Share of freehold - Extending

Consumer10

Currently the prospective flat has 91 years left on the share of freehold.
Is this cause for concern? Considering any extension of the share of freeholders can only take place after being in the property for 2 years. Thereby taking it to 89 years.  I noticed that it's  in the disucssions amongst the other freeholders they agreed that each individual should organise an extension to the lease on their own accord. 
How much does extending a lease with share of the freehold cost? Is there impending new government legislation surrounding this?
Is it in anyway benficial that i'm trying to extend the share of freehold as oppose to a standard leasehold?

AdrianC

You're confused as to what the "share of freehold" is.

The flat is "a standard leasehold". The lease has 91 years left.

A statutory lease extension can only be done after owning the flat two years - but a discretionary one can be done at any time. The cost of a statutory extension is defined by law, the leaseholder pays all the legals, it adds 90yrs and takes the ground rent to peppercorn. https://www.lease-advice.org/calculator/ will tell you how much.
The cost and terms of a discretionary extension are whatever the leaseholder and the freeholder agree between them.

The building itself contains several leasehold flats. The building, and the ground it sits on, are owned by the freeholder, who maintains it on behalf of the leaseholders.
The freeholder is (I presume) a limited company. Each of the shares of that limited company is owned by an individual... who probably just happens to be an owner of a leasehold flat - but might not necessarily be. That limited company can make decisions in several ways, one of which is simple one-share-one-vote. Or maybe it'll be delegated to the directors.

So... if you, as leaseholder, want to negotiate a discretionary leasehold extension, you need to agree with the freeholder limited company.

macman

Assuming a 25 year mortgage, it'll still have 66 years left on the lease at the end of the mortgage term, so no real concern on that front. 

Consumer10

AdrianC said:

You're confused as to what the "share of freehold" is.

The flat is "a standard leasehold". The lease has 91 years left.

A statutory lease extension can only be done after owning the flat two years - but a discretionary one can be done at any time. The cost of a statutory extension is defined by law, the leaseholder pays all the legals, it adds 90yrs and takes the ground rent to peppercorn. 
The cost and terms of a discretionary extension are whatever the leaseholder and the freeholder agree between them.

The building itself contains several leasehold flats. The building, and the ground it sits on, are owned by the freeholder, who maintains it on behalf of the leaseholders.
The freeholder is (I presume) a limited company. Each of the shares of that limited company is owned by an individual... who probably just happens to be an owner of a leasehold flat - but might not necessarily be. That limited company can make decisions in several ways, one of which is simple one-share-one-vote. Or maybe it'll be delegated to the directors.

So... if you, as leaseholder, want to negotiate a discretionary leasehold extension, you need to agree with the freeholder limited company.

Thanks however the the purchase of this flat would give you a 25% share of the freehold of which there is 91 years left of the share of freehold. According to the company formed, you would own 1/4 of the freehold .My question  relates to , how do I go about extending the share of freehold and what woul the approx cost be?

kingstreet

A freehold is not time-limited, so a share of the freehold isn't either.
Adrian is correct. You wear two hats. You will be the leaseholder of Flat X which has a lease with 91 years left and you are also part-owner of the freehold.
At some point, you will be looking to increase the lease (probably) with the agreement of your co-freeholders.

yksi

You're still confused.
You are buying BOTH a leasehold (of 91 years) and a 25% share of the freehold (the building) which has no expiry.
Think of a leasehold as a piece of paper giving you permission to live there; but you don't actually own anything except permission. The freehold is the bricks and mortar, the actual building, the physical thing which can be owned. Normally when you "buy" a flat you only get the leasehold. In your case, lucky you, because you will also get to have a say in maintaining and running the building.
 
You would become a director of the company owning/running the freehold, but that's just the way it has to be set up legally. In essence, you and the other three owners will  collectively get to decide how the four leases are managed. In my case, our freehold company has agreed to allow all leaseholders to arrange a new lease of 999 years, without waiting, at peppercorn rent (£1 per year) and at no charge apart from legal fees (around £500).

As we're doing it at the same time, we have a "bulk deal" from our own solicitor to keep the price down. If your other leaseholders all have shortish leases like yours, it's in all your interests to do it all at once with the same solicitor. 

AdrianC

Consumer10 said:

AdrianC said:

You're confused as to what the "share of freehold" is.

The flat is "a standard leasehold". The lease has 91 years left.

A statutory lease extension can only be done after owning the flat two years - but a discretionary one can be done at any time. The cost of a statutory extension is defined by law, the leaseholder pays all the legals, it adds 90yrs and takes the ground rent to peppercorn. 
The cost and terms of a discretionary extension are whatever the leaseholder and the freeholder agree between them.

The building itself contains several leasehold flats. The building, and the ground it sits on, are owned by the freeholder, who maintains it on behalf of the leaseholders.
The freeholder is (I presume) a limited company. Each of the shares of that limited company is owned by an individual... who probably just happens to be an owner of a leasehold flat - but might not necessarily be. That limited company can make decisions in several ways, one of which is simple one-share-one-vote. Or maybe it'll be delegated to the directors.

So... if you, as leaseholder, want to negotiate a discretionary leasehold extension, you need to agree with the freeholder limited company.

Thanks however the the purchase of this flat would give you a 25% share of the freehold of which there is 91 years left of the share of freehold. According to the company formed, you would own 1/4 of the freehold .My question  relates to , how do I go about extending the share of freehold and what woul the approx cost be?

I repeat.
You are buying a leasehold flat with 91 year lease.
You are buying one of four shares in the company that owns the freehold.
You need to talk to the other three shareholders in that company.

Consumer10

Thank you all for the clarification. 

In terms of extending the lease with the other 3 individuals. What happens if one refuses to for whatever reason? I just want to factor in ‘worst’ case scenario and the applicable costs 

Slithery

That depends on the freehold 'Articles of Association'. It may require all joint freeholders to agree or you may just require a majority vote.

yksi

If you google for a "lease extension calculator" you can see what the long-way-version would cost you in two years' time. Remember you aren't even obligated to do it. You can still sell a flat with an 89-year lease and who knows, parliament might change the law in your favour by then.

eddddy

Consumer10 said:

Currently the prospective flat has 91 years left on the share of freehold.
Is this cause for concern? Considering any extension of the share of freeholders can only take place after being in the property for 2 years. Thereby taking it to 89 years.  I noticed that it's  in the disucssions amongst the other freeholders they agreed that each individual should organise an extension to the lease on their own accord. 
How much does extending a lease with share of the freehold cost? Is there impending new government legislation surrounding this?
Is it in anyway benficial that i'm trying to extend the share of freehold as oppose to a standard leasehold?

You're very confused about a number of things, but taking a step back...

The sensible thing that the 4 owners (joint freeholders) should have done was to extend all 4 leases to 999 years when they bought the freehold - without having to pay each other any money.

You should find out why they didn't do that. Was it because they didn't know what they were doing? Or was there some kind of argument about it?

So you should start by saying that you want the flat lease extended to 999 years before completion. And if the seller and/or joint freeholders won't do that, find out why. (And if the other joint freeholders want to be paid for the lease extension - again you should find out why.)

If the joint freeholders suggest that you should wait 2 years and do a statutory lease extension - that should ring big alarm bells. That would be like saying "The 4 of us are such a dysfunctional group of joint freeholders, we can't even agree on arranging a lease extension - so you'll need to pay solicitors and valuers a few thousand pounds to force us to give you a lease extension."

If the joint freeholders can't get their act together over something as conceptually simple as extending all the leases to 999 years, I'd worry how they'd deal with something more complex, like when the property needs some major roof repairs.