Flat is share of freehold AND leasehold??

spend_thrift

Hi,

The flat I am currently seriously considering is share of freehold, AND leasehold. I'm not sure what that combination means.

The remaining lease is 66 years, bought as 99y in 1977.

The vendor is saying that because it is share of freehold the lease doesn't matter, but surely I need the lease to get a mortgage?

I'm an FTB, so fairly new to all this stuff and not sure if I should be insisting that he extends the lease as part of the sale.

Jebrelli

Hi spend_thrift, as I understand it any property with a share of freehold will still have a lease - this is quite normal. Obviously the length of the lease isn't ideal, as it's under 80 years, but for mortgage purposes it should be sufficient.

As you say, it would be ideal to get this extended by the current owner before the sale goes through. This shouldn't be costly (a token payment) because of the share of freehold set-up. If, for some reason, the owner doesn't want to do this, I would be pretty concerned.

spend_thrift

Thank you Jebrelli - that's really helpful.

Why would you be concerned if the owner doesn't want to extend the lease? What sort of things should be raising alarm bells for me?

Richard_Webster

As you say, it would be ideal to get this extended by the current owner before the sale goes through. This shouldn't be costly (a token payment) because of the share of freehold set-up. If, for some reason, the owner doesn't want to do this, I would be pretty concerned.

Quite! Go and see the other shared freeholders and find out what they say about extending the lease. Usually they will take the view that they are all in it together and if their lease needs extending to enable it be mortgaged by a buyer then they would expect the others to co-operate, so why shouldn't they help your seller now?

That's what reasonable people would do. However legally you can only compel an extension once you owned the flat for 2 years and you have to pay the going rate (effectively reduced by your percentage share of the freehold). So the other co-freeholders don't have to co-operate and sometimes they don't. This can be because:

* One co-freeholder is having an argument with your seller about something else and uses refusal to sign an extension deed as a bargaining counter ; or
* One or more co-freeholders steadfastly maintain they are not signing anything because "we are shared freeholders and we don't have leases...." (Yes, it is quite common for them to think that.)
* One of the co-freeholders has disappeared and even if you wanted an extension you couldn't get it because his signature would be needed!

With this sort of set up the personalities of the people concerned are very important. Do not assume that the law can sort out any problems - it may be possible, but only at great cost, time and stress. If one of the co-freeholders looks as if he is going to be awkward, walk away.

A lot of this is explained on my website, but I am not allowed to link to it.