Freehold acquisition query

af2909_2

Hi all

Am about to begin the process of setting up a freehold enfranchisement company as there is an absent LL.

Assuming the freehold is acquired - does the freehold company have to remain in place or can the company be dissolved with the equal shares of the freehold distributed between the 2 flats?

Any advice welcomed!:beer:

PS - assuming that the freehold company has to remain - does this pose any problems in future conveyances (ie extra cost as there is a "business" element with the freehold)?

af2909_2

af2909 wrote: »

Hi all

Am about to begin the process of setting up a freehold enfranchisement company as there is an absent LL.

Assuming the freehold is acquired - does the freehold company have to remain in place or can the company be dissolved with the equal shares of the freehold distributed between the 2 flats?

Any advice welcomed!:beer:

PS - assuming that the freehold company has to remain - does this pose any problems in future conveyances (ie extra cost as there is a "business" element with the freehold)?

Sorry to bump this thread but has anyone else come across these issues post freehold enfranchisement?

tim123456789

not sure if I supposed to name names (so I won't),

but I think that you need to ask this on a "professional" Landlord board (from the pov of long leasehold LLs)

tim

propertyman

af2909 wrote: »

Assuming the freehold is acquired - does the freehold company have to remain in place or can the company be dissolved with the equal shares of the freehold distributed between the 2 flats?

PS - assuming that the freehold company has to remain - does this pose any problems in future conveyances (ie extra cost as there is a "business" element with the freehold)?

No it should not be split as it is contrary to the purpose of the freehold. You each own your own lease of your flat, and the FH owning company is the vehicle which
a owns the remainder of the building which is not demised in your leases
b is responsible in most cases for maintaining a
c is responsible for enforcing the covenants in the lease

I suggest that on enfranchisement you both immediately extend your leases to 999 years at peppercorn rents so that in most cases all the value in the freehold is removed making transfer of membership in the FH company administrative only.

In relation to c above make sure that the Articles of the company allow for determination of a dispute between you.

Jeffrey_Shaw

Whilst post #4 is accurate, and most useful to OP, it's also true that- provided the entire building's freehold reversion remains unbroken- there's no absolute need for a new company. There are just two flats; so the f/r could be owned in the joint names of T1 [lessee of flat 1] and T2 [lessee of flat 2].

propertyman

Jeffrey_Shaw wrote: »

Whilst post #4 is accurate, and most useful to OP, it's also true that- provided the entire building's freehold reversion remains unbroken- there's no absolute need for a new company. There are just two flats; so the f/r could be owned in the joint names of T1 [lessee of flat 1] and T2 [lessee of flat 2].

While in theory they need not, as they are exercising the right to enfranchise, they are required to do so via an RTE company, not as people.

They could subsequently transfer it to themselves, but the cost of doing so and setting up a declaration of trust or partnership document seems superfluous when they have a company and articles.:)

af2909_2

Thanks for the help guys, makes sense! With regards peppercorn rents, would this need to cover the cost of structural insurance or is this something myself and future owners just bite the bullet regarding the cost?

:beer:

propertyman

af2909 wrote: »

Thanks for the help guys, makes sense! With regards peppercorn rents, would this need to cover the cost of structural insurance or is this something myself and future owners just bite the bullet regarding the cost?

:beer:

Rents have nowt to do with service charges and insurance.

You need to read the leases and see what responsibilities the freeholder will have and where that involves costs eg insurance what and how are they recovered from the leaseholders.

af2909_2

propertyman wrote: »

Rents have nowt to do with service charges and insurance.

You need to read the leases and see what responsibilities the freeholder will have and where that involves costs eg insurance what and how are they recovered from the leaseholders.

Cheers again - will obviously get this sorted via our conveyancing solictor who is pretty good on these things to be fair:beer: