Share of freehold: How to extend Lease?

KTF

Our flat is part of 8 (2 blocks of 4) who own a share of the freehold and each flat owner is a director of the non-profit making management company that 'holds' the freehold.

I am the nominated company secretary who files the annual accounts (zero balance), etc. with companies house each year.

The lease has 73 years left and has been flagged up as needing extending by the solicitors dealing with the sale of one of the flats.

Can anyone give me an idea of the costs and timescales involved in doing this?

Looking online it suggests that you have to deal with the 'landlord' but in this case that is the management company that each owner belongs to so I dont know if this will make the process easier/cheaper/more complicated, etc...

richardw

If all directors agree it can happen quickly.

KTF

I did not live here when the freehold was originally bought but there is no money in the management company and the value of the properties are not effected by the short lease as it is sold as share of freehold.

From reading online >80 years assumes a marriage value of nill so I do not see there being a problem with everyone accepting it as £1 as there is no financial impact of the short lease.

richardw

Does each flat have a lease?

KTF

Yes, each flat has their own copy of the lease. Same for each one barring the flat number on the front.

KTF

richardw wrote: »

If all directors agree it can happen quickly.

The relationship between all the directors is good. There has not been an issue when costs have had to be shared in the past i.e. painting the exterior of the property.

I would just send a letter round to everyone with the details as usual.

Any idea of the timescales/costs involved?

richardw

The leaseholder selling will pay for all the costs for extending their lease, including the management company/ freeholder costs.

If other lease holders want to extend aswell, the cost per lease may be lower.

KTF

I would imagine that all the leases would be extended together as it is at the point when they all need renewing as they all have the same remainder on them.

So whatever the grand total is would be split between 8 (assuming all 8 want to extend)?

Would it just be a case of finding a solicitor who specialises in lease extensions to generate a quote?

I assume if everyone agreed to the £1 marriage value then there would just be the legal costs to pay (plus £1)?

twisty

I'm in a similar boat myself, except that I own the flat that is being sold.

We've recently bought, along with the other flat owners, the freehold for the building, and we are now looking at extending the leases of each of the flats. Each currently has 78 years remaining.

The cost is simply whatever a solicitor charges you for doing the legal work.

We have been quoted £325 per flat, reduced to £275 per flat because we have already passed a lot of work this solicitor's way when buying the freehold.

I'm still waiting for an answer on timescale but I think it is largely dependent on how motivated the other flat owners are. I think you are talking weeks rather than months.

propertyman

KTF wrote: »

I did not live here when the freehold was originally bought but there is no money in the management company and the value of the properties are not effected by the short lease as it is sold as share of freehold.
.

Wrong I am afraid. You cant sell something which does not exist and there is no such thing as SoF - Freehold leasehol of common hold thats it.

You have a lease of 73 years.
You have a share in or are a member of the company that owns the freehold.
The company owns the freehold and the right to the reversion- the flat back empty, at the end of the lease.

The latter has a value to the company and in the abscence of an express agreement in the participation agreement or the memorandum, they can seek the full market value of the lease extension.

If the leases are the same length, then yes all all parties would be entitled to the same, but some might see the opportunity to put cash into the company and use it now for costs to the building.Thats not making a profit.

I would be looking at the FH title at HMLR and see if the leases have been extended and ask for the same terms.

propertyman

twisty wrote: »

The cost is simply whatever a solicitor charges you for doing the legal work..

Well no thats only if that was what was agreed beforehand or subsequently.

if it wasn't or isnt, the fh company can charge the full value.

its a common error in FH purchases between leaseholders.