Individual flat freeholds: what should I be aware of?

G_M

Moonraker71 wrote: »

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.

This might make a significant difference.

Essentially it sounds like a semi-detached property.

Two adjacent properties (sharing a Perty Wall?), each on their own distinct plot of land.

Does the other flat (the 'maisenette') have any part of its makeup above your flat?

This sounds like a 'flying freehold'.

holly_hobby

If they both have their own individual freehold title, and you need a mortgage to purchase I would re-think carefully, as most national lenders won't entertain freehold flats (albeit there may be local exeptions to this, as referenced above).

As a point to note Scarborough BS don't operate any longer, merging into the Skipton BS brand about 4 yrs ago.

Skipton do not accept freehold flats UNLESS in the Scarborough area (as a carry over from Scarborough BS) - so obviously only of value to you if the property is located in this region.

Even if you don't need a mge to pch to complete, the freehold status of the unit will affect your future re-sale audience, whom may well need such finance (and the sale being vunerable to they meeting the UW criteria of a restricted panel lenders whom will look at freehold title flats).


Just something to consider in the mix before you jump in and incur any fees that may be non-refundable .....

Hope this helps

Holly

Moonraker71

That is so interesting cutandshut - strangely enough this flat is also on the south coast. I had no idea they were more common here; this is the first time I've ever come across such a set-up.

G_M, it's a large double fronted detached house. The ground floor flat has its own front door and occupies the front half of the ground floor; about two thirds of the total area of the ground floor. The maisonette also has its own front door, at the rear of the building, and occupies the rear third of the ground floor plus the entirety of the first floor - so yes, it is both next to and above 'my' flat.

If it did turn out to be a flying freehold I wouldn't particularly want to deal with that either, having previously had major issues arising from that scenario on another property I once owned.

Thanks Holly, I think unfortunately I will be taking your advice. Shame, as it's a beautiful flat. But I want to retain my ultra low rate with the Woolwich and doubt they will lend on it. (Can only see 'refer to Issuing Office' in their criteria.) Plus even if I could could get a mortgage on it, the potential future pitfalls are something I could do without.

Flats can be so complicated!

holly_hobby

Yep Woolwich is a refer for freehold enqs.

If the property was changed into leasehold, with the current freeholders forming a management co (to take care of freeholder duties), this would open up the vendors re-sale market, as we they would be selling a leasehold flat.

With either the new owner (ie you) taking the vendors place within the management co on completion (which some lenders will accept) OR the vendor retaining and administering the freehold themselves post completion.

Could that be a solution ?

Hope this helps

Holly x

thelem

I can see several potential solutions if there is the cooperation of the other flat. All involve first combining the two freeholds into one, owned by either:
a) a management company for conventional share of freehold; or
b) the owner of one or other flat, with the other flat becoming leasehold; or
c) an independent management company for a conventional leasehold.

I'd definitely be looking at these options if I already owned the property, but I can see all of them being time consuming and expensive, so not really worth it for you when you can just keep looking.

holly holly: I think you're suggesting that the vendor keep the freehold and just sell the property as leasehold. While that might help, it still doesn't solve the fundamental problem that if, for example, the roof starts leaking the freeholder (i.e. the current vendor) would have an obligation to repair it that they could not fulfil.

Moonraker71

It could be Holly. What if a Deed of Mutual Covenants already exists though? Is this kind of similar to the limitations that would be in a lease?

Anyway, my curiosity got the better of me so I downloaded the title from the land registry. Definitely a single freehold flat with one title no.

The property is mortgaged with NatWest.

There are various restrictive covenants listed, as well as various 'charges' - hard for me to get a grip on the legalese - but seems to mainly be about giving access to each other's property for maintenance/repairing purposes and a joint responsibility to maintain the shared driveway.

This was also added as a restriction under the Proprietorship Register in 2010. Can't quite grasp what it means:

RESTRICTION: No disposition of the registered estate by the proprietor of the registered estate or by the proprietor of any registered charge, not being a charge registered before the entry of this restriction, is to be registered without a written consent signed by the proprietor for the time being of the Charge dated x x in favour of National Westminster Bank PLC referred to in the Charges Register.

Still think it sounds too risky to bother with, but then I guess even in a normal share of freehold situation you are still reliant on the other party actually paying up, or accepting that repairs need to be done, etc, esp. when the freehold is only split between two parties.

Moonraker71

Sorry thelem, I didn't see your post before posting my last response. Yes, those all seem like potential solutions but I agree they would be a huge hassle to set up and what if the other party aren't remotely interested? Guess I should just keep looking. Sod's law that this places ticks every box though.

Richard_Webster

You have already seen references to the explanation on practice's website.

Do not touch with a very long bargepole. These "pure freehold" flats are virtually unmortgageable (except as has been said to some limited extent in the Scarborough area).

In theory it can be sorted out by the individual freeholders conveying their freeholds to one common entity and then that entity granting leases of the individual flats but the legal costs would be in four figures and the chances of the other flat owner being prepared to do this are small, because they usually don't understand the problem.

The normal advice is to let the present owner sort out his own mess - he may be hoping you buy the flat to avoid him having to do so!

Land_Registry

Moonraker71 wrote: »

Anyway, my curiosity got the better of me so I downloaded the title from the land registry. Definitely a single freehold flat with one title no.

The property is mortgaged with NatWest.

There are various restrictive covenants listed, as well as various 'charges' - hard for me to get a grip on the legalese - but seems to mainly be about giving access to each other's property for maintenance/repairing purposes and a joint responsibility to maintain the shared driveway.

This was also added as a restriction under the Proprietorship Register in 2010. Can't quite grasp what it means:

RESTRICTION: No disposition of the registered estate by the proprietor of the registered estate or by the proprietor of any registered charge, not being a charge registered before the entry of this restriction, is to be registered without a written consent signed by the proprietor for the time being of the Charge dated x x in favour of National Westminster Bank PLC referred to in the Charges Register.

Just a quick post re the restriction quoted - this is a standard restriction used by most lenders to ensure that the registered proprietor (legal owner) obtains their consent should they wish for example to sell, lease or remortgage the title.

The registered charge and restriction in favour of Nat West reflects the fact that the loan is secured against the title i.e. the property is mortgaged

holly_hobby

thelem wrote: »

holly holly: I think you're suggesting that the vendor keep the freehold and just sell the property as leasehold. While that might help, it still doesn't solve the fundamental problem that if, for example, the roof starts leaking the freeholder (i.e. the current vendor) would have an obligation to repair it that they could not fulfil.

Yes I completely agree - that does not change the freehold status issues for lenders, which is why that is a solution I didn't suggest.

If you re-read, you'll note that as solution, I suggested changing the flat to leasehold, and the vendor with the fellow freeholders setting up a management co which as a collective (with either the freeholders holding roles or it run completely by an independent co) administers freehold duties and common ground maintenance issues that are the issue with freehold flats, inc the area you have touched on.

Refer ...

holly_hobby wrote: »

If the property was changed into leasehold, with the current freeholders forming a management co (to take care of freeholder duties), this would open up the vendors re-sale market, as we they would be selling a leasehold flat.

This is a common solution and arrangement to such problems, and as stated an exercise for the CURRENT vendor to undertake. (which TBH would be worth it, due to the fact that they are currently largely restricted to cash buyers).

Hope this clarifies

Holly