Leasehold property - freeholder might be local council - problematic?

JeffMason

Hi All,

I'm interested in a flat, it's a house split into two - downstairs and upstairs flats - this is the upstairs flat. The lease is over 100 years and I've got the title deed to find out some more information and I think the freeholders might be the local council and I assume the downstairs flat is council tenanted. Under 'parties' listed on the lease, one is a person's name (not the current owners but I assume the person who owned the property when the lease started in 2005) and the other is named as "The Mayor and Burgesses of the London Borough of Lewisham".

Am I right in thinking that at one point this was fully owned by the council but at some point the upstairs flat was sold, but the downstairs remains council owned? I didn't realise this was a thing, it's a large victorian property that has been split in two at some point and I assumed only purpose built flats or whole houses could be part council/ part privately owned, but I suppose there is no reason why that would be the case.

If I am right, could this be a problem? I am worried about dealing with the council as the other leaseholder and (I assume) the freeholder too. Will this cause problems when work needs doing? Has anyone dealt with a similar situation before? 

greatcrested

Why don't you purchase the freehold title (£3 here) from the land registry? That will name the current registerd freeholder.

The names on the lease are irrelevant - they simply tell you who the parties were back in 2005. Either the freehold and/or leasehold may have been sold since then - hence looking at the registered titles for current owners.

The lease however is useful as it specifies the rights and obligations of the current freeholder and leaseholder.

JeffMason

greatcrested said:

Why don't you purchase the freehold title (£3 here) from the land registry? That will name the current registerd freeholder.

The names on the lease are irrelevant - they simply tell you who the parties were back in 2005. Either the freehold and/or leasehold may have been sold since then - hence looking at the registered titles for current owners.

The lease however is useful as it specifies the rights and obligations of the current freeholder and leaseholder.

I was thinking that might be a good idea. I got the lease title just to confirm the length of the lease I was told by the EA was correct (it is) but there's little else on there that is helpful...

greatcrested

You need to understand the difference between

a) the original lease itself (a long document of maybe 5 - 20 pages, naming the original parties in 2005, and the full terms of the lease). If lodged with the Land Registry, a paper copy can be purchased for £6 using form OC2 here, and

b) the Land Registry leasehold Title (£3) which shows the current registered owner of the lease, plus any Charges (mortgages), and maybe a reference to the lease and/or a reference to key rights/obligations

Which are you looking at?

And since your original query was in relation to the freeholder, have you purchased the freehold title yet?

JeffMason

OK, got the freehold title and the freeholder is still "The Mayor and Burgesses of the London Bourough of Lewisham". 

So the freeholder (and quite probably the leaseholder of the ground floor flat) is the local council. Does anyone have thoughts and if and how this could be problematic? Or helpful??

JeffMason

greatcrested said:

You need to understand the difference between

a) the original lease itself (a long document of maybe 5 - 20 pages, naming the original parties in 2005, and the full terms of the lease). If lodged with the Land Registry, a paper copy can be purchased for £6 using form OC2 here, and

b) the Land Registry leasehold Title (£3) which shows the current registered owner of the lease, plus any Charges (mortgages), and maybe a reference to the lease and/or a reference to key rights/obligations

Which are you looking at?

And since your original query was in relation to the freeholder, have you purchased the freehold title yet?

I had the leasehold title. I now also have the freehold title. I've tried getting full leases recently (they are £7) but the land registry are only sending out paper copies at the moment and it takes too long for them to arrive. 

NameUnavailable

I would say having a local authority as the freeholder is preferable in some ways - they will act professionally and impartially and hopefully won't be out to rip you off should the opportunity arise (plenty of cases on here about private landlords being difficult when it comes to selling or agreening changes to the property etc).

The neighbours may be council tenants but so what? If they're good neighbours great but you can get nightmare neighbours anywhere. Does it look like they're tidy/looking after the place?

tacpot12

NameUnavailable said:

I would say having a local authority as the freeholder is preferable in some ways - they will act professionally and impartially and hopefully won't be out to rip you off should the opportunity arise (plenty of cases on here about private landlords being difficult when it comes to selling or agreening changes to the property etc).

The neighbours may be council tenants but so what? If they're good neighbours great but you can get nightmare neighbours anywhere. Does it look like they're tidy/looking after the place?

I'd agree with all of this. I've owned a flat in a block that is owned and maintained by a local authority for the last 7 years and they have been professional, although I'm about to raise an issue with rising damp, so we will have to see how this pans out. The council's tenants are no better and no worse than my tenants. Service charges, ground rent and buildings insurances have all been reasonable, but some of the charges for work on the building fabric have been high as the council seems to chose large contractors to complete the work. Check if there are any repairs that have been notified that you need to contribute to. At least in my lock there are 9 flats, so I only pay one ninth of the costs. If the costs are only being split two ways, the wrong choice of contractor would have a greater impact on you. But you are saved the work of finding the contractor, and my freeholder also allows me to spread the payment of large repair bills over 12 months by DD.  So it's swings & roundabouts really. 

JeffMason

I'm told that the roof was replaced and brickwork refurbished in 2018, I can see the roof is new when looking back at street view images over the last couple of years. So hopefully that means that will last a long while before the need for further big repairs.

The downstairs tenants seem to have been there for quite a long time, or the net curtains in the windows have stayed the same through several tenants over the past decade. I can't tell if that's good or bad. They don't look untidy, but they also clearly aren't putting much work into the place themselves, which is a shame. 

The service charges are very low based upon what I've been quoted previously. I've either been told it's somewhere around £100-150 per month or it's ad hoc, which concerns me. This is instead a yearly very low amount, which is great. The exterior front door is needs a refurb though and the small shared hallway space is shabby and could do with an update - I wonder how easy it would be for me to ask for that to happen... The exterior door doesn't seem highly secure, which is a concern...

How can I check if any repairs are due? Just ask the EA to ask the vendor? Or try and talk to the freeholder (council) directly?

NameUnavailable

Your solicitor will check if any major works are due and should also obtain copies of service charge accounts etc. but there is nothing from stopping you from asking the questions directly via the estate agent.

The level of regular service charge is a bit meaningless as if the freeholder decides to carry out more major work on the property your share will be half of whatever is spent. That new roof almost certainly wasn't paid out of the small charge you are seeing. That's probably just for insurance and admin.

The lease should state when the communal areas must be redecorated. The front door will be down to the freeholder to decide if it really needs replacing or repair or whatever - again at your cost.

JeffMason

NameUnavailable said:

Your solicitor will check if any major works are due and should also obtain copies of service charge accounts etc. but there is nothing from stopping you from asking the questions directly via the estate agent.

The level of regular service charge is a bit meaningless as if the freeholder decides to carry out more major work on the property your share will be half of whatever is spent. That new roof almost certainly wasn't paid out of the small charge you are seeing. That's probably just for insurance and admin.

The lease should state when the communal areas must be redecorated. The front door will be down to the freeholder to decide if it really needs replacing or repair or whatever - again at your cost.

So I could ask about the costs of the refurb works in 2018 and see what they say. 

And yeah, I get that the service charge doesn't cover those major work costs, but it doesn't on other properties I've looked at either - and then I'd be spending a lot more on the general service charge and still have the potential larger costs turning up. Very few I've looked at have anything at all going into a sinking fund.

If more works needing doing, the front door for example, how does that work with the people in the downstairs flat? If they are council tenants then does that mean the council pay half the costs and I pay the other half?

It seems a conflict of interest if the downstairs flat owners are the freehold and leasehold owners and I'm worried that could cause issues. Or am I over worrying?