The following Property guidance note provides comprehensive and up to date legal information covering:
One of the most common management schemes adopted by developers of residential flats is for the developer to retain the reversionary interest but to contract out the management and provision of services to a management company. Under this form of scheme, the developer can continue to collect the ground rents reserved under the flat leases, but divest itself of the ongoing management obligations under the landlord covenants in the flat leases.
The developer has three options in these circumstances:
a tenants' management company
a professional management company
an associated company controlled by the developer
Under this arrangement:
the entirety of the development is divided between the flat leases; consequently, there are no common parts; the building is effectively ‘sliced’ in horizontal layers, with common elements (internal staircases, external downpipes, etc) being apportioned between the various flats
each flat tenant covenants to repair its ‘slice’ of the building; whilst in theory each flat tenant could also covenant to insure its own ‘slice’, this would be administratively difficult (each flat tenant would have to be required to insure with a common insurer and on the same terms as each other) and so, in practice, the landlord will (or certainly should) insure the entire building subject to reimbursement by the flat tenants
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