Buying a share of freehold/extending lease

squoog

I recently (2 months) bought a flat, the upstairs one of 2. The freeholder is also the owner of downstairs and rents it out.
I need to get a lease extension as it only has about 65 years remaining and I am also hoping to get permission to change the flat from a 1 bed into a 2 bed.
I have asked the freeholder if she would be willing to sell a share of the freehold but she has said no.
I am wondering if i have any rights to buy a share or not. Also the best way I should go about getting a lease extension and permission to make changes.
the agent told me after I completed that the freeholder is looking for about £15k for the extension which seems very high.
I bought at auction hence not getting this info before hand. if I can't get all these things at the moment I will just leave things as they are, but I would like to get it all tied up so that I know where my finances are.
I am also hoping to ask for permission to use the roof space as only my flat has access and offering to split maintenance 60/40 in return.
I would be really grateful for any guidance. I know(vaguely )the freeholder from my sons school and am hoping to get my facts straight and go to her with an offer of a package for the above things, but not sure what rights I have or how much to be offering.

cattie

You have no right to a share of the freehold I'm sorry to say. Also, at this point you actually have no legal right to a lease extension as you need to have owned a property for 2 years before you have the full legal right to do this.

However, if a freeholder is agreeable to extending the lease before the 2yr qualifying period is up then you are free to go ahead & agree a price for the extension. If you can't agree a price then you need to wait till the 2yr period is up & you can then apply to a tribunal to have the market price set if you believe the freeholder is asking way above what it realistically should be.

You should really have done your homework on leaseholds before purchasing this flat. A lease with less than 80yrs remaining costs quite a bit more to extend than one with 80+ years, as something called marriage value comes into play. This site here will give you all the info you need about owning leasehold property, lease extensions etc & will explain more about marriage value. http://www.lease-advice.org/newintro.htm

Normally where roof space is concerned & the upper flat has no legal rights to it, the freeholder will want paying for the space & this can often be worked out by how much actual value having the roof space will add to the upper flat.

Even If you are to have access to the roof space just for storage, then an amendment needs to be made to the lease, which involves expensive solicitor's costs.

Unless the freeholder is in agreement, you cannot make changes to your flat

squoog

Thanks for all that info.
I have looked at that site but was a bit confused as we are only 2 flats and the other is the freeholder.
I knew that I didn't know all I should when i bought and its not the end of the world as I am happy not to sell in the near future if all the legalities are too expensive.
I will arrange to meet the freeholder and see what we can come up with ( now I'm clear that I have no rights!:o )
I was wondering what benefit there is to hang on to the whole freehold in this situation. I would have thought selling for a few£k and splitting responsibility would be a good option but maybe i'm missing something?

Doozergirl

squoog wrote: »

I was wondering what benefit there is to hang on to the whole freehold in this situation. I would have thought selling for a few£k and splitting responsibility would be a good option but maybe i'm missing something?

Where your lease is that short, it is likely that a share in the freehold is roughly equal to or actually cheaper than the cost of a lease extension! Plus they still get their ground rent each year.

maybe she also feels that she gets to keep control of things that way.

cait_2

I am interested in this thread as I am the opposite of the original poster. I own the whole freehold of a two flat converted building. The lease is currently split between me and the leaseholder with 2/3s mine and 1/3 his. I have allowed my leaseholder to develop his 1 bedroom flat by extending into the loft and adding a roof terrace which has added considerable value to his property. We didn't make any formal agreements but now he wants to split the freehold 50/50 without paying me any money as he says the general repairs he has made whilst undertaking his development are equivalent to the value of buying the freehold from me which he hasn't charged me for.

What rights do I have in this situation? Am I still entitled to charge him for buying the freehold? What is the value of 50% freehold in a now 4 storey Victorian terrace with a 99 year lease? And does the loft space belong to the freeholder? I have allowed him to incorporate this into his flat without charge which has added nearly £100,000 in value to his flat.

I would really appreciate some advice - although I am a freeholder I am totally unaware of my rights/ responsibilities and my leaseholder is a property developer.

Many thanks.

Doozergirl

You must read through the existing lease and see what the terms of it are.

Is there no formal paperwork at all regarding the loft conversion?

Does his lease actually include the loft area? Either way, he needs formal permission from you the freeholder for any major works or his flat will be unmortgageable when he comes to sell it.

How long is his lease now? The value of the freehold is determined to a great part by this.

Whatever happens, the terms of the lease should be adhered to and he clearly doesn't appear to see the need for that if he has no formal agreement for the conversion and has carried out other major works for which he thinks you should pay. If you were to give him half the freehold (I am not sure whether he legally able to enforce you even selling it to him) there is a company which needs setting up and a lot of legal work which the leaseholder has to pay for. A freeholder doesn't need to contribute to 'enfranchisement'.

My gut instinct is that he owes you some money and needs to sort his lease out big time. Whether you make some gesture towards essential repairs (which are your responsibility and decision to organise really - not his :eek: although you share the costs as leaseholders) is a reasonable enough question - again it depends on the terms of the lease.

You really need to speak to the people at the Leasehold Advisory Service (the web link cattie provided above) on 020 7374 5380. They are Govenrment funded and there to help both leaseholders and freeholders.

cait_2

Many thanks for your reply - it is a great help and reassurance.

There is absolutely no formal paperwork whatsoever regarding the conversion - I just basically let him get on and do it. I think to some extent he is playing on my ignorance so I need to find out as much now as I can. I'll check the lease about the loft but I don't think it is part of his lease agreement. In terms of formal permission, he never formally asked me and I really didn't give it much thought until now. If the loft does belong to me as a freeholder, what steps should I take? The lease is quite long - 99 years remaining, I think.

Thank you again for taking the time to reply and for the phone number - I'll check the lease and give them a call to find out what I should do next.

Doozergirl

If the loft belongs to you, he owes you a LOT of money and you need a friendly solicitor. He won't be able to sell the flat without help from you.

cait_2

I've just checked his lease and it clearly states what is included in his title - the loft space is not.

How would you advise I proceed in this? If I own the loft space as the freeholder, does he need to buy the space from me? Presumably his lease would need changing to include that space if he did buy it from me.

Also, does it not affect him unless he wants to sell? I know he is planning on letting the flat out. However, he is using part of the property that doesn't belong to him and profiting from - surely that is illegal?

Thank you again.

Doozergirl

Yes he needs to buy and lease that space from you. He essentially needs to pay full market value for that loft space before he converted it.

If the loft isn't his to let, he can't let it - there is no lease or agreement with you, the owner.

I would speak to LEASE tomorrow morning and dependant on what they say go and speak to your conveyancing solicitor and take that lease with you. The first issue is certainly the loft conversion; I think that is the motive behind the bully boy tactics on the freehold, which I think are unfounded.

Let us know how you get on, please.

cait_2

Thank you very much for your help. I'll ring them tomorrow and let you know what happens.