Extending a lease while owning part of the freehold

LozzaD

Hi everyone,

I did post this query on another discussion but it didn't get any responses. I'd really appreciate some advice on my circumstances.

I bought a flat (one of three in a converted house) in June 2010 for £130k with 83 years on the lease and a third share of the freehold. The owner of the downstairs flat bought the freehold jointly with the former owner of my flat and subsequently sold a third of the freehold to a housing association/trust that owns the third flat (which is let out under a protected tenancy).

What I would like to know is firstly, whether as a holder of a third of the freehold I would need to extend the lease and secondly, if it does need to b extended, how the ownership of the freehold (equally by three parties) would affect this process and the costs involved.

Thanks for the help!

richardw

If all 3 flats are on the same lease length then they may all need a longer lease length soon. Perhaps have a freeholder meeting with the others and see what you can agree on.

propertyman

No such thing a share Freehold :mad:

The freeholders, you and flat 2 and 3 do not own a share of the freehold, you either
1: own it jointly ( in the same way as a Mr & Mrs X own a house, not a half share) or
2: are members of a company that does.

You are therefore one distinct legal entity, not sharers.
It is helpful to
1: think of different hats one hat as a leaseholder and one hat as a freeholder, and not think of yourself as being one thing- you self inflict confusion

2: You need a lease to represent your ownership of your flat to borrow on it and sell in the future, and it also sets out your obligations to the freeholder and there's to you, and other owners

Lease Extensions

Extending your lease has a value to the freeholder as it defers the date when in 83 years, in simple terms, you hand the keys back to the freeholder, as the lease has ended. The freeholder can then sell it.
(Forget the various rights to extend and suceed as an assured tenant the above is the basis that valuation is prepared on)

Unless the terms of the purchase of the freehold say otherwise,it is therefore a decision of the freeholders whether to
1: extend your lease at no cost, or
2: charge a premium

That will depend on the length of their leases- if 2 has say 989 of a 999 year lease, they may want to charge a premium. If they are 83 years then they too may want to extend and cross charging each otehr premiums may be pointless.

The premium, if charged, would then be paid out to the freeholders, in effect "cashback" for you.

I suggest that you find a local chartered surveyor who deals with lease extension valuations to advise you on the value and take a look at the other other leases and advise you on strategy.

There are free online calculators and you may be happy to negotiate without help. You will be responsible for your and the freeholders legal costs. There is statutory right to a new extension but this is likely irrelevant as I am sure the 3 of you can do a deal.

LozzaD

Thanks for your replies. The Transfer of Registered Titles form for Land Registry we completed when the top floor flat was sold states that the transferee is more than one person and "they are to hold the property on trust in the following shares: [...] one third each". My mistake.

Could I also ask whether under these circumstances, between the three of us we could also agree for the lease of the top flat to be extended despite only being purchased in June 2011? Does the two year ownership rule give a point at which you have a legal right to extend or is it the soonest that you can legally extend (hope that makes sense).

Thanks again. This is my first property and despite really trying to get clued up on this issues for some reason it still evades me.

propertyman

LozzaD wrote: »

Could I also ask whether under these circumstances, between the three of us we could also agree for the lease of the top flat to be extended despite only being purchased in June 2011? Does the two year ownership rule give a point at which you have a legal right to extend or is it the soonest that you can legally extend (hope that makes sense)..

If you re read my post it explains that question exactly.

It's not a simple yes or no.

LozzaD

The other leases are the same length as mine so hopefully we can all mutually agree to extend the leases for no charge and split the legal fees.

To clarfiy - the legal right doesn't matter if we can all agree to the extensions? Even though the top flat was only purchased 10 months ago, that lease can still be extended because (if) all the parties that own the freehold agree?

Richard_Webster

To clarfiy - the legal right doesn't matter if we can all agree to the extensions? Even though the top flat was only purchased 10 months ago, that lease can still be extended because (if) all the parties that own the freehold agree?

That's right - if all agree then there's nothing to stop extensions being done whenever you want.

propertyman

LozzaD wrote: »

To clarfiy - the legal right doesn't matter if we can all agree to the extensions? Even though the top flat was only purchased 10 months ago, that lease can still be extended because (if) all the parties that own the freehold agree?

I wound suggest that the extensions are granted on a 999year basis to avoid this ever arising.

Ground rents can be reduced to a peppercorn ie a nil rent.

this is also an opportunity to remedy any defects in the leases