Share of freehold (or not)

timmyt

try and get a discount for mis-selling but otherwie, the point is that you are still willing to buy, so unless your lender takes issue with the valuation and mistaken assumption that a freehold share will be given, it is a practical issue only, of whether you are simply happy to proceed......would the freehlders be willing to join you in...get your lawyer to have the seller find out from the freeholders...easy fax to send off and find out

Richard_Webster

Although the situation is not as first expected I think you have to look at the whole set up and compare it to other set ups in similar flats in the locality that are available for sale.

If the people get on and there is a workable arrangement then this is a plus. You could have a shire of freehold situation where you have more in the way of theoretical rights but the people are difficult and you have trouble in enforcing those rights.

As otherwise have said there will be little real difference in value.

On the subject of lease extensions I would assume that the immediate landlord's lease is very little longer than that of OP and therefore when an extension is needed both OP and his landlord will have to obtain extensions. In theory at that point the landlord can bargain with the other co-freeholders on the basis of "I'll sign your extension deed if you sign mine" - although all 4 signatures will be needed in each case. OP hasn't got that bargaining power and will have to rely on his landlord's good nature. However if he doesn't intend to be there when the lease needs extending it is unlikely to be an issue when he sells..

John_V85

Richard

Thank you for your reply.

My concern (and I haven't decided if its warranted or not) is that the saleability is effected. Although I don't intend to be there when I would consider the lease needs renewing (~80 years remaining from what I can gather), I wonder if a buyer from me (say in 5 years time) looks at his saleability (perhaps he would be there at a time when the lease needs renewing or considers that his purchaser might be) and whether that influences significantly the purchase price I would be able to realise. I can't see that any risk of non-renewal (although I find this hard to quantify) is essentially priced in and I just wonder if it should be, or whether it is too far down the line to warrant consideration.

John

Richard_Webster

I think you sell it as a leasehold flat but with the added bonus that the other occupiers are friendly (if they are by then). At minimum you fall back on saying that the landlords own the other flats and there isn't an outside third party uninterested landlord.

If you sell in 5 years time there will be 92 years left and most buyers wouldn't even think about lease extensions so the way that might be accomplished 10 years later will be unlikely to cross their minds.

Valuewise, flats are looked at for location, size, condition, and the existence or otherwise of facilities such as central heating and parking. Lease length (unless really short) is scarcely considered at all. (I had a case locally where two virtually identical maisonettes were being offered at the same price, one with 975 years left on the lease, the other with 75 years.)

Shared freehold does have a value but it is one of many factors together with those I have already mentioned, so it is quite difficult to distill out the amount that is attributable to that factor alone for any given flat, because there are unlikely to be two almost identical flats locally - one shared freehold and the other not ,so you can make a straight comparison and arrive at some conclusion as to the percentage difference.

Even then it would not be statistically significant - to allow for all the other differences you would have to compare say 1,000 shared freehold flats with 1,000 that were not and compare the aggregates of their prices to arrive at some average percentage difference. Possibly somebody has done that, but I don't know of it.