Help!! Freehold/leasehold flat confusion!!

m_curiousity

Hi all,

Will explain this as best I can. Basically we put an offer on a flat on the understanding that the vendor was selling the freehold for the whole property with the flat. The property is a victorian terrace with 3 floors - one floor is a seperate self contained basement flat with seperate front door, and the other 2 floors are combined into one maisonette with another front door.

Our mortgage broker asked the estate agent a few weeks ago if there was any lease in effect on the flat, he said 'Im sure there isnt but I'll check with the vendor'. We paid our mortgage arrangement fee, valuation fee etc yesterday. The EA has come back to us and the mortgage broker today saying 'yes there is a 99 year lease on the flat, but the freehold is definately for the whole building'. A little while later he changed his mind and said 'actually its a 93 year lease'.

From what I understand, this wouldnt affect us negatively in any way as long as we still had the freehold for the entire building, (we are happy to be responsible for maintainance etc as its only 2 flats involved). However when I asked our solicitor this, she gave me this reponse,

"Thank you for you enquiry, we still await draft paperwork at the moment but the property is leasehold with the freehold of the building. This means you will be the landlord of the other leaseholder. As to the freehold you only own the communal parts the other flat obviously has their own title. You need to make sure that you are happy that the property is off reasonable maintenance as any repairs will fall to the two leaseholders. Your survey will be able to inform you of this and it needs to be for the whole building."

As the property doesnt have any communal areas, I asked if this would affect us negatively in any way, and if in theory we could later sell the flat as leasehold but keep hold of the freehold, (or sell this to a management company). I also explained that as I understand it at the moment, the freehold and the leasehold are being sold as two seperate entities. She responded with

"There would be no benefit in keeping hold of the freehold if you sold the flat you only own the freehold to the communal parts each lease/flat is owned separately so the freehold would need to be sold with the leasehold title".

I'm now really confused, I've told her there are no communal areas now, but I'm not sure if this means there is a seperate freehold for the basement flat, or if we will in fact have the leasehold for our flat plus the freehold for the entire property, not just the 'communal areas' that dont exist.

Can anyone help me decipher this solicitor speak please?? Would really appreciate it, spent ages reading up on leasehold/freehold law but cant see anything that covers this situation!!

Thanks

Chinkle

Surely if 2 flats share one front door there is a communal area. I'm assuming you will hold the freehold for the building that will include the basement flat too and be responsible for the building maintenance for all three flats, be able to grant lease extensions on them etc. Otherwise what kind of freehold would you be buying? Whether you want to keep this later if you sell the flat depends on whether you still want to be responsible for the building for what little income it is likely to derive. What length of leases do the other two flats have?

kmmr

Communal parts includes things like the Roof, and foundations I think. Basically you own the building, and the leaseholders own the insides. The freeholder is still responsible for the roof, the external appearance etc - but paid for generally by the contributions from the two leaseholders.

If you sell and retain the freehold, then you own the building. You have a right to rental income etc.

My uneducated two cents worth.

G_M

kmmr wrote: »

Communal parts includes things like the Roof, and foundations I think. Basically you own the building, and the leaseholders own the insides. The freeholder is still responsible for the roof, the external appearance etc - but paid for generally by the contributions from the two leaseholders.

If you sell and retain the freehold, then you own the building. You have a right to rental income etc.

My uneducated two cents worth.

Nope. Very educated 98 cents worth!

For actual definition of communal areas you'd need to refer to the leases. Sometimes responsibility for roof falls on the top flat and responsibility for footings (eg damp proof course) falls to bottom flat. Sometimes responsibility (financially) is shared (but controlled by freeholder). It all depends on the terms of the leases. But there are bound to be 'common areas' for example, painting the external walls/window cills or whatever.

PasturesNew

I'd think communal areas would be:
- roof
- guttering/downpipes
- drains
- any gardens, walls, driveway, parking, outside lighting
- exterior walls (pointing, etc)
- chimney on the roof

So, anything that isn't the inside of the other person's flat.

m_curiousity

Hi,

We have 2 seperate front doors as I said in the first post. Its essentially a house with a seperate basement flat is the best way to understand it!

I didnt know outside walls etc counted as communal areas, thats why I was getting confused! I think we've worked it out now... EA's are such blatant liars, just chased mine for the HIP which is said he hadnt got, but sent me the mini HIP. At the bottom it says very clearly that there are 2 leases for the property, on the maisonette and the basement flat. Why would he not tell me this in the first place when we queried???Grrrrr!!

Thanks for the help guys, just gotta explain it to the bf now

G_M

PasturesNew wrote: »

I'd think communal areas would be:
- roof
- guttering/downpipes
- drains
- any gardens, walls, driveway, parking, outside lighting
- exterior walls (pointing, etc)
- chimney on the roof

So, anything that isn't the inside of the other person's flat.

Maybe. Maybe not. You have to read the leases!

Fire_Fox

There are a host of legal responsibilities that come with being a freeholder, you would do well to read this entire website:
http://www.lease-advice.org/publications/documents/

kmmr

m_curiousity wrote: »

"There would be no benefit in keeping hold of the freehold if you sold the flat you only own the freehold to the communal parts each lease/flat is owned separately so the freehold would need to be sold with the leasehold title".

But the freehold doesn't just mean you own the communal areas - it means you own the whole place. You just have a couple of long leases on it that you have to honor first!

And of course you are bound by the law on issues like lease extensions.

You could say the freeholder owns two financial assets - the leases that produce an income.

Anyway, it's just details, I think you have resolved your issue!

I am always interested in this freeholder/leaseholder stuff as I come from Australia and we don't have these issues. When I first bought a leasehold flat in London I didn't understand at all why it was leasehold. And I still can't really work out why anyone bothers owning these freeholds that produce not much more than a peppercorn rent!

G_M

And I still can't really work out why anyone bothers owning these freeholds that produce not much more than a peppercorn rent!

because as the lease gets shorter, the leaseholder tends to want to extend it - and is willing to pay the freeholder to do so??

HollyV

Hi
Interesting - I am about to put offer on a share of freehold flat which is two floors of 3 floor victorian conversion. The bottom flat is share freehold too. I understand therefore the two flats of the building both have share of freehold, however on the HIP Freehold is ticked but the lease part is also filled out and it seems has 107 year lease on it. There is a leasehold contract and a building company registred as holding the lease. Where does this leave me? confused about what the freehold is then. How can I have share of freehold yet a third party has the lease? Any ideas? Is this normal?
........thanks