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Loft in the lurch

They may look great, but warehouse flats come with a string of potential problems. By Anne Spackman
Wow, is the word that springs to mind when you first see the Alaska building. The white 1930s block with its vast glass entrance and large windows dwarfs the surrounding inner-city landscape of Bermondsey in south London. When Dominic West first saw the place he was so impressed he bought a flat there in half an hour - and that was in the winter of 1993 when nobody was in a hurry to buy property of any kind. "I was overwhelmed at the time," he said. "I saw the flat and I wanted it. It was an impulse buy."

Act in haste, repent at leisure, some wise heads will be thinking. Well, in this case, it isn't quite like that.

Neither Dominic West nor his dozens of neighbours in the New York-style apartment block regrets buying there. On the contrary, they love their flats, they love the building and they are pretty fond of each other, too. Their homes have gone up in value and similarly striking developments are coming on to the market at double the price.

But they have come to realise that however stylish the development, the same mundane domestic problems arise as in any block of flats. Indeed, given that the building was not originally designed for residential use and that such conversions are in their infancy, the potential for trouble is, if anything, greater.

Most industrial conversions are sold from brochures with plenty of moody black-and-white pictures but little emphasis on the nitty gritty of leases and service charges. Many buyers purchase their flat "off-plan", before it has actually been completed. They see a show flat and buy a numbered space on the basis of what they have seen.

In the case of shell flats, where the buyer is responsible for fitting out the interior - including the heating and hot water systems - the details are particularly important. Floor plans may show a GIA of 600sqft. How many people know this means Gross Internal Area? And do they understand that this is not the same as usable floor space?

Service charge is another big consideration. Buyers of two-bedroom flats generally pay well over pounds 1,000 a year. The approximate charge for the first year is usually given, but there may be no mention of how high it might rise in subsequent years.

Mortgages can also be problematic for buyers of shell flats because the property is being sold unfinished. When the spaces are fitted out they must conform to the regulations, for which the buyer is responsible. The Manhattan Loft Corporation, which specialises in selling shells, says it takes a handful of lenders and lawyers around a development so that they understand what their clients are taking on.

One thing the developer is bound to include is a lengthy disclaimer, like this one on the back of Regalian's brochure for Gilbey House, a converted gin factory in Camden, north London. It includes the sentence: "These particulars should not be relied upon as accurately describing any of the specific matters described by any order under the Property Misdescriptions Act".

David Perkins, an expert on the Act, advises that such disclaimers are routinely used to protect developers from civil actions but they do not affect their responsibilities under the criminal law. "If flats are being sold off-plan and the plans are misleading, it is a criminal offence," Mr Perkins said.

It is unwise to rely on your solicitor to pick up points like this as few have experience of this kind of property. Linda Beaney of Beaney Pearce, the selling agents at Gilbey House, advises clients buying property off-plan to go to an experienced solicitor. The buyer has to be particularly vigilant before signing on the dotted line and handing over a deposit.

Like most of the firms operating in this niche market London Buildings, developers of the Alaska scheme, is a small company employing only a handful of staff. It buys in its builders, its plumbers, its cleaners and its maintenance expertise. When London Buildings bought the Alaska site it was advised that the centralised heating and hot-water system had only recently been installed and that it was more than adequate for the proposed conversion. The long white radiators complemented the style of the flats and the system should have been cheaper to run than a series of individual boilers.

In fact, in mid-winter, with snow on the ground outside, residents found themselves throwing open the windows as temperatures rose to 110F. They nicknamed the block Baked Alaska. The hot water took so long to come on that residents had to co-ordinate if they wanted a shower before work. As these items were paid for centrally, on the service charge bill, the inevitable disputes arose between freeholder and leaseholder.

The company has thrown a lot of time and money at the plumbing problems at Alaska and now the system is functioning normally. While the problems persisted, London Buildings shouldered the flat owners' bills and has been very reasonable about payment of service charges.

The residents appreciate this, but feel it has taken a long time to get things done. One reason for their impatience is that the flat owners at Alaska are, overwhelmingly, professional people including architects, designers, accountants and town planners, who conduct their relationship with the developer as they would a business transaction. They like problems sorted out fast and they know how to complain when they aren't.

In a letter to the Alaska Residents' Association, Colin Serlin, managing director of London Buildings, wrote "One of the main difficulties we have in trying to deal with your various problems is the sheer detail and scale of correspondence. We are not set up continually to manage projects after they have been sold and do not have a team of staff able to devote the time necessary to cope with that sort of correspondence, hence the delays and difficulties you had in obtaining responses from us to your letters. However, this does not mean that the problems have been ignored."

London Buildings has handed over the running of Alaska to a large firm of managing agents, Gross Fine, which has regular meetings with residents to discuss problems. One London estate agent advised that buyers of all flats should look as closely at the name of their managing agents as at their freeholder to ensure they have sufficient expertise.

Buyer be aware has always been the basis on which British property has been sold - even if buyers of stunning flats forget it in the heat of the moment. In the case of lofts and warehouse conversions, the developers should be aware, too, given the calibre of potential opposition.