Buying freehold?

springer211

I've been offered to purchase the freehold for my property (house converted in two flats, I own one of them).

The owner of the ground flat is very unreliable, it's a rented property (although I don't think they have informed the mortgage lender or the freeholder of that).
They don't care about maintenance, even the flat itself is not in good repairs. So a shared freehold is out of discussion they are too unreliable.

The freehold does not have any provisions for service charges, a small ground rent, half of the building insurance and that's it. However it states that the leasholders are jointly responsible for maintaining the building.

Buying the whole freehold will cost 10k. As I only have 79 years left in my lease I would need to spend money to extend it anyway at some point in the future. But money is really tights right now as I recently lost my main job and don't earn much right now.

I'm worried that I may end up having to spend a lot of money in legal fees to get the leaseholder below to pay what they owe for rent and insurance (they've never paid a penny to the current freeholder, letters were sent back as they don't live here any longer, and the freeholder did not have a clue on how to go about getting their money).

Any thoughts from other people who own a freehold or are familiar with similar situations would be very useful.

G_M

Sounds like a disaster waiting o happen.

Pay when you can to extend your lease.

Don't take on the freehold. Enforcing lease terms on the other flat owner will be expensive, time-consuming and stressful.

And if any real maintenance issues arise (new roof?), you can magnify that by 10.

propertyman

These arrangements work well but when they go bad they are often epic. In the event of indecision its 1 vs 1.

it is always recommended that in small schemes that there is arbitration clause to freehold purchases to resolve that, but then you have, as implied, an issue over their funds and willingness.

Extend your lease and hope the new landlord is willing to enforce the covenants is the most obvious option ...

But remember that you may have to force the landlord to enforce the lease terms on upstairs, incurring all the costs for action against both.

springer211

propertyman wrote: »

These arrangements work well but when they go bad they are often epic. In the event of indecision its 1 vs 1.

it is always recommended that in small schemes that there is arbitration clause to freehold purchases to resolve that, but then you have, as implied, an issue over their funds and willingness.

Extend your lease and hope the new landlord is willing to enforce the covenants is the most obvious option ...

But remember that you may have to force the landlord to enforce the lease terms on upstairs, incurring all the costs for action against both.

If I bought the freehold would I not be in a stronger position to enforce the lease in terms on maintenance?

propertyman

Yes, however assuming the freeholder is not resident, the freeholder must offer it to you both ( buying jointly) before selling it to anyone, including just you.

If you did purchase it after that had been worked through, then you are in a position to enforce the lease. If you bought it jointly then you would have to agree on any action, which in a 1 v 1 situation it will be a stalemate.