Individual flat freeholds: what should I be aware of?

Moonraker71

Apologies if this has been answered before.

I'm potentially interested in offering on a flat I saw today. It is one of just two flats in a detached Edwardian house; a 2-bed apartment on the ground floor (which is the one I'm looking at) and a 3-bed maisonette (the kitchen and lounge of which are at the rear of the building on the ground floor, plus 3 bedrooms on the first floor).

Both properties are freehold: not share of freehold, but each with their own individual freehold.

Is this quite an unusual scenario? I've never heard of it before. On the sales particulars it states that maintenance is shared between the two flats, but I wonder how that would work in reality?

I'm interested to know what (if any) are the potential pitfalls of this set-up - or is it seen as more advantageous than share of freehold?

Who, for example, would be responsible for the roof? On a share of freehold basis, it would be both parties - would it be the same here? Anything else I should bear in mind? Be great to get some opinions from those in the know - thanks in advance.

casperlarue

Are you absolutely sure about the freehold of each property? The first floor flat can't be freehold as the ground floor flat is below it. Have you downloaded the title plans for each flat from Land Registry? This will give you the freehold/leasehold status for each property.

Edit....have just googled this for you..

Share of freehold
In recent years the option to become a share of freehold owner has become much easier. This allows you to own your flat outright. Essentially it works by the owners of leasehold flats buying the freehold off the freeholder and then all owning a share of it.
Your property will still be owned leasehold but the new freehold organisation can grant new leases of long length, say 999 years, with a peppercorn ground rent.
This is preferable for technical reasons to owning a flat freehold, which causes problems with insurance companies and mortgage lenders.
Once you have a share of freehold flat you will then have a share in the common areas of the building - roof, walls, stairs and hallway - and be partly responsible with the other commonholders for the upkeep of those areas.
Previously, most flats were owned on a leasehold basis. This meant they were held on long leases that run for 99 years. After that their ownership reverts to the landlord of the building the flat is in, who pays no compensation to the tenant.
Leaseholders can also be prey to landlords who may demand exorbitant management fees, charge for building insurance at vastly inflated rates and threaten to evict anyone who refuses to pay up. Landlords can also stop leaseholders selling their flats.
Buying a property's freehold is a legal process and will require solicitors. The best way to find out more is to visit Government-funded Lease which gives free advice.

What happens in share of freehold
Under the new rules, upkeep of all the common areas of a building is the responsibility of the shared freeholders. The idea is that an association is set up to manage the communal areas of the building. Flat owners who do not want to get involved in the extra work this may involve can appoint a managing agent.
Share of freehold can work out cheaper as owners will not be prey to the over-charging endemic in the leasehold sector. They will be able to negotiate their own service fees with cleaners, find the best-value buildings insurance and get a better price for building repairs than landlords often do.
The price of a share of freehold flat could well be higher than a leasehold one, but any difference is likely to be small unless a leasehold flat has a short lease remaining. This would come from the fact that leaseholds dwindle over the years and so the nearer they get to the end, the less they are worth.
• The Government-funded Lease organisation gives free advice. Call 0845 3451993.

G_M

Is this England?

In Scotland it is a common set up (don't ask me how it works either legally or in terms of maintenance though they have someing called 'building factors'.

In England, you won't get a mortgage. If buying cash - fine. But when you come to sell, you'll be limited to other cash buyers!

Moonraker71

Thanks, both.

Yes, this is England.

The EA was clear that these were two 'pure' freehold flats, rather than share of freehold. However, she was a Saturday-only EA who looked about 13 and the flat only came on the market yesterday, so I will verify this with the office on Monday.

I've done a bit of reading myself tonight and seems that freehold flats are very rare, are hard (if not impossible) to get a mortgage on, and especially not with a high street lender which is who my DIP is with.

If a Deed of Mutual Covenant exists (which would set out all the normal limitations that you'd ordinarily see in a lease) does this make any difference in the lenders' eyes?

Thanks again.

neverdespairgirl

Freehold in England is of land - so I don't see how the first floor flat can be freehold, as it is essentially a slice of air.

Moonraker71

It's the same scenario as outlined here, as far as I've been led to believe:
http://www.rwco.co.uk/freehold_flats.htm

Moonraker71

Also, the other flat is a maisonette; it includes the rear part of the ground floor, the back garden and all of the first floor. The flat I'm interested in is the front part of the ground floor and the front garden - not sure if this makes any difference.

curedham

Moonraker71 wrote: »

It's the same scenario as outlined here, as far as I've been led to believe:
http://www.rwco.co.uk/freehold_flats.htm

That's interesting information, never heard such thing before. Sounds like you should avoid it.

Would't be good if the top floor flat decided not to do any repair on the roof which you can't do anything about!

Moonraker71

My thoughts exactly, curedham. Sounds like a lot of aggro. I'd still be interested to hear if anyone else has experience of this though, either buying or selling. Purely out of curiosity.

cutandshut

Freehold flats are quite common on the south coast. I have a friend who has had one in Worthing for several years with no problems. He paid cash for it and it was seriously cheap as no mortgages were available then. I think the mortgage situation has changed now and they are available.

phill99

Our freehold flats do exist in England, as cutandshut suggests. They are also common on the north east coast around Scarborough. The Scarborough Building Society would lend on them quite regularly as they were so common. So, yes they do exist and yes, you can get a mortgage.