PLEASE READ BEFORE POSTING

Hello Forumites! In order to help keep the Forum a useful, safe and friendly place for our users, discussions around non-MoneySaving matters are not permitted per the Forum rules. While we understand that mentioning house prices may sometimes be relevant to a user's specific MoneySaving situation, we ask that you please avoid veering into broad, general debates about the market, the economy and politics, as these can unfortunately lead to abusive or hateful behaviour. Threads that are found to have derailed into wider discussions may be removed. Users who repeatedly disregard this may have their Forum account banned. Please also avoid posting personally identifiable information, including links to your own online property listing which may reveal your address. Thank you for your understanding.

We'd like to remind Forumites to please avoid political debate on the Forum. This is to keep it a safe and useful space for MoneySaving discussions. Threads that are - or become - political in nature may be removed in line with the Forum’s rules. Thank you for your understanding.

Another query about leaseholds and freeholds

Seeing as I got such good advice on here with my last query, I'm back with more questions. Have seen another flat am potentially interested in tonight. Tenure details as follows:

- Flat is leasehold with 91 years remaining. Ground floor flat, one of three in the building.
- Freeholder is the property development co. who did up the building in 2005, converting it into three flats and issuing 99 yr leases. Am told they are located miles away and have no ongoing involvement.
- The three flats formed a Right to Manage company in 2008. £250 ground rent is payable per year (£125 per six mths). Maintenance is split between the three flats as and when needed. There is no regular sum collected for maintenance.

My questions are:

- Does this sound like a reasonable (ie, easily mortgageable) scenario?
- When there is a Right to Manage co. with maintenance only paid on an as-needed basis, what involvement does the Freeholder still have?
- What happens about things like buildings insurance?
- Does a Right to Manage co. have any sway over things like lease extensions? (I'd be interested in extending and wondering how this would work if the Freeholder is AWOL)

As ever, any thoughts/advice hugely appreciated.
«1

Comments

  • G_M
    G_M Posts: 51,977 Forumite
    Part of the Furniture 10,000 Posts Name Dropper Combo Breaker
    ...my questions are:

    - does this sound like a reasonable (ie, easily mortgageable) scenario?yes
    - when there is a right to manage co. With maintenance only paid on an as-needed basis, what involvement does the freeholder still have?collecting ground rent; enforcing lease breaches
    - what happens about things like buildings insurance?management company
    - does a right to manage co. Have any sway over things like lease extensions? (i'd be interested in extending and wondering how this would work if the freeholder is awol)no

    as ever, any thoughts/advice hugely appreciated.
    :t
    ......................
    :t
  • OK, thanks G_M.

    I have done some further detective work and come across what could potentially be a painful problem.

    As I said, the property is leasehold and there is a Right to Manage company in place. The person whose flat I'm interested in buying is listed as a director of this RTM co.

    I've now learned that the Freeholder (lets call them ABC Developments) was dissolved in July 2007, two years after the leases were issued. However, according to Companies House, another company with an identical name and the same two directors was incorporated in 2011. This 2nd ABC Developments has a different co. reg number and is registered to a different address. Last filed accounts in April 2012.

    The Right to Manage co. was formed in 2008, during the 2007-2011 period when there appears to have been no Freehold company in existence.

    On the land registry document, only the first ABC Developments is listed as the Freeholder. I am assuming that when that co. was dissolved in 2007, the Freehold passed to the Crown and the flats became bona vacantia.

    How can I find out if the RTM co. acquired the freehold during that period? I'm assuming that it didn't because if so, wouldn't there have been an update to the land registry title to reflect this?

    Or - could it be that when the second ABC Developments was incorporated in 2011 they somehow got the freehold back?

    If a freehold passes to the Crown, does the land registry title update to show them listed as the new freeholder?

    My feeling is that these flats are all bona vacantia, and for whatever reason the leaseholders have not been able or willing to buy the freehold back. The (immaculate, reasonably priced) flat I'm looking at has been on the market for over a year so there must surely be an issue along these lines.
  • Apologies. Correction to my last post: the second ABC Developments does *NOT* have the same directors as the first co. So this could be a red herring - it could be purely a coincidence that another identically-named company was incorporated in 2011. (Bit odd as the name is quite specific but hey)
  • zarf2007
    zarf2007 Posts: 651 Forumite
    Ninth Anniversary Combo Breaker
    Seeing as I got such good advice on here with my last query, I'm back with more questions. Have seen another flat am potentially interested in tonight. Tenure details as follows:

    - Flat is leasehold with 91 years remaining. Ground floor flat, one of three in the building.
    - Freeholder is the property development co. who did up the building in 2005, converting it into three flats and issuing 99 yr leases. Am told they are located miles away and have no ongoing involvement.
    - The three flats formed a Right to Manage company in 2008. £250 ground rent is payable per year (£125 per six mths). Maintenance is split between the three flats as and when needed. There is no regular sum collected for maintenance.

    My questions are:

    - Does this sound like a reasonable (ie, easily mortgageable) scenario?
    - When there is a Right to Manage co. with maintenance only paid on an as-needed basis, what involvement does the Freeholder still have?
    - What happens about things like buildings insurance?
    - Does a Right to Manage co. have any sway over things like lease extensions? (I'd be interested in extending and wondering how this would work if the Freeholder is AWOL)

    As ever, any thoughts/advice hugely appreciated.

    I think apart from the issues with who owns the freehold the biggest issue is the lack of service charge.....what if there are major repairs required (ie new roof for the block), there is no sinking fund and you would all be hit for this cost.....it seems the 'management' company arent doning a good job as they are collecting next to no money for maintenance....

    i would walk away...
  • zarf2007
    zarf2007 Posts: 651 Forumite
    Ninth Anniversary Combo Breaker
    Seeing as I got such good advice on here with my last query, I'm back with more questions. Have seen another flat am potentially interested in tonight. Tenure details as follows:

    - Flat is leasehold with 91 years remaining. Ground floor flat, one of three in the building.
    - Freeholder is the property development co. who did up the building in 2005, converting it into three flats and issuing 99 yr leases. Am told they are located miles away and have no ongoing involvement.
    - The three flats formed a Right to Manage company in 2008. £250 ground rent is payable per year (£125 per six mths). Maintenance is split between the three flats as and when needed. There is no regular sum collected for maintenance.

    My questions are:

    - Does this sound like a reasonable (ie, easily mortgageable) scenario?
    - When there is a Right to Manage co. with maintenance only paid on an as-needed basis, what involvement does the Freeholder still have?
    - What happens about things like buildings insurance?
    - Does a Right to Manage co. have any sway over things like lease extensions? (I'd be interested in extending and wondering how this would work if the Freeholder is AWOL)

    As ever, any thoughts/advice hugely appreciated.

    I think apart from the issues with who owns the freehold the biggest issue is the lack of service charge.....what if there are major repairs required (ie new roof for the block), there is no sinking fund and you would all be hit for this cost.....it seems the 'management' company arent doing a good job as they are collecting no money for general day to day maintenance....

    i would walk away...
  • Moonraker71
    Moonraker71 Posts: 190 Forumite
    Eighth Anniversary 100 Posts Combo Breaker
    I know Zarf, I asked the EA about this and he said it was because there was hardly any need for maintenance which sounds a bit dubious. Apparently each flat is responsible for its own windows, there is only one tiny communal hallway, and it's a brick built building rather than rendered. And had a new roof when converted in 2005. So maybe has a point but it's concerning that there are no funds available if something unexpected turned up.

    I wish I knew how to find out if the freehold was ever acquired back from the Crown (if indeed it ever went to the Crown). Oh well... sounds like another flat I should probably turn my back on.
  • Land_Registry
    Land_Registry Posts: 6,056 Organisation Representative
    Part of the Furniture 1,000 Posts Name Dropper
    Our online Practice Guide 35 - Corporate insolvency may supply some answers

    An application to register any change of ownership would be requried - there is no automatic process.
    Official Company Representative
    I am the official company representative of Land Registry. MSE has given permission for me to post in response to queries about the company, so that I can help solve issues. You can see my name on the companies with permission to post list. I am not allowed to tout for business at all. If you believe I am please report it to forumteam@moneysavingexpert.com This does NOT imply any form of approval of my company or its products by MSE"
  • propertyman
    propertyman Posts: 2,922 Forumite
    But why- the Crown will deal with lease extensions. You can even approach them to buy the freehold and as long as you meet their costs the others can join in or not.
    Stop! Think. Read the small print. Trust nothing and assume that it is your responsibility. That way it rarely goes wrong.
    Actively hunting down the person who invented the imaginary tenure, "share freehold";
    if you can show me one I will produce my daughter's unicorn
  • Moonraker71
    Moonraker71 Posts: 190 Forumite
    Eighth Anniversary 100 Posts Combo Breaker
    Thanks both.

    I know, but I don't want the hassle or the extra expense. If I understand correctly, 3 x flats with a ground rent of £250 per year means buying back the freehold would not be particularly cheap.

    I think maybe I'm ultra sensitive to this because I've been in this situation before. Five years ago I 'sold' the flat I'm living in now, only to find out halfway through the process that my freeholder was in jail, his co. struck off and my flat (alone in the building) had a flying freehold and was bona vacantia. My buyer pulled out, I lost the property I was purchasing and the whole thing cost me £1,000s (and eight months) to resolve. I eventually got about two thirds of the money back from my original solicitor who should have discovered this issue when I purchased, but still - it was a nightmare.

    So my preference now is to just buy somewhere straightforward!!!
  • tim123456789
    tim123456789 Posts: 1,787 Forumite
    Part of the Furniture 1,000 Posts Combo Breaker
    Thanks both.

    I know, but I don't want the hassle or the extra expense. If I understand correctly, 3 x flats with a ground rent of £250 per year means buying back the freehold would not be particularly cheap.

    Well that rather depends upon whether you are comparing it with the cost of a packet of peas

    or the total value of the property.
This discussion has been closed.
Meet your Ambassadors

🚀 Getting Started

Hi new member!

Our Getting Started Guide will help you get the most out of the Forum

Categories

  • All Categories
  • 348.2K Banking & Borrowing
  • 252.1K Reduce Debt & Boost Income
  • 452.4K Spending & Discounts
  • 240.8K Work, Benefits & Business
  • 617.1K Mortgages, Homes & Bills
  • 175.6K Life & Family
  • 254K Travel & Transport
  • 1.5M Hobbies & Leisure
  • 16K Discuss & Feedback
  • 15.1K Coronavirus Support Boards

Is this how you want to be seen?

We see you are using a default avatar. It takes only a few seconds to pick a picture.