[Misc] Would you buy a flat with no sink fund?

herecomesaregular · Feb 23, 2021

Sorry it's off topic, but if you were buying a flat (a small block of 4 purpose built flats, built 14 years ago), leasehold, no problems with freeholder and repairs carried out promptly but paid by being billed to the 4 owners immediately.- would you be put off that there is no sink fund/reserve for repairs? I'm one of the owners and the other owners don't want to put annual funds into a sink fund, which I find a bit odd and against common sense. I could understand it in the first 10 years when the flats are still under guarantee but surely in future it could make the flat harder to sell? Don;t know whether an estate agent could answer this question.

keaton · Feb 23, 2021

herecomesaregular said:
Sorry it's off topic, but if you were buying a flat (a small block of 4 purpose built flats, built 14 years ago), leasehold, no problems with freeholder and repairs carried out promptly but paid by being billed to the 4 owners immediately.- would you be put off that there is no sink fund/reserve for repairs? I'm one of the owners and the other owners don't want to put annual funds into a sink fund, which I find a bit odd and against common sense. I could understand it in the first 10 years when the flats are still under guarantee but surely in future it could make the flat harder to sell? Don;t know whether an estate agent could answer this question.

I had a flat with B&HCC leasehold and they didn't have one. They sent me a cheque every year bar one

Cheshire Cat · Feb 23, 2021

I wouldn't buy a lease hold flat at all, especially given the recent issues with paying for replacement cladding https://www.lease-advice.org/advice-guide/service-charges-other-issues/#7

amexer · Feb 23, 2021

Nothing to stop you creating your own fund

usernamed · Feb 23, 2021

For me it depends on the size and type of the property. If the property is two storey, no lift, standard tiled roof, standard construction, no steep slopes at any boundary - then most maintenance should be (relatively) affordable split 4 ways. As ever, the issues begin when one (or more) person(s) won’t cough up. Equally, in a scenario like this where you’re not keeping a fund, make sure the buildings cover is the absolute best it can be and would cover a complete rebuild or fixing movement/subsidence.

It seems short-sighted on the part of your co-owners, to assume that they will always have readily available cash around in case something expensive were to happen. But if all the above is true, then each of you should only ever be liable for 25% of the cost. (assuming that’s how responsibility is divvied up)

If the property has lifts, 3+ floors, cladding, non-standard construction, outbuildings (detached garages etc) then personally I would steer clear unless a sink fund is agreed. Everyone has their own level of risk they’re happy with, you’ll know yours.

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Notters · Feb 23, 2021

amexer said:
Nothing to stop you creating your own fund

Yes - surely this, just a case of self insurance?

FatSuperman · Feb 23, 2021

Hopefully you are in the ground floor flat? That way you can let the sucker in the basement flat worry about flooding and the top flat fool worry about the roof leaking. They'll have to sort those long before it causes you an issue.

ArfurW8 · Feb 23, 2021

herecomesaregular said:
Sorry it's off topic, but if you were buying a flat (a small block of 4 purpose built flats, built 14 years ago), leasehold, no problems with freeholder and repairs carried out promptly but paid by being billed to the 4 owners immediately.- would you be put off that there is no sink fund/reserve for repairs? I'm one of the owners and the other owners don't want to put annual funds into a sink fund, which I find a bit odd and against common sense. I could understand it in the first 10 years when the flats are still under guarantee but surely in future it could make the flat harder to sell? Don;t know whether an estate agent could answer this question.

I have a similar situation,I am able to have a personal fund but have no idea about the other owners.
What would you consider to be a reasonable amount for the sink fund and why would it make the flat harder to sell?

NooBHA · Feb 23, 2021

herecomesaregular said:
Sorry it's off topic, but if you were buying a flat (a small block of 4 purpose built flats, built 14 years ago), leasehold, no problems with freeholder and repairs carried out promptly but paid by being billed to the 4 owners immediately.- would you be put off that there is no sink fund/reserve for repairs? I'm one of the owners and the other owners don't want to put annual funds into a sink fund, which I find a bit odd and against common sense. I could understand it in the first 10 years when the flats are still under guarantee but surely in future it could make the flat harder to sell? Don;t know whether an estate agent could answer this question.

Warranty won't help you Buddy

I am currently going through issues not the same but similar. I am caught by the Grenfell Regulations and looking at a 1/20 th share of a £3.8m Bill to put stuff right.

Companies who do the redevelopment or Building of such Blocks often set up a company to do the Build. Then they sell on the Freehold within a 2 year period. They then close the Company and you can never claw anything out of the Warranty because it dies with that closed company.

So if you do buy it. Do some ''Due Diligence'' and make sure that the Company which offered the Warranty are still in Existence. In my case I know who the Directors of the Company are but can't touch them because the other Company is gone. And although I do not specialise in this sort of Law - I have a Law Qualifications and I got caught out by it.

herecomesaregular · Feb 23, 2021

usernamed said:
..... If the property is two storey, no lift, standard tiled roof, standard construction, no steep slopes

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yes, two storey, no lift, standard tiled roof. It is on a slope and off the main road (so water and electricity, we have no gas, comes up to us and probably our liability), some big trees within range.

thank you for your opinion

herecomesaregular · Feb 23, 2021

amexer said:
Nothing to stop you creating your own fund

Agreed and have always done so. I believe the other owners are afluent enough to have done so also. Just was thinking a/ the flat is 14 years old now b/ when someone sells (still same owners since built) maybe a new buyer won't have enough savings for bigger repairs.

herecomesaregular · Feb 23, 2021

ArfurW8 said:
What would you consider to be a reasonable amount for the sink fund and why would it make the flat harder to sell?

Not sure, I was just thinking of suggesting each owner pays in £100/150 each year, hardly damaging, so that over next few years there is some communal funds in place at least. My folks were looking at a 4 flat block in Seaford yesterday that had a £25k sink fund and was 20 years old! But did have a lift and it looks like some/most of it was shortly going on replacing all the double glazing (it's on the seafront).

I wondered whether no fund might frighten off a buyer as it seems commonplace to have one?

NooBHA · Feb 23, 2021

herecomesaregular said:
Not sure, I was just thinking of suggesting each owner pays in £100/150 each year, hardly damaging, so that over next few years there is some communal funds in place at least. My folks were looking at a 4 flat block in Seaford yesterday that had a £25k sink fund and was 20 years old! But did have a lift and it looks like some/most of it was shortly going on replacing all the double glazing (it's on the seafront).

I wondered whether no fund might frighten off a buyer as it seems commonplace to have one?

Lifts are another issue - Many Lifts do not have ''Fire Stopping'' walls around them which are now caught by the Grenfell Regulations and when the Fire Certificate comes up for renewal if it doesn't have these Fire Stopping Walls then costs to put it right are phenomenal

BNthree · Feb 23, 2021

Personally I find it a bit odd but guessing they are only just paying their mortgage each month so who knows.

The Andy Naylor Fan Club · Feb 23, 2021

NooBHA said:
Warranty won't help you Buddy

I am currently going through issues not the same but similar. I am caught by the Grenfell Regulations and looking at a 1/20 th share of a £3.8m Bill to put stuff right.

Companies who do the redevelopment or Building of such Blocks often set up a company to do the Build. Then they sell on the Freehold within a 2 year period. They then close the Company and you can never claw anything out of the Warranty because it dies with that closed company.

So if you do buy it. Do some ''Due Diligence'' and make sure that the Company which offered the Warranty are still in Existence. In my case I know who the Directors of the Company are but can't touch them because the other Company is gone. And although I do not specialise in this sort of Law - I have a Law Qualifications and I got caught out by it.

You're looking at a £190,000 bill for your share of the work? How the fook can cladding on a block of 20 flats cost £3.8m?

BTW, I am one of 4 shareholders in our freehold and there is no sink fund here either. Will just have to stump up if anything goes tits up!

beorhthelm · Feb 23, 2021

NooBHA said:
Lifts are another issue - Many Lifts do not have ''Fire Stopping'' walls around them which are now caught by the Grenfell Regulations and when the Fire Certificate comes up for renewal if it doesn't have these Fire Stopping Walls then costs to put it right are phenomenal

harsh to be expecting retro compliance with regulations for a certain set of buildings.

NooBHA · Feb 23, 2021

The Andy Naylor Fan Club said:
You're looking at a £190,000 bill for your share of the work? How the fook can cladding on a block of 20 flats cost £3.8m?

BTW, I am one of 4 shareholders in our freehold and there is no sink fund here either. Will just have to stump up if anything goes tits up!

It's quite a big block. It's a converted former office block with 8 floors . Apparently there are other buildings in Central Birmingham where the costs are anticipating much higher costs. We are gonna drag the Freeholder into Court if need be but Legally the Freeholder can pass on the costs.

The only thing in our favour is that the Freeholder is a Large Pension Fund and negative Publicity could damage their investment standing world wide but they are not budging at the moment. However I have some Media Contacts to get it in National Media if need be.

At this moment we will follow every option open to us because those level of costs will financially ruin some of the flat owners.

Live by the sea · Feb 23, 2021

Having a reserve fund is always a good idea from my experience as it prevents potential arguments when something needs doing .

I do agree , if at all possible avoid buying leasehold flats and buy a freehold house instead as it’s a lot less bother in the long term as you make the decisions no one else .

Not sure about prices outside of Brighton and Hove , but when looking recently, noticed lots of 3 bed flats in central areas in Brighton and hove circa £400,000 - £600,000 but you can also buy freehold houses circa 1000 sq ft in the same areas and off the seafront which is brilliant for £500- £600k .

A house surely has to be the best option .

jessiejames · Feb 23, 2021

I have just had my kitchen re fitted, I was going to say that you can have my old Kitchen sink from out the skip for nothing. Sorry I thought you needed a sink, as it is biding have the taps.

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