Freehold flat lease to buy or not?

moonlight76

Hi all
Some advice for a friend. If they own the flat and the management company is selling the lease, is it better to buy it or are you better of being with the management company they sell to. What happens about repairs to the property? Who pays for what?? If the people in the other flats buy the freehold and you don't what happens and vice versa. Any advice appreciated.
Moonlight

Jenniefour

I think you asking if it's better to buy the freehold if it's offered to the leaseholders. Yes, grab it with both hands if it's offered at a reasonable price. Then the flat owners, who between them own the freehold, can chose to manage the place themselves. Usually the leases would stay as is and everything carry on as before re paying service charges for communal lighting, buildings insurance etc. and sinking fund for repairs.

I can't imagine why a leaseholder would not want to buy a share of the freehold unless they simply cannot raise the money to do it. But it wouldn't necessarily stop purchase of the freehold going ahead if enough of the other leaseholders want to buy it and can raise the funds.

Richard_Webster

If the freeholder sells the freehold then the terms of the lease stay the same.

If an outside company buys the freehold then the lessees are stuck with them unless they exercise the right of collective enfranchisement. Most such companies will make it as difficult as possible for the lessees to do this.

If a group of lessees buys the freehold either directly or through a company they set up then they will have control over levels of service charge and could decide not to collect ground rent from those that have participated in the collective purchase.

Whatever you do, do not buy the freehold of just your flat separate from others - you then end up with a pure freehold flat which (unless it is in Scarborough, for some strange reason) is effectively unmortgageable.

moonlight76

Jenniefour wrote: »

I think you asking if it's better to buy the freehold if it's offered to the leaseholders. Yes, grab it with both hands if it's offered at a reasonable price. Then the flat owners, who between them own the freehold, can chose to manage the place themselves. Usually the leases would stay as is and everything carry on as before re paying service charges for communal lighting, buildings insurance etc. and sinking fund for repairs.

I can't imagine why a leaseholder would not want to buy a share of the freehold unless they simply cannot raise the money to do it. But it wouldn't necessarily stop purchase of the freehold going ahead if enough of the other leaseholders want to buy it and can raise the funds.

Hi
Thanks , this is exactly what I was trying to say. The freehold price is not much. Thanks for advice.
Moonlight

moonlight76

Richard_Webster wrote: »

If the freeholder sells the freehold then the terms of the lease stay the same.

If an outside company buys the freehold then the lessees are stuck with them unless they exercise the right of collective enfranchisement. Most such companies will make it as difficult as possible for the lessees to do this.

If a group of lessees buys the freehold either directly or through a company they set up then they will have control over levels of service charge and could decide not to collect ground rent from those that have participated in the collective purchase.

Whatever you do, do not buy the freehold of just your flat separate from others - you then end up with a pure freehold flat which (unless it is in Scarborough, for some strange reason) is effectively unmortgageable.

Thanks where do you stand re repairs and do have to buy your own buildings insurance separately?
Moonlight

moonlight76

Hi
If you get offered to buy freehold with 2 others . The property is a house converted into 3 flats on la lease at the moment. Yours is on 1 st floor and is 1 bed. Is the shAre of freehold equal or based on size of flat. What repairs are you jointly responsible for? Do you need a legal agreement incase you sell so doesn't put others off. Do you pay for repairs based on size of property? Do you then pay extra if you decide to extend your place e.g into loft. Or can the other 2 have a clause in your contract that says you can't extend and you lose out then if you decide to sell and others can't extend?

loubel

Is the shAre of freehold equal or based on size of flat.
- it will depend on how you structure the purchase, but it is pretty normal to have equal shares, either as tenants in common or as shareholders of a company.

What repairs are you jointly responsible for?
- the freeholder's responsibilities are set out in your Lease. These won't change just because the freehold has changed ownership.

Do you need a legal agreement incase you sell so doesn't put others off.
- if buying as tenants in common it would be very sensible to set out your joint ownership in a Deed. It would be usual to include a term that ownership of the freehold will match the leaseholds, ie if you sell your flat you will transfer your interest in the freehold at the same time. Ask your solicitor to draft this at the same time as dealing with the purchase.

Do you pay for repairs based on size of property?
- How service charges are calculated will be set out in your Lease and will not change due to the purchase.

Do you then pay extra if you decide to extend your place e.g into loft.
- if the Lease does not include the loft, or it is included but consent is required for alterations, then it is up to the freeholders to decide whether to charge for this. The freeholders could make altering the service charge division in the Lease a term of their consent if the existing set up is no longer considered appropriate following the extension.

Or can the other 2 have a clause in your contract that says you can't extend and you lose out then if you decide to sell and others can't extend?
- not sure what you mean?