Buying share of freehold flat, how can I protect myself?

sterl1ng

Buying 1 bed flat in converted house, which is share of freehold. Just found out the flat above has also offer on it but by investor, so bit concerned when it comes to work needing doing investor will be non respondent. People tell me share of freehold is much better than leasehold but I'm finding this all rather complicated especially as homebuyer report speaks of roofing, plumbing and damp issues which need addressing!

I really like this place so is there anything I can do for piece of mind for this share of freehold in terms of me a FTB vs this investor who's bought upstairs?

G_M

You need to meet the invester upstairs!

delay your purchase till he has Exchanged?

Or just take a gamble and hope that he will cooperate with the required repairs.

sterl1ng

Well my vendors are still looking, the EA is not very helpful, it was only by chance that I found out that upstairs was on offer too BUT today found its investor. Not sure if I'll get to meet investor but if I do what should be discussed in terms of who does what as I gathered solicitor finds this for me. Any help would be great!

G_M

who does what?

Easy. read the lease.

bouicca21

I have limited experience of share of freehold, one is the flat I rent, one is the flat owned by friend, and one is the flat I used to rent.

The flat I rent is owned by a company In which the individual shareholders are directors. They outsource management to a commercial company. The annual maintenance charge is very high. About half the flats (it's a big old Victorian house subdivided into flats) are owner occupied. None of the owners are proactive. Very little gets done. Repairs are slow, their contractors don't seem to be very good. Damage to the roof in the recent storms has had an effective temporary repair but no one is jumping up and down to get it properly reinstated. Externally the place looks run down and neglected. I have no idea what the sinking fund is, maybe that is where the money is going.

Flat owned by friend is also a Victorian conversion and has a similar set up. Only one flat is rented but it is the owner of this flat who is most proactive and who gets things done. The annual maintenance charge is very low but the sinking fund is non-existent and it doesn't take a genius surveyor to work out that the roof will need major attention in the next ten years or so, or that it will be expensive.

The flat I used to rent was a purpose built Victorian maisonette. The two owners were jointly responsible for repairs. One wouldn't pay up, leaving the other stuffed unless she wanted to go to court.

Oh and one flat I looked at when trying to buy was also share of freehold without a freeholders' company; the freehold and leasehold had parted company and no one knew where the owner of the share of freehold was and how to get repairs done.

So I think the answer for OP is that share of freehold works well if people are prepared to put in the right kind of effort, and if the arrangements are clearly set out and enforceable. If they are not then it can cause considerable difficulty.

propertyman

You protect yourself by forgetting SoF there is no such thing, no there isn’t, its freehold commonhold or leasehold and that it.

In this case you a re buying

1 a lease for the flat which is what your mortgage is secured on and it must be
A long enough
B have adequate arrangements for the building in to be maintained and insured by the freeholder.

2 if offered to you by the vendor the purchase of their interest in the freehold so that you and the other flat owner will be the freeholder.

These are two entirely separate legal interests so don’t conflate them into an imaginary title share of freehold as your lender is only interested in the leasehold interest.

The lease is therefore key on what the freeholder, you and neighbour, have to do and if they can recover those costs from the two leaseholders on you and the other, the neighbour.

Think of it as two hats

As you can see as long as the lease clearly sets out the rights and responsibilities its a question of if the neighbour is sensible and approachable or a complete idiot or recluse and unlikely to agree on the time of day.

It is very usual to find that there is no agreement or a declaration of trust ( which joint ownership of the freehold is) that sets out how you will do what the lease says and how to resolve disputes if you don’t or cannot agree.

:money:It’s the sort of thing a solicitor would tell you, oh they haven’t, well I am surprised (not) feel free to print this and poke them in the eye with it if they haven’t.

propertyman

bouicca21 wrote: »

I have limited experience of share of freehold, .

No one has there is no such thing.:p
http://leaseholdpropertymanager.blogspot.co.uk/2013/07/i-have-share-of-freehold-no-you-dont.html

sebtomato

We created a freeholder company for my block of flat, and that company bought the freehold of the building from the previous freeholder.

We all have shares in the new company, so we do have a share of freehold (e.g. each flat owns a share of the freehold via the freeholder company).

Therefore, no sure why people say it's not possible.

Kynthia

sebtomato wrote: »

We created a freeholder company for my block of flat, and that company bought the freehold of the building from the previous freeholder.

We all have shares in the new company, so we do have a share of freehold (e.g. each flat owns a share of the freehold via the freeholder company).

Therefore, no sure why people say it's not possible.

It's not possible to have a 'share of freehold' flat as because the flat is still leasehold, it's just that you are also buying a share of the freehold. They are two separate things. Forgetting that means people don't treat the leasehold and freehold correctly and it causes confusion. Also a freehold flat is something very different and many mortgages companies won't lend against them, so you need to be clear with your lender.

Richard_Webster

"Share of freehold" is an estate agent's shorthand expression that most people in the business understand well enough. However it's use does cause confusion, hence Propertyman's concerns.

Problem is as has been pointed out that:

1. some think the flats are "freehold" and tell their lenders that and get turned down for a mortgage;

2. others think that they have special rights because they own a "share of freehold". They don't. They are merely leaseholders of their individual flats and directly or indirectly (usually through a company) they collectively own the freehold. The normal law relating to leaseholders and freeholders applies.

The advantages and disadvantages of "share of freehold" are set out at some length on my practice's website - which you should be able to find fairty easily but which I cannot post here.

rpc

sterl1ng wrote: »

homebuyer report speaks of roofing, plumbing and damp issues which need addressing!

How many other freeholders? Sounds like the current bunch don't really care too much. If it is only two flats, both being sold, then there might be some progress. If some of the current, not-bothered freeholders will remain then you might struggle to make repairs.