Buying a share of the freehold/extending lease?

gibbon69

Hi

We live in a block of flats. 20 out of 28 have brought a share of the freehold and extended leases where necessary. This means that the manging agent has been changed. We wondered if its worthwhile doing the same.. our lease has 92 years left on it. We've lived in the flat for 7 years, we might want to sell in a few years. We have been told that it'll cost around 5K to extend the lease and buy a share of the freehold. Is it worth it? Will we be able to recoop this investment when we sell, will it make a big difference to prospective buyers?
Our mortgage adviser says do it, the managing agent said it's not worth it.
Thanks in advance for any advice

arachne

Most of the flats in our block recently bought the freehold and then extended the lease. At the time, our managing agent said that when any of the flats who didn't buy in come to sell, the managing agents will have to fill in a long form for the buyer's solicitors, where they'll declare that it is one of only 3 flats in the block who didn't buy in. I guess this wouldn't look great to your buyer who might then insist you buy into the freehold as condition of the sale. So you might end up buying in anyway, but the longer you leave it the more it will cost and it could slow down the selling process.

That said, someone in our block did sell without share of freehold last year (with a much shorter lease than you) so I guess it doesn't put all buyers off. I think it comes down to how good the buyer's solicitor is in whether they highlight it.

Personally, I did make the decision to buy in and I'm currently selling my flat and haven't recouped the cost. However, I don't know if selling would be even more difficult if I didn't have the share of freehold/long lease so I don't regret doing it.

Good luck with your decision.

Richard_Webster

Most of the flats in our block recently bought the freehold and then extended the lease. At the time, our managing agent said that when any of the flats who didn't buy in come to sell, the managing agents will have to fill in a long form for the buyer's solicitors, where they'll declare that it is one of only 3 flats in the block who didn't buy in. I guess this wouldn't look great to your buyer who might then insist you buy into the freehold as condition of the sale. So you might end up buying in anyway, but the longer you leave it the more it will cost and it could slow down the selling process.

That said, someone in our block did sell without share of freehold last year (with a much shorter lease than you) so I guess it doesn't put all buyers off. I think it comes down to how good the buyer's solicitor is in whether they highlight it.

Personally, I did make the decision to buy in and I'm currently selling my flat and haven't recouped the cost. However, I don't know if selling would be even more difficult if I didn't have the share of freehold/long lease so I don't regret doing it.

Good luck with your decision.

This is a sensible balanced viewpoint.

At 92 years you won't need to extend the lease yet, so that won't be a worry. If a lessee has bought a "share in the freehold" then normally he doesn't have to pay for a lease extension. However the law cannot compel "shared freeholders" to grant lease extensions to fellow "shared freeholders" for free. However if they don't buy into the freehold they are more likely to have to pay roughly the same amount (or more) for a lease extension later on down the track

It does depend on how you look at it. A non-shared freeholder would probably be expected to pay ground rent (whereas frequently those with shares do not have to do so) but apart from that they will have what are usually the benefits of localised hopefully relatively cheap management costs. There are some idiots running shared freehold management companies, but usually a company run by the residents is better than one run from outside for pure profit, so even even if he doesn't get a "share" a buyer might be attracted by that. The downside is that you don't get a say in what they do.