Share of freehold - Extending

LAD917

There is very little risk that shared freeholders would not vote to extend their leases before they dip below 80 years.  This would be the definition of cutting off one's nose to spite to one's face....

You do, as others said, want to understand why the shared freehold did not do this before now.  In one situation I'm close to, the shared freeholders (8 units) decided to write a new lease - both because the existing lease was defective in certain ways, and because of various changes to the building, including use of un-demised space, expansion of one flat, and creation of a new flat (by the previous freeholder) since the time of the original lease.  The complete re-write, with reapportionment of the service charges, took seven years to finish.  It's not quite as horrible nor as expensive as it sounds, but was a tense situation full of false starts, that finally got resolved when the looming 80-year deadline broke the stalemate and resulted in compromise.

AdrianC

LAD917 said:

There is very little risk that shared freeholders would not vote to extend their leases before they dip below 80 years.  This would be the definition of cutting off one's nose to spite to one's face...

We've had enough tales here of mortally dysfunctional neighbours that absolutely NOTHING would surprise me.

Slithery

The other leaseholders may already have extended leases. If this is the case then it would be perfectly reasonable to charge the OP for an extension.

eddddy

Slithery said:

The other leaseholders may already have extended leases. If this is the case then it would be perfectly reasonable to charge the OP for an extension.

Do you mean the other 3 extended their leases before buying the freehold?

In that case, they should have adjusted the prices paid when they bought the freehold. For example, each of the other 3 pay 15% of the cost of the freehold and the 4th pay 55% (or whatever) - then everyone gets the same 999 year leases.

Failing to do that when you buy the freehold can cause problems later on - as the OP might be finding out.

(But if you mean the other 3 extended their leases after buying the freehold, but the 4th person didn't - that suggests something strange went on. Maybe arguments, misunderstandings, 3 ganging up against 1, etc - which I would want to investigate.)

gab3x

Don't just think of the purchase and extension of this leasehold. Take into consideration whole lifecycle of the ownership, the cost as well as complications. Share of Freehold sounds great but you only have a 25% stake so how are decisions being made on maintenance, covenant breaches, taking out insurance, having accounts in order and assisting sale of leasehold enquiries? 

Your life there will be governed by other three persons who own the rest of freehold but you will not get to meet them and figure them out prior to completion of the sale. In many way a four person share of freehold is a much more frustrating and stressful situation than just having a freeholder who unilaterally makes all decisions. 

Buy a season ticket and for a relatively short commute you can enjoy your own freedom of a freehold house. 

NameUnavailable

I've seen a few share of freehold properties with 'short' leases. I do not understand why anyone would buy the freehold and NOT extend the leases (unless some parties didn't pay towards the freehold and then those remain on whatever lease they already have).

I was told by one EA it's not a problem, you just ask a solicitor to extend it and they have to because you are the freeholder! Obviously not true and he was taken aback when I said he was wrong!

Ultimately, the rest of the freeholders could ask for the market value for the lease extension (less your own proportion).

md258

There is a lot on here that is pointing towards the worst case scenario, but in my opinion it is far more likely that the lease is 90ish years long because no one has changed it as it is not a problem. Why would the 4 leaseholders pay to do something that wasn't (yet) required and could be done at any point in the future.

The OP may need to be the one that pushes this through but it is probably* not a problem.

* it may be worth knocking (or covid-safe equivalent) on the other flats doors and asking if they own it/what their landlord is like. This will give you a feel for the other freeholders and may indicate any tensions.

Consumer10

I will find out how many years left the other 3 flats have on their share of freehold. If it's equal length, then I believe they wouldn't want to charge a premium, given they would have to go through the same process of extend their own lease. As a result it may be cheaper to extend it as a group.

It was also mentioned by the estate agent (I know they will say anything to push through the sale) that government regulation may be changing, which could potentially reduce the cost, does anyone have an information regarding this?

LAD917

Part of the benefit of the share of freehold is that the shared freeholders usually extend leases to 999 years at peppercorn ground rent for nominal (£1) consideration plus legal fees in the hundreds.  The potential law change would only help if you go down the statutory route - which would be highly unusual for a share of freehold - and would involve costs in the thousands. Either the agent doesn't know what they're talking about (most likely), or this is a highly dysfunctional situation.

I tend to agree with md258 that this is on the "benign" end of leasehold flat problems, but I suspect there is a reason the leases weren't extended at the time of freehold purchase because any solicitor would recommend extending the leases.  My guess is that there's something that someone wants to change before memorialising the rules for the next 999 years - could be flooring, Airbnb, incorporation of undemised/additional space, etc. - that isn't entirely straightforward. I continue to believe (absent additional facts) that the most likely outcome is that the leases will be extended, or new leases written, before the lease drops below 80 years.

I'd still be asking a lot of questions - like why the freehold hasn't extended the leases, and what is the plan to extend the leases.