Extension permission

proformance

That's really helpful, thank you so much. 
I'll gather what info I can from the seller re discussions up to this point 

AlexMac

proformance said:

Hi guys 

Thanks for this. 

So, they can charge whatever they want... Do I get the names of the other freeholders and just talk to them? 

If I interpret you correctly, this is the seller's problem and they should either
-  sort it out, or
-  discount the price to what the property is worth without Freeholder permission to extend, or 
-  your solicitor and theirs should agree and hold onto a "retention" equivalent  the costs of sorting it out.

It's a little bit more than "just talking to them" or "greasing" them although an informal chat won't hurt at some stage- after all, you'll want to maintain good relationships with the other leaseholders and the Company Directors once you're in.  You or the seller really ought to clarify things in writing.  

I'd bet that if this is a conventional "shared freehold", the "Freeholder" will be a formally constituted Company made up of some or all of the leaseholders as Members or Directors (all three of my past such flats have had this arrangement).  You can clarify who the "Freeholder" is and what their formal correspondence address is from the LPI form (the Leasehold Property Enquiries form) which your Solicitor should by now have back; unless the Freeholder or their Agent is incompetent or obstructive.  (I used to reply to these buyers' enquiries for two of my past shared freeholds, because they were only small blocks of 6-13 units and we didn't want to pay a managing agent to rip us off. This DIY approach paid off, saved loads of dough, and I could turn the LPEs round in a day or two).

Then, you or the seller would be advised to write to "the Freeholder" to confirm that they will permit the extension.  Don't ask about costs- that's down to them if, for example they wish to either grab some bunce for the permission (as presumably, the extension will add value), or in effect "sell" you the space from the garden, loft void, or whatever you need to build in or on, as presently this may well be communally owned. 

And while this is happening, that will give you a feel for how the leaseholders work together, who controls the Freehold Company, and whether it's going to be a happy future relationship- oh-  and whether they manage things themselves as I prefer, or abdicate it to a grasping Managing Agent.

In one of the shared freeholds I co-owned, just such a buyer came along.  Before exchange, he wrote us a letter asking, purely in principle, about the space over the flat; hoping he could eventually extend into the loft, after being assured by the existing owner that this would be viable.  The loft void was "communally owned" as is usual in these cases, albeit it was only accessible from "his" flat.  It was the top floor of a conversion, so you'd think "no problem".  In fact, the leaseholder below went ballistic at the prospect of building works above him, and builders trekking up the shared stairs past his door.  "Over my dead body" was his attitude, so the buyer dropped the idea.

Good luck!

proformance

Really informative response, thank you. 

Another question..

If the garden space (any of it) isn't shown on the floorplan, does that mean we don't "own" it? What even is the concept of "ownership" on a "share of the freehold" arrangement for that matter? 

And if we did extend, but the garden nor extension was ever "demised" to the property, does it really add value? And is that value less than that off a garden/extension demised to a property? 

I just assumed that because the listing is all about "garden flat" and only the ground floor can access it that it was "our" garden. But this issue has prompted me to look further and as I said, the garden space isn't drawn on the floorplan. Of course floorplan aren't legal documents, but is that a concrete sign that we wouldn't "own" the space? 

davidmcn

proformance said:

If the garden space (any of it) isn't shown on the floorplan, does that mean we don't "own" it? What even is the concept of "ownership" on a "share of the freehold" arrangement for that matter? 

And if we did extend, but the garden nor extension was ever "demised" to the property, does it really add value? And is that value less than that off a garden/extension demised to a property? 

I just assumed that because the listing is all about "garden flat" and only the ground floor can access it that it was "our" garden. But this issue has prompted me to look further and as I said, the garden space isn't drawn on the floorplan. Of course floorplan aren't legal documents, but is that a concrete sign that we wouldn't "own" the space? 

If it's not leased to you (or anybody else) then it's communal space - so everybody would have the right to wander through "your" garden (or your extension!). So yes, they would need to be demised to you in order to be yours - you want them to be legally the same as the rest of your flat.

proformance

So, if the agent's advert says "...and private garden to the rear" - what they mean is it is private in the sense that technically (at the moment), only we can access it? But there would be absolutely nothing stopping a neighbour from sticking a set of stairs in to go directly down (subject to freeholder agreement + PP), right? I am half disappointed with myself for not spotting this myself earlier on and half a bit disappointed with the agent for not being explicit and for being slightly misleading.

In your experience, would the other freeholders typically demand cash for the right to demise the space to a property? It would be out of sheer stubbornness if they outright refused and pretty greedy if they demanded cash (as they literally can't do anything with it)....

eddddy

This could become a very complex negotiation. How many joint freeholders are there? It's very possible that you well need 100% agreement.

How much value would the extension add to the flat - after building costs? Savvy joint freeholders might look for a sizeable chunk of that profit to be paid to them.

Alternatively, if the potential payment is very small, some joint freeholders might be disinterested. (e.g. I know of a block where each owner was offered £2k to agree to an extension. They immediately dismissed the offer, on the basis that the disruption caused by building work wasn't worth it.) 

eddddy

proformance said:
In your experience, would the other freeholders typically demand cash for the right to demise the space to a property? It would be out of sheer stubbornness if they outright refused and pretty greedy if they demanded cash (as they literally can't do anything with it)....

Yes - freeholders definitely demand to be paid for demising space to a property.

The only exception might be if your joint freeholders are naive amateurs, who don't take professional advice.

A valuer might suggest that a fair way of doing it is to look at the 'profit' from a development (i.e. the increased value of the flat as a result of the extension less the building costs) - and the leaseholder pays 50% of it to the freeholder(s) and gets to keep the other 50%.

proformance

So I think I will employ the following tact if we decide it is still worthwhile to pursue:
1) Renegotiate the purchase price (the owner has expressed willingness to do this)
2) In parallel, ask for any conversations/documentation that has already been exchanged, formal or otherwise between the seller and the other freeholders (there are 2 others)
3) In parallel, seek permission to engage the other 2 existing freeholders to initiate conversations about the extension and get approval in principle (and perhaps a rough fee?)

Regarding point 3 - given the time-pressure to exchange (from the seller's POV), it is unlikely that we'd be able to get fees agreed and License to Alter drawn and signed beforehand, so is there any value in an "informal" approach?

eddddy

proformance said:

Regarding point 3 - given the time-pressure to exchange (from the seller's POV), it is unlikely that we'd be able to get fees agreed and License to Alter drawn and signed beforehand, so is there any value in an "informal" approach?

There's probably no legal value in an "informal approach". I don't think any of the parties would sign-up to a binding agreement without all fine details being agreed.

e.g.

• Who will be responsible for maintaining and repairing the extension?
• Is a new breakdown of service charges needed?
• If you're cutting holes in the building wall, who checks that you're using the right joists etc?  
• Will the extension you build use 'sympathetic materials' so that it doesn't spoil the look of the building?

And maybe even agreeing stuff like...

• What hours will the builders work? (e.g. not before 8am on weekdays, and never at weekends)
• Where will the builders store building materials and waste? (e.g. not in communal areas)
• Will the builders protect walls / floors in communal areas and clean all communal areas at the end of each day?

proformance

Seems like the harder job in these types of multi-freehold arrangements is convincing the other freeholders than it is the council..