Share of freehold (or not)

John_V85

Thanks for the replies up to now. I now have some clarification on the issue.

Contrary to my expectation that a document would be missing, it turns out that the flat does not actually have a share of freehold.

The flat I am looking to buy (the basement) used to be part of the ground floor flat. While it was a single flat the leaseholders of the building (4 levels) purchased the freehold, each obtaining a share of freehold. Subsequent to this, the leaseholder of the ground floor flat divided the flat to create the additional separate basement flat granting an underlease (what I would be buying). The tenant of the newly created basement flat was not given a share of the freehold.

That's the history. The apparent reason for it being advertised with a share of freehold is that despite the legal obligations the vendor (current holder of the underlease) has indicated that all leaseholders (including himself) in the building gather together to discuss property matters with everyone having an equal vote in any matters, including himself. That sounds nice, but personally I think the "share of freehold" statement was quite misleading as it is clearly not a legal entitlement and who's to say what will happen with the owners in the future. The vendors solicitors statement that it is merely semantics insults intelligence.

So the situation I find myself in now is trying to attribute, if any, a value to the loss of share of freehold interest, which is where I'm fairly stuck. The lease has 97 years remaining so I don't see a renewal of the lease (common reason I would see for having a share of freehold) is going to be a big issue. I plan to move on with 5 years. I don't see any major issues in the lease. Contribution to the service charge/costs is 1/12 reflecting the smaller size of the flat which appears reasonable.

Any thoughts on this would be appreciated.

John

timmyt

no real significance really. lease duration is long enough by at least 17 years. ok freehold owners may pay no ground rent, but doubt it is big anyway is it? still have to pay 1/12th of service charge and all the others will ensure the block is well run and probably at more of an aforable price than 3rd party landlord.

John_V85

ground rent is pepercorn.

Fire_Fox

John_V85 wrote: »

So the situation I find myself in now is trying to attribute, if any, a value to the loss of share of freehold interest, which is where I'm fairly stuck. The lease has 97 years remaining so I don't see a renewal of the lease (common reason I would see for having a share of freehold) is going to be a big issue. I plan to move on with 5 years. I don't see any major issues in the lease. Contribution to the service charge/costs is 1/12 reflecting the smaller size of the flat which appears reasonable.

Any thoughts on this would be appreciated.

John

Presumably you need to apply to the ground floor flat for an extension of the lease and not the freeholders? What is nothing stopping them charging you the full whack for doing so? Leaseholders do not usually need to gather to discuss property matters, they will all effectively be wearing their freeholder hats ... except you. Just because that flat has a vote now does not mean it will continue to do so when the flats are sold on.

John_V85

Fire_Fox wrote: »

Presumably you need to apply to the ground floor flat for an extension of the lease and not the freeholders? What is nothing stopping them charging you the full whack for doing so? Leaseholders do not usually need to gather to discuss property matters, they will all effectively be wearing their freeholder hats ... except you. Just because that flat has a vote now does not mean it will continue to do so when the flats are sold on.

Thanks for the reply.

I'm fully aware of the later, which is why I raised my issued with the vendors solicitor attitude of it being semantics.

The former point is interesting, although I wonder how it would effect value in the forseeable future given the length of the lease.

Fire_Fox

John_V85 wrote: »

Thanks for the reply.

I'm fully aware of the later, which is why I raised my issued with the vendors solicitor attitude of it being semantics.

The former point is interesting, although I wonder how it would effect value in the forseeable future given the length of the lease.

I am no expert on property prices but ... my understanding is that extending your lease does not increase the value, however not extending the lease means that towards eight years the value of the flat will reduce. I think your issue here is more future saleability - FTBs like nice simple flats, they get twitchy when the arrangements are not crystal clear.

Do you have time to insist the lease is extended to, say, 200 years at no cost to yourself (not even legals) as a quid pro quo for the mis-representation? You then have no worries at a later date about awkward/ slow/ absentee freeholders or the cost or the fact that you have to be a leaseholder for two years to apply for an extension.

John_V85

I may be confused here, but can the holder of an underlease extend their lease under the 2 year rule. Presumably it would depend on the length of the main leaseholders lease. Far to complicated for this time of night.

I presume a problem with insisting extension to 200 years is that the main leaseholders lease might also need to be extended, depending on its current length.

Fire_Fox

Good point! Another reason for a buyer to get cold feet ... ?

Ulfar

This all sounds very complicated, what does your solicitor say ?

To be honest leasehold can be complicated enough, these further issues would prompt me to find somewhere else or lower my offer as you aren't getting what you bid on.

John_V85

I think I'll drop my solicitor a line about the extension business - i think that is essentially key to this all.