31 Failure to clarify who is responsible for repairs in units procured through Section 106 A housing association purchased 66 homes through a Section 106 agreement from a speculative developer in 2008. The homes were part of a 220-unit scheme. The developer and contractors are all in administration. The freeholder has set up a separate legal entity and appointed a managing agent. There have been significant problems with leaks from the cold water supply to the blocks leading to the insurer refusing to insure against escape of water. Additionally, there is leaking from roof terraces into four of the properties. Shared owners are not prepared to accept the insurance situation or the uninhabitable homes. The freeholder has not got funds to deal with the issue. The housing association has significant equity stake in the properties, but no management control or legal responsibility to pay. Shared owners have individual leases with the housing association and have been pressing for action through them. There is no straightforward solution here. This case study demonstrates the consequences of not procuring freehold, or of not using the lease to clarify legal responsibility for repairs, maintenance and insurance. The situation would have been improved if there was a clearer legal separation between the role of the housing association in enabling the shared ownership purchase and the duty of the freeholder to manage the building. However, there is often still an incentive for a housing association to be involved to protect its financial investment in the unsold equity. In this case, the housing association has provided financial and technical support to investigate and to some extent have underwritten the insurance, so the homes are saleable.
32 Publizr Home