Freehold/ Leasehold Question

DamzT

Hi, I’m looking at getting a mortgage on a freehold flat, however I would become the buildings manager and own the land. The upstairs flat would apparently pay me ground rent and pay towards the home insurance.

The upstairs flat is leasehold and has 78 years left. Would you be able to explain what that would mean for me? Would I be in anyway liable for extended their leasehold etc?

Thanks for any info! :j

Typhoon2000

You are unlikely to get a mortgage on a freehold flat. Are you sure it's not a leasehold flat with share of Freehold?

anselld

DamzT wrote: »

Hi, I’m looking at getting a mortgage on a freehold flat, however I would become the buildings manager and own the land. The upstairs flat would apparently pay me ground rent and pay towards the home insurance.

The upstairs flat is leasehold and has 78 years left. Would you be able to explain what that would mean for me? Would I be in anyway liable for extended their leasehold etc?

Thanks for any info! :j

"Liable" isn't quite the right word. If you are the freeholder then you will be able to charge a substantial sum for a lease extension if and when the Leaseholder requires it. The potential sum will increase as the years go by and the remaining Lease gets shorter. Furthermore, the Leaseholder pays for all Surveyor and Legal fees for the extension.

What you are liable for is organising things like building insurance and any maintenance required to the structure of the building. You will also need to recover part of the cost of these from the Leaseholder as well as ground rent. Read the Lease to find out the full extent of your obligations as Freeholder.

As far as the Mortgage is concerned, you would need to explain that you would own the entire building as freehold, but that the top floor is leased as a separate unit. That will probably put off many lenders, but it is not quite as bad as saying "freehold flat".