Freehold garden flat - mortgage problems

Richard_Webster

Although it looks like it doesn't now apply, owning the freehold along with your leasehold interest on a flat is a huge advantage to you,

But there is no lease of the flat - that's what this is all about. Having said that it still is an advantage because you can collect any ground rent and a greater element of control over the building. If the freehold was shared some of that control would be lost.

Incacola

RE: JayZed
Thanks, listed next to each freehold is *(1) and at the bottom of the page it says:

*This row refers to a title that is duplicated elsewhere in the results table, as the title belongs to more than one property. The number in brackets will show you which other properties share this title.

I think that means there is only one freehold – phew!

RE: Richard Webster
Many thanks for your point about 5.5.3. I have now spoken to another broker (I thought it was best to start with another one) and once I explained the situation and gave him the ref, he spoke to a couple of lenders and was fine to offer us a mortgage. Such a relief!

Having researched freeholds a bit more on the internet (and your name crops up on many forums – many thanks) I wondered if I need to check about the Right of First Refusal (i.e.: that she has offered the freehold to her upstairs neighbour). Apparently, he is aware she is selling (plus there is a big board outside the house) but is this something we need to check?

Also, if we in the future or possibly made it part of our negotiations now and asked her to change the freehold into a leasehold for the garden flat and a separate freehold, is that likely to cost a lot? I’m thinking more for the future when we sell whether it would make it smoother as I wouldn’t want future buyers to be put off because they have to negotiate for a mortgage (although its much easier when its explained to you, like you did)? I understand we could make it part of the sale that on completion, she issues us with a leasehold and sells us the freehold on the side?

Fire_Fox

AFAIK right of first refusal cannot apply if the freehold is not being sold separately from the leasehold of the downstairs flat - in this case it does not sound possible to sell one without the other as you only have one title. IMO you would be better to get your own solicitor to create a lease on the downstairs flat as you have comeback if it is not done well. You will need to consult with your mortgage lender over this.

The best place for reading about freehold and leasehold legislation is here
http://www.lease-advice.org/publications/

Incacola

Update: we have offered for the flat and it has been accepted. We are arranging our mortgage and although I can get one with either Woolwich or Abbey, the best one is with First Direct (Lifetime tracker 1.89 above base rate) who are refusing to accept the freehold situation.

I’m speaking to our solicitor and the vendors about getting a lease issued for the ground floor flat but does anyone know the best way to do it. First Direct say the leasehold would need to be in place before the monies transfer. Would we therefore get a lease issued to us and then purchase the freehold separately and afterwards? Do you need to sell a freehold according to certain prices? Could we for example purchase the freehold for a paltry sum (eg; £100) as I’d really want all of our money to go towards our deposit for the leased property.

On an aside – if I need to get a building survey done, is it ok to use the mortgage lender’s surveyor to do both or is there possibly a conflict of interest?


Please help!

Richard_Webster

HSBC/First Direct are a law unto themselves on things like this because they are the only major lenders who do not subscribe to the CML handbook and are completely unpredictable on this kind of fairly obscure legal issue.

Virtually every other lender should be OK.

If you have to faff around with lease(which will increase legal costs) then if you are buying on your own then freehold gets transferred to you and your brother (or other friend/relative) for say £1 and lease is issued to you. If more than one of you buying then lease to both of you and freehold only to you. Mustn't be to same people.