should I renegotiate with no share of freehold?

cybervic

Hi all,

we are FTB and had our offer accepted on a flat which EA said it has share of freehold with no ground rent. However, vendor's information pack arrived this week and it appears that a flat is not share of freehold and has ground rent £40pa.

The freehold set up is in the form of trustees (not quite sure if that makes any difference). The flat has 950 years of lease remaining and perhaps that why EA made the mistake. MSE freehold buying guide says having SoF adds 1% of value which is about £3000 in our case. Other online calculators suggest the cost of buying freehold is in the range of £700-£1000, not sure how accurate it is though.

Has anyone has similar experience? Would you negotiate the price again? Any thoughts are welcome.

Thanks in advance.

Richard_Webster

"Share of Freehold" is not a legal term and can mean different things to different people. having said that I would make three comments:

1. You say the freehold is owned by trustees - so you should ask the seller to provide details of the trust - could be that these individuals hold the freehold on trust for the flat lessees.

2. The copy lease you have been sent could well refer to a ground rent which would have been imposed when lease first granted. Question is whether it is still being collected. The lease itself doesn't get changed but if the freehold is owned by trustees for the lessees then it isn't usually collected. So big question is whether it is being collected.

3. You will also want to know how the block is being managed. If no money is being put aside each year for long-term maintenance requirements then you could find sudden massive increases in such costs. You want to check who does the day to managing - is it done professionally or by a group of individuals who never agree about anything important?

Usually "share of freehold" is a good thing - but sometimes it is a curse if the co-freeholders can't agree about things.

cybervic

Richard_Webster wrote: »

1.you should ask the seller to provide details of the trust - could be that these individuals hold the freehold on trust for the flat lessees.

2. The copy lease you have been sent could well refer to a ground rent which would have been imposed when lease first granted. Question is whether it is still being collected.

3. You will also want to know how the block is being managed.

Thank you Richard for the very useful info.
It's probate flat so the sellers (inheritors) know very little about everything. There is a managing agent in place, am I right to think that they will have all the finance and trust details as per your comment?

My understanding is that if the freehold is set up as limited company then they have to submit the finance once a year, but if it's set up as trustee then they don't have to do it?

eddddy

cybervic wrote: »

My understanding is that if the freehold is set up as limited company then they have to submit the finance once a year, but if it's set up as trustee then they don't have to do it?

Are you asking this question because you're worried about something? Perhaps information about service charges?

As a leaseholder, you can insist that you receive detailed information about service charges. You even have the right to see individual invoices, receipts etc. That applies whoever/whatever your freeholder is - a person, a company, a trust, etc.

But a group of shared freeholders (or a group of leaseholders) can volunteer to do things more informally, if they want to - maybe because they all trust each other.

(An example of an informal arrangement might be "My mate's a decorator, he says he'll paint the communal hall for £500 - so if you all agree, give me £100 each, and I'll arrange it.")

Richard_Webster

There is a managing agent in place, am I right to think that they will have all the finance and trust details as per your comment?

Certainly worth asking them for information - but seller's solicitors ought to be finding this out - your solicitors will have to push them to do so.