Can you help?Buying 1st house and not sure on what to do

Luce3006

Hi there, I need a bit of advice.

Last month we put an offer on a flat with a fantastic garden. Both Agency and owner told us that the flat was freehold and that there were no problems at all in getting planning permission in case we decided to extend because next door flat has been granted them by the council. Sure of this bit of information, we made an offer which was then accepted.
So we applied for the mortgage and contacted the solicitors. When the solicitors came back to us, on the paperwork it said that the flat is leasehold. We called the agency and the guy who is handling our case told us that it was a mistake and assured us once again that the property was freehold.
This morning my DP called the solicitors who told him that he checked on the coulcil documentations where it says that the flat is leasehold and there are 102 years left on the lease.
Very !!!!ed off, he then called the guy at the agency and then the solicitors again and got told that the current owner does own a share of freehold but for the upstairs flat and the owner of the upstairs flat owns the share of freehold for the flat we put an offer in.
Can't explain how angry I am. I feel like they lied to us all along.
Does any of you know if it is possible to do a sort of exchange of shares of freehold with the upstairs flat owner? We decided to buy this flat because of it being freehold,with a 125 ft garden and close to the Catholic school we want to send our ds to.

ARGHHHHHHHH, really don't know waht to do!!

lil'H

I'd get some advice from your solicitor, but if you don't feel comfortable walk away before you start spending more money on the purchase. Something didn't sit right with a place I was meant to be buying, survey came back saying opposite of what sellers/agents had said. I walked away and went on to find a house twice the size and a million times nicer.

bob79

I was in a somewhat similar situation (I will expand on that later in another thread).

What you describe doesn't really make sense. What I expect the situation to be is that the owners of the flats together own the freehold of the whole building. They would then most likely form a management company. Such companies are generally publicly listed. Try googling the address of the house (maybe together with 'management'): records of the management company may turn up (I've done this in the past on properties that I viewed: this is a good way of veryfying existence of a management company).

In a flat you can't expect to fully own the freehold. For example: any building work on the ground floor flat would also affect the first floor flat (shoddy workmanship may see the whole building tumbling down), so the owner of the first floor flat has in that sense an interest in the ground floor flat. Similarly with the roof and if applicable with communal areas like the front door. These issues are much more severe than with e.g. a terraced house were you share a wall.

In general you also can't get buildings insurance for a flat, it must be taken out for the whole building.

A share of freehold construction with a management company with the leaseholders of the flats as directors is very standard. If you buy a flat then you will almost surely just have to put up with this.

What worries me about your situation is that this wasn't made clear before you made the offer and that when your solicitor enquired, the agent messed up again.

As I said, I was in a somewhat similar situation as you are. I chose to walk away. Of course, you have to make up your own mind, but you should consider walking away as a serious option.

PasturesNew

I have heard of this before, where two flats own the lease to each other's flat. This is to ensure that they work together for the betterment of the property as you require their permission to do potentially annoying things - and they need yours. Imagine if you did manage to swap leases (I think legally there'd be a problem with this/mortgage) and you built your extension... what if they then plonked a roof garden on top of it? Without your permission they could do.

So that's why they work like they do.

If you want to be freehold you have to really go for a house. Flats will always have some peculiarities regarding leases of some sort.

feralkitten

This arrangement for upper and lower lessees to hold the freehold of the other flat used to be more common in the north of England, while the freehold being held by a (lessees owned) company is more common in the south. The company freeholder set-up is considered more convenient as when there is a sale, it is only necessary to transfer the share in the company, rather than having to transfer the freehold ownership to the new purchaser. Either way, the point is that the flatowners need to agree on any decisions to say carry out repairs or set up an emergency fund, etc. The vast majority of flats are leasehold, as the lease is the means of ensuring that the lessees abide by the covenants and promises needed to keep all the lessees in the building doing what they should. The freeholder, whether an individual or a company, in their role as Landlord, has the power to enforce covenants that are not being kept by a naughty lessee. It sounds as if, in your scenario, you would be the Landlord of the upper flat and they would be yours. With only two flats involved, we are back to the point that it really means that co-operation is called for between the two flatowners when something needs to be done.

Incidentally, although there are some flats which are sold freehold, this would be viewed as more of a problem because of the lack of covenants and promises binding the owner and could put off a mortgagee from lending.

bob79

feralkitten wrote: »

This arrangement for upper and lower lessees to hold the freehold of the other flat used to be more common in the north of England, while the freehold being held by a (lessees owned) company is more common in the south.

:eek:Ouch, I got caught out for the arrogant southerner that I am.:D

Entertainer

What you are after - a freehold flat- is very uncommon and is in fact undesirable for you. If you want to buy a freehold property then you need to buy a house.

What you want, in addition to your leasehold flat, is a share of the freehold of the building so that you and the other lessees have control over the building's management. This is what you appear to have but in a roundabout way as others have said (very good advice from them by the way.)

I'm just amazed at how stupid the estate agent was for telling you it was freehold.

Doozergirl

Entertainer wrote: »

I'm just amazed at how stupid the estate agent was for telling you it was freehold.

Honestly, EAs often know very, very little about the intricacies of leasehold properties even less about Share of Freehold.

I was helping friends buy in London and I'd often be treated like an idiot and told quite firmly that Share of Freehold means there is no lease, which simply isn't true. They are not conveyancers and I generally pay little heedance to what the EA says. Everything has to be confirmed and if they say a flat is freehold then you can very quickly conclude that they have no idea what they are talking about.

OP, I would not walk away yet because what you think you want (a freehold) simply does not exist (not one that a mortgage company would like anyway). You need your solicitor to look further into the leases and confirm who exactly owns the freehold for you. If it is owned by the flat owners then extending will be less of an issue than it might be with a more independent, and therefore profit-seeking, freeholder.