Must you remortgage after buying freehold

mollymikki

I bought a leasehold flat a year ago (125 years) for 200,000 pounds, so not a big one.
Now the other two flats (in one side of a building, an old Victorian place), are up for sale and the freeholder wants to sell them with a share of freehold, with me buying a share too.
Would I need to renegotiate my mortgage or does this not affect it?
Do I need to pay stamp duty again (I have another house so I would have to pay the extra percentage)
If I dont buy a share of freehold would this devalue my flat or make it hard to sell?
I can't really afford all the costs to buy a share of freehold but don't want to risk my flat being devalued as a result of not buying a share.
I'm an older person too (57) so can't get a long cheaper mortgage and its harder to find lenders who will consider me because of age to retirement.
My freeholder is the church next door and I would prefer if they sold the other two as leasehold but I think they want to be free of responsibility and potential costs of maintenance.
However, they own the adjoining half of the house which they use for an office and I know they have been weighing up what to do.
Help please!

da_rule

Your mortgage does not affect it (unless you potentially need to borrow more to pay for the freehold).

There may be stamp duty liability, but this is difficult to say without knowing how much you are potentially paying for the freehold.

A simpler way to deal with freehold ownership between groups of parties may be for the freehold to be sold to a limited company and then each flat is given a share in the company and all owners are made directors. This helps separate all the different hats everyone has to wear. It also means that when you come to sell you only have to transfer your share in the company rather than actually transferring the freehold.

davidmcn

mollymikki wrote: »

If I dont buy a share of freehold would this devalue my flat or make it hard to sell?

The current value reflects the fact that you don't own the freehold (and that it's possible for anyone else to become the freeholder) so no, it won't "devalue" it. It may improve the marketability (and perhaps the value) if you are able to sell it with a share of the freehold.

Tom99

See what the current freeholder is going to offer you.
They want to sell the other 2 flats and offload the freehold management as well, and all 3 flats having 1/3rd of the freehold interest (via ltd co if possible) is a neat arrangement so its possible you could negotiate a reasonable or even free deal since if you don't buy your share of the freehold then they will either have to sell the freehold to the 2 remaining flats or come to some other arrangement.

SDLT_Geek

It is unlikely that the value of the freehold, which will be subject to long leases at low rents, will be anything like high enough to suffer an SDLT charge.

mollymikki

Thank you all for the advice, it is hugely appreciated.

Your shared wisdom has been invaluable - I was very worried and don't really have anyone to talk it trough with - I'm glad I posted to the forum and you were kind enough to take time to respond..

AdrianC

Remember, you're going to finish up owning two separate things.
1. Your leasehold flat - same as you've always done. There's a mortgage secured against it.
2. A share in the freehold.