Share of freehold - management company

Lyncroft

I looked at a garden flat. 1 out of a block of 4. It's a share of freehold, apparently 22% share as it's smaller. Long lease of 999 years, token ground rent £1, no service charge. He told me that there was no management company and on asking him how communal areas, front garden, maintenance issues were dealt with he told me "people knock on each others doors". This struck me as a bit odd. He told me the other 3 flats were owner occupied.

A few other things bothered me. It sold about 14 months ago for £25k more than the current asking price (this is London). On asking why the owner was moving he said she was a widow and wanted to be near her son a bit further out of London. I asked if there were any neighbour issues and he said not as far as he knew. Next door had put in an application to extend backwards which could potentially block the bedroom window.

I downloaded the lease from the land registry. This confirmed the price paid 14 months ago, the long lease and what seemed standard gobbledegook to me. I also downloaded the freehold document which stated a purchase of £12k in 2002 by 42 ****** (insert address of property) Road Management Limited. Wouldn't this be the management company? Also looking at the freehold document it seems 3 of the flats had their leases extended to 999 years in 2013 and one didn't which is now running down to 60 odd years.

Would the above raise concerns for anyone?

Many thanks

oli_ro

Yes - my concern is who is the director of the company and actually runs it. You could look at this(director) at companies house.

Doing stuff by committee is never going to work well and will raise concern for buyers/solicitors/etc... afaik.

I have exactly the same setup as yours but with equal parts. The ltd is run by one of neighbours, who is retired and does a very good job.

You are also right to worry about short period of ownership, do more homework and try to catch neighbours for a chat.

Lyncroft wrote: »

Also looking at the freehold document it seems 3 of the flats had their leases extended to 999 years in 2013 and one didn't which is now running down to 60 odd years.

This should not be an issue, as my flat was in exactly the same situation. Since the owners own the leasehold, extending is a formality and should be done for free. But would be interesting to know why was it not extended at the same time as others.


Good luck.

[These are my personal view from my experience and is not legal advice, you should go with all these concerns to your solicitor if you go ahead]

G_M

Lyncroft wrote: »

I looked at a garden flat. 1 out of a block of 4. It's a share of freehold, apparently 22% share as it's smaller. Long lease of 999 years, token ground rent £1, no service charge. He told me that there was no management company and on asking him how communal areas, front garden, maintenance issues were dealt with he told me "people knock on each others doors". This struck me as a bit odd. He told me the other 3 flats were owner occupied.
Very common on smaller blocks of flats. Much cheaper and more efficient than employing a management company - provided everyone cooperates & gets on! Knock on the doors yourself and see what the people are like!

A few other things bothered me. It sold about 14 months ago for £25k more than the current asking price (this is London). On asking why the owner was moving he (who? estate agent?) said she was a widow and wanted to be near her son a bit further out of London. I asked if there were any neighbour issues and he said not as far as he knew. Next door had put in an application to extend backwards which could potentially block the bedroom window.
Do not rely on anything the EA tells you. Make your own enquiries - again: knock on doors
But I see nothing strange in the flat being sold after 14 months. People are often transient/upgrade/ move for any number of reasons.

Find out about the application next door: go to the council offices and ask to see the appliction & speak to the Planners.

I downloaded the lease from the land registry. This confirmed the price paid 14 months ago, the long lease and what seemed standard gobbledegook to me. I also downloaded the freehold document which stated a purchase of £12k in 2002 by 42 ****** (insert address of property) Road Management Limited. Wouldn't this be the management company?
This is the freeholder by the sound of it. From what you say, the buyer of the lease (you) will get a 22% share in this company.
Also looking at the freehold document it seems 3 of the flats had their leases extended to 999 years in 2013 and one didn't which is now running down to 60 odd years.
Provided yours is 999 years why do you care?

Would the above raise concerns for anyone?

Many thanks

Nothing worrying there.

Just a bit of standard checking to do.

Lyncroft

Thanks for the replies.

Hmmm. Some right monkey business going on here.

Don't know why but I assumed I was looking at Flat B and looked at the lease for Flat B as the EA told me the lease was for 999 years. The EA literature just gives the road number. I assumed the extension next door was for the house next door but on investigating the planning application my deduction is that I should be looking at Flat A (short lease) and the planning application is for Flat B in the same house! There is an objection letter from the owner of Flat A dated 2 weeks ago stating the extension goes up to her bedroom window and the change of use from bedroom to living room/kitchen will cause noise/light problems, etc.

I had mistakenly been concentrating on Flat B hence why I thought it was now selling for less than 14 months ago. Flat B was bought 14 months ago, Flat A was bought in 2006. I'm guessing that maybe the Flat A owner couldn't afford to extend the lease when the other 3 extended. I could spend £3 to get the Flat A lease but not sure I can be bothered.

To cap it all the EA just left a message saying the person after me loved the place and put in an offer there and then! I emailed back saying I think I'll just let things roll. He emails back asking why? I'm still deciding what to say!

Edit - couldn't resist looking at the lease on Flat A and it looks like that's got a 999 year lease too. Not sure why it doesn't say that on the Freehold one though.

Yolina

Lyncroft wrote: »

no service charge.

Meaning there's no sinking fund in place and so it's going to be a right PITA when something expensive needs doing.
With only 4 flats, there's no point appointing an external management company but no provision for a sinking fund seems like a bad mistake to me.

Lyncroft

Thanks for the replies.

I was thinking the same thing regarding the sinking fund.

Out of interest with respect to the planning application and shared freehold can the person objecting to the application just say she doesn't want it to go ahead as they're part of the same freehold? How does that work?

anselld

Lyncroft wrote: »

Thanks for the replies.

I was thinking the same thing regarding the sinking fund.

Out of interest with respect to the planning application and shared freehold can the person objecting to the application just say she doesn't want it to go ahead as they're part of the same freehold? How does that work?

Anyone can object, but the planners will only consider valid planning issues.

However, there is also the question of the right to actually build an extension should planning actually be granted. Does the lease of that flat actually include the land on which the extension will stand? Permission would be required from the freeholder for structural alterations and for any lease extension needed. So the owner would need at least a majority of the freehold shares to agree such permission.

Lyncroft

anselld wrote: »

Anyone can object, but the planners will only consider valid planning issues.

However, there is also the question of the right to actually build an extension should planning actually be granted. Does the lease of that flat actually include the land on which the extension will stand? Permission would be required from the freeholder for structural alterations and for any lease extension needed. So the owner would need at least a majority of the freehold shares to agree such permission.

I imagine it does. Looking at the application on the website the only comment has come from the selling flat. I don't think it impinges on the other 2 flats above. I can see why the flat hasn't sold as the extension comes just up to the vendors bedroom window and is changing from bedroom to kitchen/living room. I suspect the seller might be wanting to leave for this reason maybe. At least the EA was upfront in telling me about the planning application.

G_M

As explained by anselld, Planning Permssion simply means the council will permit the extension.

But the freeholder will also need to give permission (read the lease).

If as you suggest the freeholder is a company in which each of the 4 leaseholders have shares, then it will be down to those 4 shareholders in the freehold company to decide whether to consent or not.

Given that the current flat owner is objecting to the PP application (and possibly selling because of it), you'd be buying into an ongoing problem....

I would advise the EA of your concerns, and keep looking.

anselld

Lyncroft wrote: »

I imagine it does.

You can down load the leasehold title plan if you want to check.

Lyncroft

Thanks for replies and advice. I might download the lease. I'm sort of assuming the garden would be theirs.

At present the situation is they have a bedroom with a narrow set of steps leading down from the centre of the bedroom into a garden that runs alongside the vendors flat.

The plan is to change that use to a kitchen/living room and to extend the whole room out about 2 metres till it reaches the vendors bedroom window.The steps leading down would be the entire width of the room. The outward facing kitchen/living room would be glass - probably sliding doors I suppose. Sounds quite nice!

This sort thing must go on all the time I guess! Thanks again.