Maisonette freehold

eddddy

asantarai wrote: »

In answer to your question, no - we don't get charged anything from the freeholders except for ground rent. If there are building maintenance works or roof repairs to be done, it is in our lease that we are responsible for them, so each flat just pays for the work themselves.

As an example, we are in the 1st floor flat - so when we needed the roof repaired last year, we paid for that repair. The flat downstairs didn't pay anything towards the cost.

I think some of the answers you are getting may be misleading.

As you say, some leases - especially for maisonettes - make the upstairs maisonette responsible for the roof, and the downstairs maisonette responsible for the foundations.


However, there are some other considerations with the loft conversion plan...

• Assuming the freeholder is 'savvy', they will know that there is development potential in the loft. So the price of the freehold will be high to reflect that potential.

• If the leaseholders jointly buy the freehold - you will all jointly own the loft space.

So the other leaseholders need to grant a lease of the loft to you. They might expect you to pay them quite a chunk of cash - especially if the purchase price was high, because of the loft development potential.

So you will probably need to do some careful calculating and negotiating with your neighbours, before you commit to anything!

asantarai

Thanks eddddy - that is really helpful.

I did consider the chance we may have to pay our neighbours (or the other freeholders as may be the case) for the conversion. We are basically trying to work out if it is cheaper for us to ask the current freeholder for conversion permission or if it will be cheaper to obtain the freehold first, and then ask our 'partners'. This is why I wondered if we could state in our individual leases what each of us is responsible for, after getting the freehold.

eddddy

asantarai wrote: »

This is why I wondered if we could state in our individual leases what each of us is responsible for, after getting the freehold.

I'm not sure if this is what you mean, but...

After you've jointly bought the freehold, you can vary the leases in whatever way you like.

For example, you can all 4 agree that your specific lease will include the loft.

But if i was one of your joint freeholders, I would know exactly why you wanted your lease changed in that way - and I wouldn't agree, unless you paid me a big chunk of cash.

i.e. As a joint freeholder I would want a share of the 'windfall'.

For example, if there was £100k profit to be made through converting the loft - I might suggest that each joint freeholder should end up with £25k (i.e. You have to pay out £75k, being £25k to each of the other freeholders.)

Or if I was a real baddie, I might hold you to ransom and say you must pay me personally £50k, for my permission to vary your lease.

But maybe your joint freeholders are more easy-going than me (or maybe a little naive!) But if they take professional advice... they may find out.

And who knows if your current freeholder is easier or harder to negotiate with than a 'committee' of 3 neighbours.

One approach might be to jointly instruct a valuation surveyor, who will look at all the angles, and come up with a fair strategy.

anselld

asantarai wrote: »

This is why I wondered if we could state in our individual leases what each of us is responsible for, after getting the freehold.

The point of shared freehold is that you need a collective way of making joint decisions on things that are shared.

I think it will be a recipe for disaster if you enter into the freehold purchase with the view that you will simply separate out all the responsibilities and each do your own thing.

It will be even worse if you are considering it as a way to cheaply acquire the loft at the expense of your neighbours.

asantarai

Thank you for your replies eddddy and anselld, it's given me some things to think about.

I must make it clear that it was never our plan to intentionally dupe our neighbours, we just obviously want to explore what our cheapest option may be. In an ideal world, we only want the freehold for our property and garden - we wouldn't necessarily choose to be part of a Ltd. company with a group of people we barely know beyond saying "good morning" to, but understand that is the only way forward. I am thinking that could be a whole can of worms in itself to be honest...!

eddddy

Just another thought...

You say there are 4 maisonettes in a block - is that sort of like flat 3 above flat 1, and then flat 4 above flat 2?

You might be able to treat that as two 'buildings' for the purposes of buying the freehold.

i.e. You just buy the freehold relating to flat 3 (upstairs) and flat 1 (immediately below it).

So two of you end up owning the freehold of a semi-detached building.

Then you just have to negotiate with one other party, rather than with 3 others.

asantarai

Yes, that is the exact set-up. I think the lease says somewhere that the freehold has to be for the entire building of four flats, but will double check as sharing the freehold for 'our side' with one other person would be preferable.

AlexMac

Put yourself in the position of the person who eventually buys the leasehold flat from you. If they are like me, I'd only ever consider a "shared freehold" with a properly set up Freehold Limited company in which I had equal rights with the other leaseholders as a Director or Member.

In each of the three I've owned, that has been the case, and between them, the Articles of Association (or Memorandum or Constitution) of the Company, and the lease have been clear and specific about things like
- Company set up, control, decisons and who elects any Director(s) if that role's not shared by all.
- Service Charges, including % share if all the flats aren't the same size
- insuring responsibilities, repairing responsibilities including defining where individual leaseholders' repsonsibilities start and stop regarding the internal plaster surfaces and internal decor & fixtures (leaseholders), underlying brickwork, externals such as windows, roofs, gutters, damp, etc (usually all shared whether its a top flat or basement)
- sinking fund if any (I'd strongly suggest having one- otherwise a biggie like scaffolding and cyclical external decor, gytters or roofing can mean large one-off hits for whoever happens to be owners at the time)

Once this is clear- and any decent solicitor woauld recommend the same - you can operate as informally as you like. We shared everything on a DIY basis to save costs in my last couple of blocks; finance, filing Companies House accounts and returns, planning & contacting maintenance, shopping around for insurance...

In my current block of 6 flats we rotate the role of Director so everyone cops the work for a few years. In a block of 4 it's hardly worth paying an agent of accountant as a small company doesn't have to even have an audit to satisfy Companies House.

And while you're paying a solicitor, you might as well check everyone is happy with the lease term; especially if these are anything less than 100-plus years; I prefer longer, so just extend them and give yourseves long leases.

But watch the solicitor who acts for you; one who revised the company of my second shared freehold a few years before we moved in slipped in a wholly unecessary clause which meant they had to be paid fro a deed or something every time a flat bought or sold. I didn't notice that I'd inherited a deal which meant anyone who sold on had to pay about £50 a pop for a wholly pointless bit of paper in addition to their own usual legal fees when selling.

And as someone says above; don't assume the loft is yours; a standard lease will define this as Freeholder (ie communally owned) space, even if only you have access, just as you'll expect the others to share roof repairs and you'll chip in to downstairs rising damp!

But, given the massive benefits of shared freehold, I'd do it; in fact that's the only type of lease hold flat I'd ever buy.

asantarai

Thanks for that AlexMac - really helpful.

I would ask that as our current freeholders do not charge us for anything and do not do anything towards repairs or maintenance for the properties (the only thing we pay them is a very small nominal ground rent charge each year), do you suggest that once we set-up a Ltd. company and obtain the freehold, should we start charging ourselves service charges etc., or should we keep it exactly as we have it now?

Each of the flat owners already pays their own buildings insurance, so we would just continue to do that and not have it go through the Ltd. company we set-up right?

Slithery

asantarai wrote: »

Each of the flat owners already pays their own buildings insurance, so we would just continue to do that and not have it go through the Ltd. company we set-up right?

Does this mean that you're currently paying 4 lots of building insurance for one building? Seems like overkill to me.