Possible to leave "management company".

peter_dublin

Hi All.

Bit of a strange one, I own in a first floor own door apartment similar in design to the below linked development but with only four units in the development, the ground floor unit owner below mine is planning on selling and has offered me first choice on purchasing it which I can fund from cash.

Currently my unit is rented and I rent a house but (planning aside as I have a pre-planning meeting booked) has anyone ever heard of units leaving a management company and being converted to a house such as when a house is converted from apartments back to a house. If it is viable I would end up with a 1700 sq foot house for minimal expenditure. Sale and purchasing a house is not possible due to tracker which would leave me 200k+ worse off over this option.

Thanks
Peter.

https://www.google.com/maps/@53.2310949,-6.6476391,3a,75y,113.65h,91.71t/data=!3m4!1e1!3m2!1sHDc5RX2uhK5482nyPqT_HA!2e0

nuac

If the apartment is held under a lease, there is probably a covenant that you join the mangmt co.

You need to talk to a solicitor who has read all the relevant documents

conorh91

Man I hate it when neighbors hang their clothes on the balcony.

To answer your question, I've never heard of anyone I know successfully avoiding management fees. But as nuac indicated, a legally informed opinion is impossible without sight of the agreement.

MarkAnthony

Very interesting, do keep us informed how it all pans out.

You should obviously bear in mind that apartments are almost certainly leasehold as opposed to freehold. You would probably be better off just getting permission for the conversion (shouldn't be that difficult given you'll have 50% of the votes in the OMC) and continue to pay the management fees.

Either way you are going to need extensive legal advice, retain a good solicitor.

peter_dublin

Thanks all for the replies. Indeed both apartments are lease hold. The complex was only vested from the original developer some years ago despite being complete over 30 years. I've requested the head lease and will take it from there and will update of the outcome. Permission wise from the management companies view it would not be an issue but of course I would rather end up with a freehold house than paying 200 per month on mgt co fees for two apartments.

My overall aim really would be to have the site split, get planning for a new vehicle entry/combine the units and put up new boundary fencing etc giving a private rear garden.

MarkAnthony

Bear in mind you are the management company, although it's very likely you contract out the company secretary role to an outside company. Without significant cost I can't imagine the owner of the land is going to allow you to convert to freehold but as has been said above only a fully briefed solicitor is going to know. There may also be implications for your mortgage; you mention being on a tracker, the conversion, although seemingly in the banks interest might be used as an excuse to move you onto a different product.

Returning to the point of the management company. Why not look at what you can do to reduce the management fee. Bear in mind with a freehold property you are going to need insurance, would be wise to maintain a sinking fund and maintain the property. Aside from agency fees and insurance there shouldn't be much of a differential in what you'd be paying as a freehold property owner.

Best of luck, get proper advice, and do keep us updated!

Marcusm

peter_dublin wrote: »

Hi All.

Bit of a strange one, I own in a first floor own door apartment similar in design to the below linked development but with only four units in the development, the ground floor unit owner below mine is planning on selling and has offered me first choice on purchasing it which I can fund from cash.

Currently my unit is rented and I rent a house but (planning aside as I have a pre-planning meeting booked) has anyone ever heard of units leaving a management company and being converted to a house such as when a house is converted from apartments back to a house. If it is viable I would end up with a 1700 sq foot house for minimal expenditure. Sale and purchasing a house is not possible due to tracker which would leave me 200k+ worse off over this option.

Thanks
Peter.

https://www.google.com/maps/@53.2310949,-6.6476391,3a,75y,113.65h,91.71t/data=!3m4!1e1!3m2!1sHDc5RX2uhK5482nyPqT_HA!2e0

Two issues:

Merging the dwellings is an issue for the freeholder which might not be the same person as the management company. Under MUD Act it might be expected to be but I don't think it necessarily is in your case as you have fewer than 5 units. A freeholder is not obliged ot permit you to break through the membrane (ceiling/floor) between the two units which you would own.

The issue for your 4 unit development is not the management company but the managing agent. I can only believe that a significant part of what sounds like €4,800 per year in management charges is accounted for by the managing agent fees. If you and the other unit holders got together you could eliminate this aspect.

peter_dublin

Marcusm wrote: »

Two issues:

Merging the dwellings is an issue for the freeholder which might not be the same person as the management company. Under MUD Act it might be expected to be but I don't think it necessarily is in your case as you have fewer than 5 units. A freeholder is not obliged ot permit you to break through the membrane (ceiling/floor) between the two units which you would own.

The issue for your 4 unit development is not the management company but the managing agent. I can only believe that a significant part of what sounds like €4,800 per year in management charges is accounted for by the managing agent fees. If you and the other unit holders got together you could eliminate this aspect.

Thanks, the Freeholder/Land owner is indeed the management company, the change was ongoing when I purchased so I'm sure that is the case, as for fees, its a combination of auditor fees (20 - 25%) , insurance costs (high due to two lots of water damage) in other units which they paid out (shouldn't have but) and sinking fund provision with some additional spending due to the fact the complex was not maintained well in the past which is done outside of the sinking fund such as replacing window frames which have deformed etc.

As you said they will give permission to break into the units but this then goes to planning and if I still need to pay 2400 a year in fees its a bit pointless as the current fees are tax deductible and the house I rent is only a small amount more than my unit.

Does anyone know bar the head lease what else I should request.

Thanks

billy few mates

Apologies for the thread drift, but why would you even want to do this...?
Who would want to buy it after you, or who would want to rent it...? It's not a house it would be two former flats converted into a house with two adjoining flats.
Would you not be better off selling that flat and putting the proceeds with the money you were going to use to buy the neighbours falt and buy the house you want freehold with no worries about management fees or the flats next door etc...?

peter_dublin

billy few mates wrote: »

Apologies for the thread drift, but why would you even want to do this...?
Who would want to buy it after you, or who would want to rent it...? It's not a house it would be two former flats converted into a house with two adjoining flats.
Would you not be better off selling that flat and putting the proceeds with the money you were going to use to buy the neighbours falt and buy the house you want freehold with no worries about management fees or the flats next door etc...?

Not really. I would be near 200k worse off after the outcome in terms of total interest paid, in a smaller house (120sqm vs 160sqm) with a smaller garden then I would end up with if I joined the units but it hinges on 1. being able to leave the management company and 2 getting planning to join the units internally to make it viable.

Re selling I'm not bothered as I don't plan to sell due to my tracker and internally its easily undone, it would be the worse decision I could make really financially to sell and buy again as I cannot move my tracker. Hence why I rent my current unit and rent a house. Re flats next door, the property would have no additional surface area that a semi detached in the area anyway and either way you could end up with bad neighbours.

cerastes

Didnt someone mention this, cant you get together with the other owners and manage the entire property, as someone else said, you'd have 50% of the votes, just need to get one more on board, couldn't you remove the management company altogether and be the management company?

Obviously, I dont know anything about this, but Ive often wondered when things such as you have mentioned come up, ie why werent repairs done from a sinking fund, maintenance and upkeep costing a lot but no appearance of it being done.
Couldnt you just buy the other property and not join? them. Live in one with the view to sell if prices increase or sell to a like minded person? for the rght price, but not to someone thta might not be cooperative or contactable.

billy few mates

We managed to have the planning requirement that our estate be managed by a MC overturned and that the estate be taken in charge by the local council. All we needed was the agreement of +50% of the owners and we then approached the local Planning Authority who told us to make an application through the normal planning channels, once that was done we asked the local authorities to take us 'in charge'. Now instead of being faced with approx €900 per year management fees we now just ask the owners for a voluntary contribution of €50 per year to pay for the grass cutting (as the council won't do this) and despite the massive savings we were able to organise, less that 50% of the owners pay the contribution.

We were able to do it all on the basis of this letter which I found by chance on the internet, we presented it to the local council, they said they didn't know a thing about it but consented to our request and it was done.
http://www.environ.ie/en/Publications/DevelopmentandHousing/Planning/FileDownLoad,16779,en.pdf
It might not be much use in your case as it's really aimed at MCs in estates which are houses rather than apartments but might be of some use to somebody.

MarkAnthony

Just wanting to chime in here in relation to management companies. Simply put the owners make up the 'company' (without a digression into separate legal personality) limited by guarantee and have one share per unit. The OMC appoint their own directors. You are already the management company and I wish more people would realise this; without directing that comment at anyone here. If they did I think there would be a lot less crap in the marketplace in relation to managing agents and apartments would be nicer places to live.

My apologies for the rant.

MarkAnthony

billy few mates wrote: »

We managed to have the planning requirement that our estate be managed by a MC overturned and that the estate be taken in charge by the local council. All we needed was the agreement of +50% of the owners and we then approached the local Planning Authority who told us to make an application through the normal planning channels, once that was done we asked the local authorities to take us 'in charge'. Now instead of being faced with approx €900 per year management fees we now just ask the owners for a voluntary contribution of €50 per year to pay for the grass cutting (as the council won't do this) and despite the massive savings we were able to organise, less that 50% of the owners pay the contribution.

We were able to do it all on the basis of this letter which I found by chance on the internet, we presented it to the local council, they said they didn't know a thing about it but consented to our request and it was done.

It might not be much use in your case as it's really aimed at MCs in estates which are houses rather than apartments but might be of some use to somebody.

Who is paying your insurance?

(sorry had to remove your link)

billy few mates

Insurance for what..?
It was very common a few years back for planning authorities to make it a planning condition that new developments would have to be run by MCs. The MC would then be responsible for the maintenance of the estate, the roads, the lights, the drains, the sewers and everything else you could think of, we would also need public liability insurance and directors insurance to indemnify the directors of the MC who would be volunteers from within the resident group etc etc.
When we spoke to the council about it they told us that once we were taken in charge we would no longer be responsible for any of that except the grass cutting on the estate which they could not (would not) do. We said that was fine.
So now the only thing we do is ask the residents for a voluntary contribution of €50 per house, as I said above less than half the people pay (it's an Irish thing!) but the money we collect from those residents who do care about the upkeep of their estate is enough to pay for it all.
If everybody paid we would only need to collect bout €20 per year per household.
We were the first estate in our county to ever ask to do this so the council didn't really know how to proceed with it, we arranged a couple of meetings, sat down with them and came up with a plan on how to go about it and it was all done in a matter of months. The longest part was having to apply for the (variation of) planning permission and stick up the little sign at the entrance to the estate etc (which nobody I spoke to seemed to have a clue what it was all about), then once the waiting time was over (no objections from anyone) PP was granted, the MC was wound up, the funds transferred to the new residents association, we applied to the council to be taken in charge, and that was it all done and dusted. Well worth the effort if anyone lives in an estate with a similar condition...

MarkAnthony

Could I make one suggestion re formatting if I may? Where you leave the end of the line just stick a carriage return (exposing my age here) and a blank line, I will thank you for it! My apologies if this offends it's not meant to it will simply help my tired eyes.

Am I to understand that this is an estate of freehold houses? If so I'm afraid it bears little resemblance to the OP's situation. If not I rephrase the question; who pays your block insurance?

I have to admit living in Scotland where we did exactly the same thing in reference to apartments (£30 to have the garden looked after) I did find the management company thing here strange. I'm still not totally convinced by it but having taken an active role in mine and lately a directorship they can be a force for good, albeit a relatively expensive one.