Mortgage on flat with whole freehold but no lease..?

rlkk · 15 February 2020 at 11:30AM

Hi all,

There's been a long saga with the freehold/leasehold of the flat I've been trying to buy. I've posted before and people have been very helpful, albeit brutal! Hoping for some advice from mortgage experts today.

There is no lease on the flat. It comes with the freehold for the whole building. A lease has never been created. The owners cannot sell me a lease and the freehold as part of the same purchase; the freehold would have to be offered to all leaseholders as part of a statutory process and sold at a later date. This wouldn't be ideal for many reasons, largely because the owners are extremely unreliable.

The only other option is buying the freehold, thus owning all unoccupied parts of the building including 'my' flat without a lease. I know owning the freehold comes with extra responsibilities, but the main thing I'm worried about is my mortgage. My solicitor says Nationwide are unlikely to lend with no lease, whereas my broker says they probably will (he actually said they'd prefer it?!). Who's right? How do lenders normally react to these situations? Even if Nationwide will lend this time around, am I going to encounter problems when I come to remortgage?

Extra info in case it's relevant:
- There's only one other flat in the building and no communal areas.
- The building is habitable but needs painting and possibly more work doing.
- I intend to refurbish the flat including moving walls, hence wanting the freehold.
- I've already had a mortgage offer based on it being a leasehold purchase (at that time, I was incorrectly informed I'd be buying leasehold with a share of the freehold) and the valuation was fine.
- I'm not too worried about putting off future buyers as I could create a lease for the new owner and keep the freehold, or sell it at a later date.

Thanks for reading. Fully prepared to be told to stop clutching at straws and (finally) give up!