Estate agent advises leashold I thought freehold best ???

Lizzy

I have a few buy to let properties, to be honest it is hellish........ I would like to get out of it. I would still like to stay in the property field and think buy renovate and sell would be best for me.

I have seen a flat I like which unusually is Freehold the estate agent said it would be best to change it to Leashold as it is easier for people to get a mortgage on it (I won't need the mortgage, cash buyer). Is this really true ?? and why ?? and why has the seller not already done that if it was such a good thing ??

I always thought freehold was best.

Thanks Lizzy

ixwood

No idea, sorry, but feel free to tell us about your BTL hell...

Lizzy

Ohhhh good I can feel a moan coming on.

I have houses that I rent to students. All girls this year so not so bad, I find the boys wreck the houses to the best of their ability and are such mummy's boys they don't know what cleaning is and they don't care.

That aside the rules and regulations about renting are becoming so bad and so expensive with all the testing, fire doors, extinguishers, portable appliance testing etc, and thats in a house of 4.

Houses of 5 and over are HMO's (houses of multiple occpuation) worse again :eek: the costs involved are terrible and you have to have a licence. I do have all these things but there is something new around the corner all the time.

Latest is the deposit protection scheme. I only take a £100 bond against damage but to put that in the scheme will cost £30 per bond. So in September I won't be taking 1.

Next is the houses will be out of their fixed rate mortgages in May 08 and I have to keep the rent competitive.

Also not a day goes by without one of them contacting me about something,I feel my life is not my own.

Now then back to the Freehold, Leashold. It is a first floor flat, nothing above it except the roof.

Thanks for the rant.

Lizzy

lynzpower

Who owns the bottom flat? I presume this is a conversion property? ( or is it over a shop/ commercial premises)

If anything the flat should be share of freehold.

The issue is is the top flat is free hold and the bottom flat is also freehold, there will be an ongoing issue in terms of maintainence. I can see what the EA means here,the lease ( be it leasehold or share of freehold) will determine and outline a) the rights dituies & responsibilities in terms of maintainence and b) the boundaries of the property. Without a lease, would you be able to use downstairs garden? Would they be able to use *your* loft space? as an example. Additionally when the roof or guttering needs repairing would YOU alone be liable? Or no one be liable?

Share of freehold is best, the responsibilities of both leaseholders is laid down, so if theres damp/guttering roof etc problems BOTH flats would be equsally liable for the framework of the building.

Could you explain more?

lynzpower

Or does the upper flat hold the freehold for both flats?

ixwood

Lizzy wrote: »

Thanks for the rant.

Lizzy

It was nothing.

Lizzy

lynzpower wrote: »

Or does the upper flat hold the freehold for both flats?

These are questions that I have never thought to ask, thanks. The EA said that we would have to get together with the bottom tennant to "sort out" the Leasehold. The flat is a house conversion. Perhaps there is more to this than meets the eye, perhaps the vendor has tried to get the ground floor owner to do leashold but wouldn't co operate. EA said the vendor has just not got round to it. It may have been a question of money for them(ground floor owner ) I don't know as EA said we could offer to pay.

Hummmmmm

lynzpower

hmm.

It certainly sounds like its "incomplete" for want of a better phrase.

If both of the properties are "freehold" youll be looking at a legal minefield in my opinion.

Best to speak to the EA about it in the morning then come back and we can stick our heads together

Lizzy

A share of Freehold ?? another term again. So there is Freehold, Leashold and Share of Freehold ?

btloptingout

Can we have some more of the BTL rant?

When your mortgages come off their fixed rate terms what will the cash flow be like +ve or -ve?

Doozergirl

Lizzy, you can put deposits in to the Deposit Protection Scheme for FREE! The interest pays for the administration. There's a link somewhere.

It does sound as if your property is true freehold and that is why the agent is talking as if there are problems. In some areas of the country it is apparantly more common and less of an issue but it isn't a good thing and as far as I know, renders properties unmortgagable. The fact that this is a flat which you feel you can profit from I am sure means that it is an issue for mortgage lenders. Leases afford the right of support and protection from the other flats. It's what you NEED to keep the place standing. You need downstair's walls and ceiling, they need your roof and floors.

To fix it, you would have to agree with downstairs to form a company and create flats with equal shares of the freehold. You would both transfer your 'freeholds' to that company and issue long leases for each flat. This is how share of freehold works; flats keep their leases with the benefits they contain but own a share of the company that owns the freehold.

It may simply be that they haven't addressed the issue as I wouldn't honestly expect a layperson know where to begin. It will cost in legal fees, certainly, and perhaps downstairs can't afford or the vendor upstairs just can't be doing with it. If you can afford to buy the place in cash and possibly pay the entire legals and sweet-talk downstairs to create share of freehold then you might be able to pull off a profit - unmortgageables are certainly the only small properties that I find can turn a decent property. I've not come across a freehold flat personally though.