Lease length mystery

buzzyzoe

I'm interested in buying a flat in London. It's a top floor flat in a converted house (Flat 3). I've been trying to find out how long the lease is, as the estate agent doesn't know, but said he thinks it's a short lease. He also said it's owner occupied, not tenanted.

I've downloaded the title registers from the Land Registry website, but there's various different entries for the address. There's a freehold title register for the building, which states the lease length of all 3 flats in the building as being 999 years from 2006. Then there are two separate leasehold title registers, both apparently for Flat 3. One is registered to an individual, and says the lease length is 99 years from 1986, the other is registered to a company and says the lease length is 999 years from 2006.

Does anyone know why there would be two different title registers for one flat, and how I can work out which one is the correct one? I mainly just want to know whether the lease is 70ish years or 990ish years! I will wait to hear from the estate agent, but it seems odd to me that there's two title registers anyway, so was wondering if anyone could shed any light on this.

zarf2007

buzzyzoe wrote: »

I'm interested in buying a flat in London. It's a top floor flat in a converted house (Flat 3). I've been trying to find out how long the lease is, as the estate agent doesn't know, but said he thinks it's a short lease. He also said it's owner occupied, not tenanted.

I've downloaded the title registers from the Land Registry website, but there's various different entries for the address. There's a freehold title register for the building, which states the lease length of all 3 flats in the building as being 999 years from 2006. Then there are two separate leasehold title registers, both apparently for Flat 3. One is registered to an individual, and says the lease length is 99 years from 1986, the other is registered to a company and says the lease length is 999 years from 2006.

Does anyone know why there would be two different title registers for one flat, and how I can work out which one is the correct one? I mainly just want to know whether the lease is 70ish years or 990ish years! I will wait to hear from the estate agent, but it seems odd to me that there's two title registers anyway, so was wondering if anyone could shed any light on this.

It looks like this property is a leasehold with 'share of freehold'. This effectively means that after purchasing it you will be made a member of a company that owns the freehold to the building meaning technically each member can increase the leasehold on their properties for minimal cost to 999 years....looking at the records it seems the owner has already done this....provided the building is managed properly (decent sinking fund, well maintained etc) its a good position to be in when buying a flat like this.

buzzyzoe

Hmm, just spoken to the estate agent again, and apparently he's been told by the vendor that the lease is 72 years, which obviously checks out with the lease from 1986. He said it will cost roughly £15,000 to extend the lease, which I have checked on the lease calculator and that sounds correct. Apparently she would be willing to take a lower offer because of the short lease.

But now I'm doubly confused about what the 999 lease is!

buzzyzoe

Also, if the lease is 72 years, does it sound like a better choice to get the vendor to set the ball rolling for extending the lease, and extend straightaway for £15,000, but meaning I have to add £15,000 to my mortgage? I will still have over a 60% deposit, so it won't affect the rate I get or anything like that.

If I don't do that, I will have to wait 2 years to be able to extend the lease, and I think the cost might go up quite significantly if it goes under 70 years. However, it will mean my mortgage will be lower.

cattie

My understanding of share of freehold is that collectively, all those who own a share can agree a lease length for each individual flat should they wish to do so. It would seem that perhaps this has happened with the flat that you are thinking of buying. Perhaps the vendor doesn't really understand leasehold/share of freehold as many people who own leasehold don't.

It should be a very simple & relatively cheap step to extend the lease with you having a share in the management company once the flat is in your name & nowhere near the £15k the ea is suggesting. It just means that you & the other share of freeholders agree on a price & it is often very nominal.

The other reason for 2 titles could be if the freeholder sold off the 999yr leases to a company & the company has created under leases for the individual properties. This would be quite unusual though I think.

buzzyzoe

Interesting, this is all sounding quite promising. I suppose this would be something that my solicitor would find out if I have an offer accepted?

Thanks very much for the replies both

TrickyDicky101

cattie wrote: »

It should be a very simple & relatively cheap step to extend the lease with you having a share in the management company once the flat is in your name & nowhere near the £15k the ea is suggesting. It just means that you & the other share of freeholders agree on a price & it is often very nominal.

This is not necessarily the case - should the lease terms differ between the three flats and should the owners of each of the flats have a share of the freehold then it does not follow that the costs to extend will necessarily be negligible (as each leaseholder will have a different interest and therefore more/less to lose (or gain) from granting an extension).

propertyman

Is there perhaps the freehold, subject to three long leases, and one of those in turn subject to an underlease of 99 years less whats expired.

this can happen when the freehold is bought that intermediate leases are granted for each flat, and in the case of the other two they have surrendered their original 99 year lease and taken up the new 999 year ones?

Is the freeholder the same name as the company in the 999 yr lease?

It might be that your vendor has the 999 year lease but at some point someone forgot to surrender and remove the shorter lease from HMLR.

If either of those leases is subject to a mortage and has the vendors name on it and they pay a mortgage to that mortgagee, then that is the lease they are selling.

buzzyzoe

I thought my understanding of leases was reasonable, but now I'm not so sure!

I will try and give as much info as I can. There are 3 title plans that cover Flat 3, all 3 in different names.

First, the freehold for the whole building. This states a sold price of £500 (?!? no date as to when from) from the company 'XXX Realty Limited' (not sure if I should put the full name on here). No mortgage.

This has the following info re leases:

Schedule of notices of leases
1 12.12.2006 Flat 1, ADDRESS, 06.10.2006
1 (Part of), 4 (Ground Floor) and Garden 999 years form
and 5 Ground 1.1.2006
2 12.12.2006 Flat 2, ADDRESS, 06.10.2006
1 (part of) (First Floor) and Garden 999 years from
and 2 Ground 1.1.2006
3 12.12.2006 Flat 3, ADDRESS, 06.10.2006
1 (part of) (Second Floor) and Garden 999 years from
and 3 Ground 1.1.2006

Then there are two title registers for the leasehold of the flat. The first is registered to FIRST NAME SURNAME, who the estate agent has said is the seller. This states a paid price of £72,500 in 2011. The mortgage company listed is 'Mortgage Express.'

Lease info as follows:
(24.12.1987) Short particulars of the lease(s) (or under-lease(s))
under which the land is held:
Date : 4 December 1987
Term : 99 years from 24 June 1986
Rent : £75 rising to £225
Parties : (1) COMPANY
(2) INDIVIDUAL, but not the owner (surname is not the same either.)

The third title register is registered to XXX Properties Limited, and states a sold price of £2500, no mortgage.

Lease info as follows:
(12.12.2006) Short particulars of the lease(s) (or under-lease(s))
under which the land is held:
Date : 6 October 2006
Term : 999 years from 1 January 2006
Parties : (1) COMPANY
(2) XXX Properties Limited (who the register is registered to)

It also says '(12.12.2006) The price, other than rents, stated to have been paid on the grant of the lease was £2,500.'

Can anyone shed any light on this?! If there's any more information that I could provide you with that would help, then let me know!

As far as the estate agent is concerned, the lease is 72 years and that is that. I haven't mentioned that I've looked up the title registers.

buzzyzoe

Has the freeholder maybe sold the leases to another company? Does that then make this other company the freeholder?

The owner has owned since 2001, and these new leases were only set up in 2006, so wouldn't she know something about this?

Very confused :sad:

princeofpounds

It should be a very simple & relatively cheap step to extend the lease with you having a share in the management company once the flat is in your name & nowhere near the £15k the ea is suggesting. It just means that you & the other share of freeholders agree on a price & it is often very nominal

As said previously, although this is common it is not universal. Sometimes owners will charge other owners, moving money from the leaseholder level to the freeholder level. In share of freehold you jointly decide as shareholders what to do with that money, you don't necessarily get an equal share.

So, for example if I had 5k gambling debts and my neighbour B has 5k loan shark debts, we'd be pushing new neighbour C to pay up for a lease at the fair 15k price, then dividend it out (so C gets 1/3rd back).

As for the various leases - this is going to be one of the first things your lawyer will investigate. I can't think why two leases would be granted in this way on the same property in a normal share of freehold/leashold situation.

It looks from what you have put down here that COMPANY has sold a 99yr underlease, not the 'true' leasehold, to INDIVIDUAL. In 1987.

The freeholder XXX Realty awarded COMPANY a 999yr lease in 2006.

The sequence looks back to front, but it may be that the 2006 lease award may be a renewal of a pre-existing lease owned by COMPANY.

The really weird thing is the presence of COMPANY at all. I am wondering if perhaps each owner gets 1/3rd in XXX Realty, 100% in COMPANY for their own flat, and the underlease owned by INDIVIDUAL. I can come up with some speculation as to why you might have this structure (primarily tax reasons), but it's not normal AFAIK and I'd be wary.

Or the whole thing could be a paperwork mistake.

You should ask for a full explanation in writing from all parties involved. Either through your lawyer, but if you understand the situation well enough you can do it yourself and then decide if it's worth elevating to your lawyer. Will save you money but lose you time.

- Who is INDIVIDUAL and can the current vendor prove they have the title to actually sell?

- What is COMPANY, who are the shareholder(s), and do they really own a lease on the property?

- Can you confirm you will become a 1/3rd shareholder in XXX realty ltd as part of the purchase, and, if necessary, COMPANY.

The vendor should be able to provide an explanation. Don't take any 'I don't know' from the agent either. They should know the outline of the situation, or at least find out when asked. Not knowing might be indicative of back-covering in terms of property misdescription, or an uncommunicative vendor.