Leasehold flat with 50% freehold

set

Hi Guys

I'm completely new to this part of the forum . myself & husband are currently renting. We have now decided to look into buying a place of our own. It's going to be a flat as that's the price range that suits us best. We've only been looking on right move a couple of days but have seen a flat that is described as

one bedroomed ground floor flat, forming the lower part of a large Victorian style semi detached residence.

Tenure - The property is held on a new long leasehold, with a 50% share of the Freehold of the building.

As I said, we've only ever rented before, so really not sure what all this means? I've been reading bits online but honestly it's sending me cross eyed.

We would like to arrange a viewing but not sure if leasehold with 50% share freehold is good or bad. We do not know any other details at the moment, but could anyone advise on what questions we need to ask? Also, the property has an asking price of offers in the region of £98,500 what sort of offer would we put in? Obviously I'm jumping way ahead here as we haven't even seen the property, but I'm sat here with a million questions and scenarios in my head. We only started looking a couple of days ago and I'm already going loopy :rotfl:

Sorry for all the rambling, ruddy heck, they weren't kidding with the stresses of buying :eek:

Thanks very much for reading guys, hope you can advise.

orcocan

share of freehold is good, I'd strongly recommend you read about freehold and leasehold given how important this purchase is

re the offer, depends on how buoyant the market is in your area and how badly you want the flat (and whether you think it's fairly or over priced). You could start at 90 and see what happens

set

Thanks for your quick reply. I have been reading about it today, it's just a lot to take in. thank you for your help on the price too, will give me an idea with other prices. Don't want to offend / rub sellers up wrong way by being too cheeky

eddddy

Just about every flat for sale in England and Wales is leasehold - so that's normal.

The fact that you would also own a share of the freehold makes it even better (although this also means you have more responsibilities).


Regarding price - there's no harm in probing the EA with questions like "So the property is on the market at £x - so what kind of price is the seller hoping to achieve?"

Don't necessarily believe everything the EAs says, but you might might be able to 'read between the lines' of what the EA says.

set

eddddy wrote: »

Just about every flat for sale in England and Wales is leasehold - so that's normal.

The fact that you would also own a share of the freehold makes it even better (although this also means you have more responsibilities).


Regarding price - there's no harm in probing the EA with questions like "So the property is on the market at £x - so what kind of price is the seller hoping to achieve?"

Don't necessarily believe everything the EAs says, but you might might be able to 'read between the lines' of what the EA says.

Thanks eddddy. Will get OH to ring estate agent. Think we may go and have a look. This will be our first ever property that we view. Dont know why Im nervous

AlexMac

I assume that by now you have worked out what the commonly-called 'shared freehold' means; but I'd add that this kind of tenure is much better than buying a leasehold flat in a building owned by someone else; an absent or commercial 'freeholder', who will charge you for managing, maintaining and insuring the building, plus an admin or management fee!

I've owned three such flats, under the common arrangement whereby the new leaseholder (me, or in this new case, you) becomes a member or director of a small limited company which collectively owns the freehold.

This is good, because no one leaseholder/occupant can mess about with the building, knock down walls, replace windows, extend, etc without (the joint) freeholder's permission. Costs (external maintenance, roof repairs etc, insurance, any communal lighting...) are shared but at least you control these; and you can save money by not having an agent although that may mean one of you has to comply with simple legal requirements, maybe including an asbestos survey of communal areas if any, maintaining basic accounts (of service and maintenence charges) and possibly filing these annually with Companies House. None of which is rocket science.

I very much prefer shared freeholds like this to ones where you are not in control. I also always ask what the shared service charges and maintenence costs are before making an offer (although you may not get a binding answer til your solicitor asks for this later in the process).

When we were buying a flat last year with a budget similar to yours, we were quoted service charges ranging from a silly £1,500- £2k p.a. on a badly maintained building, to a very reasonable £400 for a well-maintained and efficiently managed one (guess which one we bought?!)

And as regards how much to offer; that depends on your local market, how popular the area or that road/flat is, and how keen the vendor is. We got lucky with our flat which was up for £90k in a cheap (but nice) area but was in very poor condition and had to be sold as the elderly owner had gone into care; we offered a cheeky £80k, and settled at £82.5k after a bit of to and fro.

You can't always start at 10% under and hope to settle at 8% below asking price as we did, however. Look at Zoopla or Rightmove etc to check recent land registry sale prices and local inflation trends for this and similar flats. Think what your absolute limit is, and start a few £k lower so the agent can tell their client they have managed to talk you up; maybe somewhere from around £93k-£95k? Remember, the agent will do you no favours as they are wholly accountable to the vendor; they may even claim they have other offers (we had to pay the asking price on one of our flats in a very popular area and in a hot 'sellers' market 13 years ago and I always wondered if the agent 'invented' a rival offer which we beat?

And if you don't get this one, there will be another which you will love just as much; fate's like that- good luck

eddddy

AlexMac wrote: »

... but I'd add that this kind of tenure is much better than buying a leasehold flat in a building owned by someone else...

In general yes, but it depends...

If your joint freehold owners are apathetic, unreasonable, disinterested or short of money, it's arguable whether you're worse off.

For example...

You live in the top floor flat - the roof is leaking - it's the freeholder's responsibility to repair - the cost should be shared by all leaseholders.

But your joint freeholders won't agree to getting the repairs done, because they don't want to pay their share (as leaseholders).

You, as a leaseholder, have to take court action against the freeholders (including yourself). You run up legal costs.

As a result, relations break down - but you still have to live next door to these people, and run a company with them.

set

AlexMac wrote: »

I assume that by now you have worked out what the commonly-called 'shared freehold' means; but I'd add that this kind of tenure is much better than buying a leasehold flat in a building owned by someone else; an absent or commercial 'freeholder', who will charge you for managing, maintaining and insuring the building, plus an admin or management fee!

Yes, we have been reading up on this. I thin it confised us as we just thught you buy either leesehold or freehold not both (This comes from not buying a property before)

I've owned three such flats, under the common arrangement whereby the new leaseholder (me, or in this new case, you) becomes a member or director of a small limited company which collectively owns the freehold.

This is good, because no one leaseholder/occupant can mess about with the building, knock down walls, replace windows, extend, etc without (the joint) freeholder's permission.
Im hoping any joint freeholder wouldnt but what could we do if they objected to us replacing windows or knocking down a wall
Costs (external maintenance, roof repairs etc, insurance, any communal lighting...) are shared but at least you control these;
This is something we need to ask the EA as it doesnt say in the listing ie some properties say maintenance shared between flats on as and when basis etc. I would prefer to pay an amount into a pot to cover lighting, and repairs but as I said we will just have to ask whats already in place. and you can save money by not having an agent although that may mean one of you has to comply with simple legal requirements, maybe including an asbestos survey of communal areas if any, maintaining basic accounts (of service and maintenence charges) and possibly filing these annually with Companies House. None of which is rocket science. Ah now paperwor I quite enjoy (as long as I know what Im talking about

I very much prefer shared freeholds like this to ones where you are not in control. I also always ask what the shared service charges and maintenence costs are before making an offer (although you may not get a binding answer til your solicitor asks for this later in the process). Will get OH to ring and check this

When we were buying a flat last year with a budget similar to yours, we were quoted service charges ranging from a silly £1,500- £2k p.a. on a badly maintained building, to a very reasonable £400 for a well-maintained and efficiently managed one (guess which one we bought?!) We did see a property a few months back and on speaking to the EA the other leeseholders were in dispute with freeholder as they were paying a charge but now work had been done. The all stopped paying and last we heard was the maintenance company wuldnt do any work until they started paying again and the leeseholders wuldnt pay until works started back up (general up eep of building ect. Needless to say as soon as we were told this it was thanks butno thanks

And as regards how much to offer; that depends on your local market, how popular the area or that road/flat is, and how keen the vendor is. We got lucky with our flat which was up for £90k in a cheap (but nice) area but was in very poor condition and had to be sold as the elderly owner had gone into care; we offered a cheeky £80k, and settled at £82.5k after a bit of to and fro. I have been on Zoopla to check sale prices, but only had a quick look. Im going to write down similar properties and how much they sold for.

You can't always start at 10% under and hope to settle at 8% below asking price as we did, however. Look at Zoopla or Rightmove etc to check recent land registry sale prices and local inflation trends for this and similar flats. Think what your absolute limit is, and start a few £k lower so the agent can tell their client they have managed to talk you up; maybe somewhere from around £93k-£95k? Remember, the agent will do you no favours as they are wholly accountable to the vendor; they may even claim they have other offers (we had to pay the asking price on one of our flats in a very popular area and in a hot 'sellers' market 13 years ago and I always wondered if the agent 'invented' a rival offer which we beat? I will get OH to deal with any offers ect, I have a rubbish poker face and not very comfortable haggling

And if you don't get this one, there will be another which you will love just as much; fate's like that- good luck

This is what my OH keeps telling me, so Im not going to get attached to something just in case it doesnt work out. Haha well thats the plan anyway.

I really do appreciate your post. Its helped so much.
Thank you
Sarah

set

Sorry I forgot to add. If there is any dispute, can't agree on repairs / they oppose any work we want to do, new windows taking a wall down etc. is there any kind of cover for this? We have family legal protection in our content policy but I'm assuming it won't cover for this maybe? I'm at work at the mo so can't really phone insurance to check it out. Is there an insurance policy we could take out for such a thing or is that being incredibly naive of me .

Quick update

We have arrange a viewing for Friday. Just going to do some more reading and write down all question I can think of. My OH did ask how long the lease was for and its just been renewed on 99yr. As the flat comes with 50% of the freehold how does that work if we want to extent the lease. I understand we need to have owned the property for two years before we can do this.

Thanks again

Richard_Webster

Also unless the frehold is owned through a company the other freholder has to sign over the freehold to you. Say A & B are the prsent freeholders and you (U) are buying A's flat. A can transfer the leasehold to U, but both A & B have to sign to transfer the freehold to B & U - A can't do it on his own.

So if A can't get hold of B or B won't sign for any number of reasons you have a problem. B's flat could get repossessed in the future and he will then be long gone and you won't be able to get his signature to transfer the freehold to your buyers.

This can be got round by setting up a deed of trust which says what happens if a joint freeholder refuses to sign or can't be found - but this costs and the average shared freeholder doesn't wasnt to spend the money - until something gopes wrong!

set

Richard_Webster wrote: »

Also unless the frehold is owned through a company the other freholder has to sign over the freehold to you. Say A & B are the prsent freeholders and you (U) are buying A's flat. A can transfer the leasehold to U, but both A & B have to sign to transfer the freehold to B & U - A can't do it on his own.

So if A can't get hold of B or B won't sign for any number of reasons you have a problem. B's flat could get repossessed in the future and he will then be long gone and you won't be able to get his signature to transfer the freehold to your buyers.

This can be got round by setting up a deed of trust which says what happens if a joint freeholder refuses to sign or can't be found - but this costs and the average shared freeholder doesn't wasnt to spend the money - until something gopes wrong!

So many different things can go wrong. Well if B didn't sign it over, no problem as we wouldn't buy it. The deed of trust, if it's a couple of hundred pounds that wouldn't bother me too much, that little piece of my mind is worth so much more