Concerned about venerable man with less than 50 years on his lease

JackSprout

So went to a party last night and got chatting to a couple and this whole subject came up, they had a similar view to me, but guess what they too have an investment flat, its has a lease hold, also 99 years which they bought with the flat 20 years ago, and guess what they weren’t planning on doing an extension on the lease, in fact new nothing about that side of things, again not informed!

anselld

JackSprout said:

So went to a party last night and got chatting to a couple and this whole subject came up, they had a similar view to me, but guess what they too have an investment flat, its has a lease hold, also 99 years which they bought with the flat 20 years ago, and guess what they weren’t planning on doing an extension on the lease, in fact new nothing about that side of things, again not informed!

Well it is a bit like people taking out an interest only mortgage and then being surprised when they still need to buy their house after 25 years.  It doesn't make it wrong.

It must be frustrating for the Freeholders to have so many incompetent Leaseholders around who fail to come forward for their lease extensions at the appointed time.

JackSprout

I do I agree to a point and I think the endowment fiasco is a quite similar, isn’t it. I just wonder if there should be an illustration of costs sent out with an annual statement?

SpiderLegs

JackSprout said:

I do I agree to a point and I think the endowment fiasco is a quite similar, isn’t it. I just wonder if there should be an illustration of costs sent out with an annual statement?

What endowment fiasco?

JackSprout

So yes an annual statement informing leaseholders of the number of years left on the lease and the leaseholders options, e.g the option to extend, buy and a calculation based on the current numbers of years left on the lease, now and in the future etc etc e.g be open..

eddddy

JackSprout said:

So yes an annual statement informing leaseholders of the number of years left on the lease and the leaseholders options, e.g the option to extend, buy and a calculation based on the current numbers of years left on the lease, now and in the future etc etc e.g be open..

Unfortunately, it's hugely more complicated than that. For example...

Lease extension...
For example, with a recent lease extension -

• The Leaseholder's RICS valuer used the statutory formula to calculate the lease extension cost as £9k.
• The freeholder's RICS valuer used the statutory formula to calculate the lease extension cost as £21k
• Each RICS valuer can charge £600+ for doing their valuation

It's impossible to predict what a Jack's lease extension would cost in future years - it depends on the property market.

So which calculation should be sent out each year (and who should pay for the work involved)?

 
Buying the freehold - jointly with the neighbour(s) - i.e. 'Shared Freehold'

It's not just about the cost of the freehold.

• Does Jack want joint responsibility (with a stranger) for arranging buildings insurance, arranging contractors to repair the roof, arranging decorators to paint the outside of the house?

• Or does Jack potentially want to argue with his neighbour about appointing a management company to deal with insurance, repairs etc?

• What if there's a leak into Jack's flat, but the neighbour is disinterested and refuses to cooperate and refuses to pay his share of repair costs?

• If his neighbour refuses to pay his share of buildings insurance, repair costs - does Jack want to have to take him to court?

• If his neighbour is an 'amateur' who doesn't understand about maintaining and repairing a property - does Jack want to get into lots of arguments with him?

• What if Jack wants to sell his flat, but the neighbour 'can't be bothered' to sign the documents? Does Jack have to get a court order?

A BTL landlord with 20+ properties recently told me he won't touch 'share of freehold' properties, after a bad experience as above. He will only consider properties with a reputable management company in place.

But I also know of another BTL landlord who is very happy that his current Joint Freeholders do a good job - until perhaps they sell up, and get replaced by less competent people.

JackSprout

Good points 

JackSprout

And another one, this time with shared ownership, school friend of my wife's, leasehold knew nothing about it until I asked her! She will be bringing the paper work around next month for me to look at. 3 people in 3 weeks normal people that appear to have no idea about leaseholds that they are party to.

NameUnavailable

JackSprout said:

So went to a party last night and got chatting to a couple and this whole subject came up, they had a similar view to me, but guess what they too have an investment flat, its has a lease hold, also 99 years which they bought with the flat 20 years ago, and guess what they weren’t planning on doing an extension on the lease, in fact new nothing about that side of things, again not informed!

This is possibly your problem. You don't buy a flat, you buy the lease. The lease is a bundle of A4 paper, but is very valuable because it proves you have the right to live at the property for X years subject to the various terms and conditions contained within.

The property is never yours, which is why most leases have stuff about not doing alterations etc without the freeholders permission.

eddddy

JackSprout said:

And another one, this time with shared ownership, school friend of my wife's, leasehold knew nothing about it until I asked her! She will be bringing the paper work around next month for me to look at. 3 people in 3 weeks normal people that appear to have no idea about leaseholds that they are party to.

You might well find that they are equally confused about how buildings insurance, contents insurance, car insurance, mortgages, pensions, PAYE, National Insurance, leasehold service charges, estate agents contracts, conveyancing, home computers, the internet, UK law and their car's engine all work.

Judging by the posts on these forums, just as many people are confused about those things as they are about leasehold issues.

The government is trying to help with things like free advice services, ombudsmen, regulators, regulations, legislation, tribunals  etc (For example, there's a big pile of legislation to protect leaseholders, plus there's the Leasehold Advisory Service, Tribunals, etc.)

It all adds up to a very complex problem.