Leasehold/Freehold

Doozergirl

SGE1 wrote: »

Really - buying the freehold just for you flat would decrease the value of your property? Wouldn't that just mean you own your flat and the small piece of land it's on (though I take someone else's point that the Crown owns the land technically)?

Totally confused - bet it's simple and obvious, but would be great if someone could explain! In my mind, freehold = good, and lease (esp. short lease) = bad, but clearly this isn't what everyone else think! :huh:

It's all so complicated that it would probably be better perhaps to view all properties with an open mind and then come back to ask us on a specific property if a leasehold property comes up.

If you owned the freehold of a flat and it was for example on the first floor, you wouldn't physically be able to own the land it sat on because there would be another flat in the way. It's imperative that all flats have leases even if you own part of the freehold so that you have a legal document which obliges you all to maintain walls, foundations, roof for the good of everyone. It's called the right of support and protection.

One person or one entity need to own a freehold. The entity in a block of flats may be all the leaseholders who form a company which owns the freehold. Each leaseholder then owns the relevant share of the company which is often referred to as their % of the freehold.

Don't be scared by sub 100 year leases - many leases are issued originally with 99 year or 125 year leases. 999 might be unusual unless it was already a share of freehold.

If you plan to sell before the lease reached 80 years then it's worth discussing in depth with us.

It's impossible to explain in depth without having a property to relate it to. Conveyancing is quite a big subject in general! It would take so long to cover every angle and you'll end up confused(!) because people are chucking in all sorts of caveats.

rizla01

One person or one entity need to own a freehold. The entity in a block of flats may be all the leaseholders who form a company which owns the freehold. Each leaseholder then owns the relevant share of the company which is often referred to as their % of the freehold.

Which actually leaves you as a leasholder, strangely.:)

Can't this cause probs with obtaining Mortgages in some cases as YOU are not the freeholder of your own flat. (Unless rules have changed)

Doozergirl

rizla01 wrote: »

Which actually leaves you as a leasholder, strangely.:)

Can't this cause probs with obtaining Mortgages in some cases as YOU are not the freeholder of your own flat. (Unless rules have changed)

Nothing's changed.

All flats need leases. So yes, owning a share of the freehold means that you are a leaseholder, but one that also owns a share of the freehold (or rather owns a share in the company that owns the freehold). What I've described is Share of Freehold done properly, not an issue for mortgage lenders, in fact, quite the opposite. They need the lease to confirm the rights and obligations of those involved in the block.

If you own a 'freehold' you have no lease, and therefore no agreement with the other flat owners that they won't remove the walls from under you! There is only one plot of land, therefore there can only be one freeholder.

Richard_Webster

Really - buying the freehold just for you flat would decrease the value of your property? Wouldn't that just mean you own your flat and the small piece of land it's on (though I take someone else's point that the Crown owns the land technically)?

Totally confused - bet it's simple and obvious, but would be great if someone could explain! In my mind, freehold = good, and lease (esp. short lease) = bad, but clearly this isn't what everyone else think! :huh:

For flats freehold of just your flat very bad, having a share in the freehold of the whole building generally good. For houses freehold good.

If the flat above was also freehold with a separate title, the problem would be how you were able to compel repair of the roof, for instance or the upper flat owners could compel repair of the foundations. Covenants between freehold owners are only binding on successors who buy a property with covenants if they are negative in substance, e.g not to cause a nuisance use for a trade, etc.

A positive covenant by a freeholder with another freeholder to keep a part of a building in good repair, to insure it, or to pay a proportion of the cost of work done by another is only binding on the person who originally entered into the covenant. If you have leasehold flats the covenants in the lease are enforceable by the lessor/freeholder/landlord against the lessee/leaseholder/tenants who happen to own the lease at the time just because of that ownership. Hence the reason most individual flats are leasehold.

rizla01

I would like to say that anyone having difficulties with this kind of problem (Fortunately not me - just nosing) is VERY lucky to have Richard and Dozergirl(also with experience in legal & property) to hand.

Well done you two. Credit where due Etc.

RTM_456

Hi there,

I have lived in a leasehold flat for four years, and am having quite an eventful time with it!
But dont be put off! I had 3 years of relative peace before a crazy maintenance bill made me exercise my Right to Manage. For £500 me and my neighbour basically formed our own management company and served notice that we would be maintaining our own properties. We used Canonbury Management who were great, but be warned their claims about the landlords rarely pursuing their fees and that the fees should be under £400 are very inaccurate!

You can also look at extending a short lease, or buying the freehold (for all flats). You then become a lessee of a freehold you own with a 999 year lease and no ground rent.

You can google all this... and knowalls, I design furniture for a living so please feel free to correct any glaring inaccuracies! :-)

If the flats has less than 80 years, leave it, or pay a low price that allows you money leftover to extend the lease, and YES definitely talk to the freeholder first before you make an offer. You could move in with the intention of extending the lease, but I beleive (pedants standby! ;-) ) that you have to be a resident for two years to qualify to extend? Lease Advisory Service are a good source of info.

However if the lease of the property you buy is less than 80 years to extend the lease or buy the freehold you will be liable for 'marriage value' which basically means paying much more.

The point about the lease running out and then you becoming a rent paying tenant is true, but the idea is that, that never happens! You renew the lease to avoid that and also because many lenders wont lend on a lease below 70 years.

Many landlords exploit lessees extending their leases or buying their freeholds with high legal fees in order to establish a reputation to scare lessees off attempting it, so please sign this petition to stop it http://petitions.number10.gov.uk/LVTlegalcosts/

Thanks!

RTM

PS.. think twice about a property with Sinclair Gardens Investment Kensington they really are bloomin' awful. Google any landlords and management companies to read any horror stories.

pizzagirl

RTM_456 wrote: »

If the flats has less than 80 years, leave it, or pay a low price that allows you money leftover to extend the lease, and YES definitely talk to the freeholder first before you make an offer. You could move in with the intention of extending the lease, but I beleive (pedants standby! ;-) ) that you have to be a resident for two years to qualify to extend? Lease Advisory Service are a good source of info.

However if the lease of the property you buy is less than 80 years to extend the lease or buy the freehold you will be liable for 'marriage value' which basically means paying much more.



.

Great post, very informative. Just to clarify the word I've highlighted I presume you mean more than 80 years not less?

Dan:_4

pizzagirl wrote: »

Great post, very informative. Just to clarify the word I've highlighted I presume you mean more than 80 years not less?

He/She means less then 80 years. As in don't buy a flat with less then 80 years left to run on the lease.

RTM_456

Yup... well think twice about less than 80 years certainly.

nishajani

However if the lease of the property you buy is less than 80 years to extend the lease or buy the freehold you will be liable for 'marriage value' which basically means paying much more.


Hi all - thanks for a most informative thread - giving me lots to think about! Wondered if anyone can explain a bit more quote above - what is marriage value and how is it calculated?

Trying to work out best way to go about all this for me and fellow leaseholder....
Your thoughts much appreciated.
N