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    • roadraider
    • By roadraider 14th Oct 16, 2:11 PM
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    roadraider
    Selling Flat with Freehold and Lease?
    • #1
    • 14th Oct 16, 2:11 PM
    Selling Flat with Freehold and Lease? 14th Oct 16 at 2:11 PM
    Hi
    Im looking to sell my leasehold flat, i additionally own the entire freehold on the building. The flat upstairs have a lease but not a share of the freehold.
    What is the best advice when selling? To sell with the freehold or without?
Page 1
    • G_M
    • By G_M 14th Oct 16, 2:30 PM
    • 37,065 Posts
    • 40,997 Thanks
    G_M
    • #2
    • 14th Oct 16, 2:30 PM
    • #2
    • 14th Oct 16, 2:30 PM
    Offer the freehold to upstairs? If they say no, offer it to the buyer of your lease as an option?

    Or offer to set up a company to own the freehold, with the leaseholders for the time being owning the shareholds of the company?
    • jimmy cricket
    • By jimmy cricket 14th Oct 16, 2:38 PM
    • 257 Posts
    • 149 Thanks
    jimmy cricket
    • #3
    • 14th Oct 16, 2:38 PM
    • #3
    • 14th Oct 16, 2:38 PM
    Years ago I had this and a very young solicitor who advised me that it wasn't worth anything. This was me trying to recoup the cost of the lease extension that the buyers insisted upon, even though I was offering the freehold for nothing.

    As I was well out of pocket on the extension, I decided to keep the freehold and it has paid off very handsomely over the years
    • roadraider
    • By roadraider 14th Oct 16, 2:39 PM
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    roadraider
    • #4
    • 14th Oct 16, 2:39 PM
    • #4
    • 14th Oct 16, 2:39 PM
    Thanks for the reply,

    What is the best option? I currently have 122 years and upstairs 87 years left on the leases, i initially was just going to sell with freehold to keep it simple but after a look online some website say banks don't like lending on flats with freeholds so dont want to complicate things that end.
    • roadraider
    • By roadraider 14th Oct 16, 2:52 PM
    • 5 Posts
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    roadraider
    • #5
    • 14th Oct 16, 2:52 PM
    • #5
    • 14th Oct 16, 2:52 PM
    Years ago I had this and a very young solicitor who advised me that it wasn't worth anything. This was me trying to recoup the cost of the lease extension that the buyers insisted upon, even though I was offering the freehold for nothing.

    As I was well out of pocket on the extension, I decided to keep the freehold and it has paid off very handsomely over the years
    Originally posted by jimmy cricket
    What about the maintenance, works which need carrying out in the future? When something goes wrong etc do the leaseholders come running saying 'hey my roof has fallen through!' would you liable for this, how is this rectified? How did it benefit you so favorably?

    Thanks
    • G_M
    • By G_M 14th Oct 16, 2:53 PM
    • 37,065 Posts
    • 40,997 Thanks
    G_M
    • #6
    • 14th Oct 16, 2:53 PM
    • #6
    • 14th Oct 16, 2:53 PM
    You get 3 competitive quotes for the roof repair, then charge each leaseholder 50% (or whatever their leases say they have to pay).
    • roadraider
    • By roadraider 14th Oct 16, 3:06 PM
    • 5 Posts
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    roadraider
    • #7
    • 14th Oct 16, 3:06 PM
    • #7
    • 14th Oct 16, 3:06 PM
    You get 3 competitive quotes for the roof repair, then charge each leaseholder 50% (or whatever their leases say they have to pay).
    Originally posted by G_M
    Hey G_M, yes its currently set at 50/50, also i have groundrent which is set at £100 so i presumably would charge the buyer of my flat the same (once lease updated), so maybe its worth me keeping the Freehold, is this the most preferable thing to do out of the options? Another point to mention is i probably will be living some distance from the flats so i couldn't visit regular, if at all, would this be an issue?
    • TrickyDicky101
    • By TrickyDicky101 14th Oct 16, 4:18 PM
    • 2,464 Posts
    • 1,619 Thanks
    TrickyDicky101
    • #8
    • 14th Oct 16, 4:18 PM
    • #8
    • 14th Oct 16, 4:18 PM
    Thanks for the reply,

    What is the best option? I currently have 122 years and upstairs 87 years left on the leases, i initially was just going to sell with freehold to keep it simple but after a look online some website say banks don't like lending on flats with freeholds so dont want to complicate things that end.
    Originally posted by roadraider
    The difference in lease terms is vaguely surprising but also makes the freehold desirable for the upstairs flat.

    To me, the hassle of needing to deal with the leaseholders and organise maintenance (and subsequent recovery of costs) would eb a pain I would well do without.
    • Richard Webster
    • By Richard Webster 14th Oct 16, 6:12 PM
    • 7,326 Posts
    • 6,986 Thanks
    Richard Webster
    • #9
    • 14th Oct 16, 6:12 PM
    • #9
    • 14th Oct 16, 6:12 PM
    Some lenders don't like lending on leases under 85 years now so the freehold has some value.

    As to lenders not liking freehold flats you simply haveto be careful about this. The Council of Mortgage Lenders' handbook para 5.8.1 deals with this situation:
    5.8.1 Does the lender accept security which comprises a building converted into not more than four flats where the borrower occupies one of those flats and the borrower or another flat owner also owns the freehold of the building and the other flats are subject to long leases?
    HSBC & Bradford & Bingley/Mortgage Express are the only major lenders that won't accept this situation. Ther a re also a numbere of more obscure lenders who won't. Some require there to be a lease of the flat to be mortgaged and others will take a mortgage on the freehold even if there is no lease of the flat in question.

    So, basiucally there should be much of a problem for OP in selling. The difficulty is that buyers don't understand the technicalities. They go into their bank/building society/broker and say its a freehold flat (when it isn't) and after a bit of umming and ahhing and checking with head offcie they get told the lender won't lend. This is because they have misunderstood the position.

    The real freehold flat nasty that is virtually unmortgageable (except with a few lenders if the flat is in the Scarborough area - don't ask me why!) is where each flat in the building has a separate freehold title - which isn't the case here where you own the freehold of the whole building.

    You have to patiently explain to the buyer that there shouldn't be a problem but the position is often misunderstood - tell them to tell their lender that it's a case falling within 5.8.1 of the CML Handbook. Then they will look it up and (unless they one of the minority who won't accept it at all) will be prepared to proceed.
    RICHARD WEBSTER

    As a retired conveyancing solicitor I believe the information given in the post to be useful assuming any properties concerned are in England/Wales but I accept no liability for it.
    • roadraider
    • By roadraider 14th Oct 16, 6:53 PM
    • 5 Posts
    • 0 Thanks
    roadraider
    Some lenders don't like lending on leases under 85 years now so the freehold has some value.

    As to lenders not liking freehold flats you simply haveto be careful about this. The Council of Mortgage Lenders' handbook para 5.8.1 deals with this situation:
    5.8.1 Does the lender accept security which comprises a building converted into not more than four flats where the borrower occupies one of those flats and the borrower or another flat owner also owns the freehold of the building and the other flats are subject to long leases?
    HSBC & Bradford & Bingley/Mortgage Express are the only major lenders that won't accept this situation. Ther a re also a numbere of more obscure lenders who won't. Some require there to be a lease of the flat to be mortgaged and others will take a mortgage on the freehold even if there is no lease of the flat in question.

    So, basiucally there should be much of a problem for OP in selling. The difficulty is that buyers don't understand the technicalities. They go into their bank/building society/broker and say its a freehold flat (when it isn't) and after a bit of umming and ahhing and checking with head offcie they get told the lender won't lend. This is because they have misunderstood the position.

    The real freehold flat nasty that is virtually unmortgageable (except with a few lenders if the flat is in the Scarborough area - don't ask me why!) is where each flat in the building has a separate freehold title - which isn't the case here where you own the freehold of the whole building.

    You have to patiently explain to the buyer that there shouldn't be a problem but the position is often misunderstood - tell them to tell their lender that it's a case falling within 5.8.1 of the CML Handbook. Then they will look it up and (unless they one of the minority who won't accept it at all) will be prepared to proceed.
    Originally posted by Richard Webster
    Thank you Richard for that detailed response.

    I can see these as my options correct me if im wrong

    1. Sell it all as one and hope the buyer doesnt have an issue with lending
    2. Keep the freehold and sell as leasehold only, maybe extending my lease to make it more desirable
    3. Offer the freehold to upstairs (is this a compulsory requirement if selling anyway?)
    4. Offer a share of freehold to new buyer and upstairs (presumably i would incur costs for new freehold drawn up)

    What would be the most favorable option?
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