of new flat CE Company justify higher service charge by saying they want a sinking/reserve fund of £20,000+ (from 16 flats) for reserves to pay for replacement roof. However all roofs are fine and have plenty of life left (I'm a surveyor) with no evidence of any problems. In my view will outlast remaining lease term.
However CE Company may consider life of building to be longer than remaining lease, and both lease and Mem and Arts of CE Company allow for sinking/reserve funding.
In which case am I right that L can effectively demand SCs which can actually be used to fund rebuilding or refurbishment of flats at end of lease term or even before?
Therefore is awarding oneself a 999 year lease actually onerous if CE Company Directors decide to start funding replacement buildings out of SC funds? Needless to say value of sinking/reserve fund is declining as RPI is 3.5% and interest earned is 0.035%
Lease suggests surplus SC funds cannot be transferred to sinking/reserve fund, and RICS service charge code suggests sinking fund has to be related to a future schedule of works, and it is not sufficient just to reserve for sometime that might happen. L has no rights to share of sinking/reserve fund on assignment/determination of L.
So in summary in the case of a 999 year lease is L expected to pay the costs of rebuilding property (say) 9 times and can F start a s(t)inking fund to cover this eventuality?
With new flat SCs are £880 pa. Original flat's SC is £660. Managing agent is the same. In both cases flats are cavity brick, pitched concrete tiled roofs and PVC windows gutterboards/soffits etc. Buildings are 35 years old lease has 64 years left but as above I have share of F.
New flat has cash of £22,000 (for 16 flats) due to SCs overfunding maintenance requirements. Original flat has £2,500 cash for 8 flats no overfunding.
Directors of new flat CE Company justify higher service charge by saying they want a sinking/reserve fund of £20,000+ (from 16 flats) for reserves to pay for replacement roof. However all roofs are fine and have plenty of life left (I'm a surveyor) with no evidence of any problems. In my view will outlast remaining lease term.
However CE Company may consider life of building to be longer than remaining lease, and both lease and Mem and Arts of CE Company allow for sinking/reserve funding.
In which case am I right that L can effectively demand SCs which can actually be used to fund rebuilding or refurbishment of flats at end of lease term or even before?
Therefore is awarding oneself a 999 year lease actually onerous if CE Company Directors decide to start funding replacement buildings out of SC funds? Needless to say value of sinking/reserve fund is declining as RPI is 3.5% and interest earned is 0.035%
Lease suggests surplus SC funds cannot be transferred to sinking/reserve fund, and RICS service charge code suggests sinking fund has to be related to a future schedule of works, and it is not sufficient just to reserve for sometime that might happen. L has no rights to share of sinking/reserve fund on assignment/determination of L.
So in summary in the case of a 999 year lease is L expected to pay the costs of rebuilding property (say) 9 times and can F start a s(t)inking fund to cover this eventuality?