Shared Freehold - Can other owners stop you selling?!

ChrisJHorton

Hi,

My partner owns a flat in a block of three. It is a Victorian townhouse conversion and when she initially bought the property in 2006 it was leasehold (999 years remaining). Once all three flats in the block were sold, 6 months later, the three owners (including my partner) bought the freehold therefore having a third share of the freehold each.

Once they purchased the freehold they created their own company (non-profit making) in order to manage the building's insurance, communal electricity etc. Each owner of the three flats is a director in the company.

My partner now wants to sell her flat - we wish to buy a house together. However, one of the owners of the other flats in the block has made it clear that she does not want our flat to be sold to an investor and to be used as a buy to let. She hasn't gone into major detail but she seems to think something is in place to stop this from happening.

Could there be a problem if we were to sell our flat to an investor? Is this type of thing a regular occurrence in the world of shared freeholds? I've looked around the web and on the forum and can't find anything yet but we are both very worried that we are unaware of a legal clause that you have to be an owner occupier if you wish to buy a flat with a shared freehold. Or, if this isn't the case then another worry is that the other two flat owners could 'block' a buy to let purchase of the flat. Can this type of thing happen?!

I hope that all makes sense! It's a real worry for us right now!

Chris

freeisgood

As far as I am aware, if your partner owns the flat, then she can sell it to whom she likes.

AnnieO1234

You need to refer back to the lease, and any documentation related to the set up of the freehold company. Anything else is just conjecture.

X

RAS

Read the lease in great detail. Some forbid renting out or only permit this with the freeholders approval.

ChrisJHorton

Thanks for you replies. We've looked through the lease but cannot see anything so far regarding renting out the property. Would there be a phrase or a term that we perhaps need to look for? Sorry, I obviously understand I'm talking about something that you're unable to look at right now but just in case there's something 'standard' that we should be looking out for!

dell12

It's usually called underletting or subletting the property.

As a leaseholder technically you don't own the property, just have the right to remain in it for 99, 125 or 999 years. The company which you've set up will hold the freehold I'd expect. In many cases the lease stipulates that you need to the consent of the freeholder to rent it out.

ChrisJHorton

Thanks. So, it does sound likely that we would need the consent of the other two flat owners - or at least from 1 of them as my partner would obviously agree and thus make a majority - to allow the flat to be purchased as a buy-to-let?

Still worried though that the two other flat owners would not agree so wondering what our options would be if this was the case?

dell12

You'd have no say as you wouldn't be living in the building and hence have a share of the freehold. You could potentially get the lease rewritten while you're in there but I'm guessing that wouldn't be that popular.

I'm not sure it's such a big issue as you think it is. I live in a block and there's a similar clause in the lease and it hasn't stopped the flats being bought or sold in the time time I've been here.

Jenniefour

OP - do not discuss anything at all with the other two flat owners until you know definitely what the lease means. If necessary take your lease to your solicitor and ask them to take a good look at it. You may not need permission at all to sell to a landlord so it will not be helpful to have any discussion that may suggest you do.

I have owned three different flats in the past (where I lived) and there was nothing at all in the three leases forbidding subletting or needing permission to do so. This kind of lease does exist but it is not the norm at all.

Get the lease checked asap.

Mandog

Are you looking at this a bit topsy turvy? Surely you can sell to anyone you like. What the buyer can and can't do with the flat is a separate issue. Anythng else would be unworkable - how are you expected to know the intentions of your purchaser?

Yes it's worth getting your solicitor to examine the lease, then you can advise the estate agent accordingly to avoid sales falling through at a late stage of proceedings. If you haven't spotted the clause against subletting it may well not be there.

This flat sounds rather desirable, it would probably sell whatever the lease says.

ChrisJHorton

Hi, Thanks for all your help. I've been away on holiday so have only just checked this thread on my return.

We're getting the lease checked by our solicitor and keeping quiet in terms of the other flats. Big 'SOLD' sign outside now though so just dreading one of them asking who we've sold to! As I say, we normally have quite a good relationship with them so it would be normal for them to ask a few details. I think we're just going to say it's been bought by a single guy (which is true!) and not say anything else. However, we've just been told today that the house that the sellers of the house we want to move into have been gazumped so I have another issue to deal with now....