Yet Another Freehold Flat Question!

westv

Many thanks Richard. Is there any way that owners of individual freehold flats can legally be bound to the upkeep of common parts and their own area - the same as leaseholders? I assume not as, if there were such a thing, more freehold flats would have this in place and more lenders would be willing to lend.

Richard_Webster

You can have a scheme of mutual covenants whereby no transfer of any flat can take place unless the buyer enters into a direct covenant with all the other flat owners (who also all have to sign the deed so they are committed to the buyer). This breaks down in practice because the larger the number of flats the more difficult it is to get them all to sign and even if they covenant that they will do so the hassle of going to court to obtain a signature when somebody wants to sell his flat would be very great.

RBS & Nat West say they will lend on freehold flats but such a scheme must be in place. In most cases there will be no such scheme or it will have broken down.

Being beholden to others when you want to sell your property is a recipe for disaster.

westv

It all makes me wonder what the thinking was behind having flats where all the residents have a separate freehold title. It all seems a recipe for complexity.

Richard_Webster

I agree. I can only think that 25+ years ago when mortgage lenders were vaguer about their requirements on these detailed points there were people out there who thought that a freehold flat sounded better than leasehold....

westv

Still waiting for my solicitor to come back to me with provisional advice.
However, they still haven't had the docs from the vendor's solicitors yet. 3 weeks after my offer was originally accepted.

westv

Just an update.

My solicitor finally got the legal info from the seller's solicitors.

It is a freehold flat.
There is a lease over the common parts.
There is a management company.
There are convenants in place and a service charge collected by the management company for the maintenance of the common parts.

My solicitor has sent a standard set of questions regarding the maintenance charge and will advise when answers are received.

Edit: It sounds a bit like commonhold but was obviously set up before commonhold came about.
The service charge includes insurance (for the comon parts I assume) but presumably this would also cover by default the rest of the structure which isn't common parts?

Richard_Webster

If the freehold is merely the internal shell of the flat (unlikely) and the common parts (if they include the structure of the building) are held in a separate title it might work in practice because you have would enforceable rights against the landlord of the common parts. This still does not make it mortgageable.

You should paying around 30% less for this flat than a similar ordinary leasehold flat. Are you?

If not, run way and let the seller stew in his own juice. Eventually when none of the flat owners can sell for a reasonable price they might try to get together and sort it all out, which will be expensive and difficult as it will require the consent and active agrement of all concerned and someone won't agree because they won't udnerstand.. Why drop yourself in a hole?

westv

Richard_Webster wrote: »

If the freehold is merely the internal shell of the flat (unlikely) and the common parts (if they include the structure of the building) are held in a separate title it might work in practice because you have would enforceable rights against the landlord of the common parts. This still does not make it mortgageable.

You should paying around 30% less for this flat than a similar ordinary leasehold flat. Are you?

If not, run way and let the seller stew in his own juice. Eventually when none of the flat owners can sell for a reasonable price they might try to get together and sort it all out, which will be expensive and difficult as it will require the consent and active agrement of all concerned and someone won't agree because they won't udnerstand.. Why drop yourself in a hole?

I guess that I'd need to check the lease (or ask the solicitor) exactly what parts are covered by the lease.
I did notice when viewing though that the whole of the exterior is very much the same. There are uPVC windows in all the flats which look identical. As there is no mention of double glazing in the 2008 energy report I was given for the flat I'm assuming these were all done at the same time. It's a question I'll be asking my solicitor. There are also rules forbidding any form of exterior attachment of aerials or flower boxes.
If there were enforceable rights for the common parts and the freehold was purely for the shell why would mortgage companies still be concerned? I understand that they would be but I'm not sure why. How would a freehold of the shell of the flat (if that is the case) differ from a leasehold - apart from the fact that a lease will eventually expire? The freeholder has additional rights to change internal walls etc?
The price I'm paying is about 15% less than two other flats sold for in the same block in early 2007. That percentage ties in well with the Land Reg figures and the Nationwide index. This flat has also been very well decorated and with new kitchen, bathroom and bedroom wardrobes - all professionaly done apparently. I'm paying around 8% less than asking price.

Richard_Webster

The price I'm paying is about 15% less than two other flats sold for in the same block in early 2007.

Don't make your comparisons with other flats in this block but other flats in other blocks nearby that are more sensibly leasehold.

My point about the shell etc was this. Most blocks of flats nowadays have leases where the structure of the building is excluded from the area leased to each flat owner and it is included within the definition of common parts that the landlord/freeholder is obliged to maintain. The landlord covenants in each lease to maintain the common parts. If he doesn't dos so you then have a right of action against the landlord for time being as long as you are the lessee of one of the flats at the time.

So if you had a lease of the right to use the common parts and have them support and protect your flat you may have a right to take action against the freeholder of the common parts. This would get round some of the objections to freehold flats but mortgage lenders' rules are quite strict and just because something might actually work doesn't mean they will accept it - it is is not in the CML Handbook it is not acceptable. Period.

Also frankly I think you will find that the freehold of each flat will include that part of the structure that relates to that flat and the lease will only be concerned about stairwells and gardens etc.

westv

Richard_Webster wrote: »

Don't make your comparisons with other flats in this block but other flats in other blocks nearby that are more sensibly leasehold.

Presently the only 2 bed flats that are up for sale within a mile of where this property is are all in another block (large conversion) and the asking price of my flat is around 30% of the lowest priced of those. In the postcode district there have been 4 sales of flats in the last year (according to the latest publicly available data). Three of those sold for 25% more than this flat.