Questions about 100% share of freehold

pieroabcd

Hi,
i've read a lot about the share of freehold, but I still have several doubts that I hope you will clear.
Assuming that I bought the 100% share of freehold of a flat,
1) if I didn't misunderstand I would still be a leasholder because there's always a leashold underpinning a share of freehold,  but 
1a) how long would my "hidden" leasehold last? Would the duration be exclusively in my own control? would the management company still have a say?
1b) I would be my own freeholder, so I could extend my own lease as long as I liked (for example to 2 thousand years)  without asking permission to anyone and without having to pay fees of any kind?
1c) if 1c applies, why doesn't the leasehold last forever by statute? Otherwise the tenure would feel  like a 100% share of leasehold!
The tenet of freehold is "your ownership never expires", but if it expires... it's not a freehold!

2) could I still be found in breach of leasehold (or of contract)? could the management company evict me from "my own freehold"?

3) if I were evicted for breach of contract, would I have my money back? how much of the purchase price?

4) do I really need to seek permission from all the other freeholders to sell or let out my flat? This looks really very hard to digest. Someone could stay in the way.

5) in percentage, how much  would my share be represented in the management company? proportionally to the ratio (size of my flat / overall size of the block) or proportionally to the numbers of flat (1 / total of flats)? In the last case a tiny studio would have the same weight as a 200sqm 5-bedroom penthouse.

6) would I need to seek permission from the management company to have a lodger?

Thanks!

anselld

You will not be buying "100% share of freehold of a flat".

You will be buying one share of the Freehold and presumably each of the other owners in the block also hold one share.

So how ever many flats in the block there are the same number of shares defining the ownership of the Freehold which is usually a Company.  This Company may be the Management Company you refer to or it may be another Company which simply owns the freehold and employs the Management Company.  The shareholders elect Directors to run the Company.

So the end result is that you are still answerable to "the Freeholder", of which you own a share, when it comes to payment of service charges and all other matters of operation of the Lease.  You do not need permission for a lodger unless the lease states that you do.

eddddy

It sounds like you're confusing yourself - you need to take a step back. It works like this...

• There will be a freehold building
• There will be a number of leasehold flats in the building - let's say 5

• Each flat will be owned by a leaseholder

• The freehold building might be owned a company or a person. Usually, that company or person is responsible for maintaining the building, insuring it, extending leases etc

• A 'Share of freehold' is created when 5 (or 4 or 3 or 2) of the leaseholders club together to buy the freehold building. So they become joint freeholders.

• (The 5 leases remain unchanged - there are still 5 leases and 5 leaseholders)

• If all 5 leaseholders club together to buy the freehold building, they'd usually own 20% each.
• If only 4 leaseholders club together to buy the freehold building, they'd usually own 25% each.
• etc

So those 5 (or 4 or 3 or 2) joint freeholders become jointly responsible for doing everything a freeholder would normally do, like maintaining the building, buying buildings insurance, extending leases etc.


So the joint freeholders need to have a strategy for making decisions about maintenance, insurance, lease extensions etc. Maybe a majority vote, or maybe something else.

pieroabcd

Thanks both. Now it's clear.
Basically it's a leasehold plus this share, in spite of the enticing marketing name that it has.
Easy to imagine that the share gives no practical power in a block with more than a handful of holders.

NameUnavailable

pieroabcd said:

Thanks both. Now it's clear.
Basically it's a leasehold plus this share, in spite of the enticing marketing name that it has.
Easy to imagine that the share gives no practical power in a block with more than a handful of holders.

Check exactly what you are being offered. Sometimes a flat comes with the freehold of the building (not just a share but the total freehold) but as you make reference to a management company I expect you are looking at a share of freehold.

As to 'power' you can offer to join as a director of the freehold company, but also you will have a say, along with other shareholders, in how the company is run.

Most importantly, everyone has a vested interest in managing the property properly, to protect your investment and hopefully to do it cost effectively. What you won't have is a money grabbing freeholder who is just out to milk you all for as much as they can get!

eddddy

NameUnavailable said:

Most importantly, everyone has a vested interest in managing the property properly, to protect your investment and hopefully to do it cost effectively. What you won't have is a money grabbing freeholder who is just out to milk you all for as much as they can get!

But just for balance...

With a shared freehold, you might end up trying to manage a building with a bunch of amateur strangers, who don't understand leasehold law, who don't understand building maintenance, who don't want to spend any money, and who are generally disinterested in the building.

So you need to do your due diligence and investigate the freeholder's track record before you buy a flat - whether it's shared/joint freeholders or a 3rd party freeholder.

I know some people who have found shared/joint freeholders to work really well, but others who have found it a nightmare.


Recently, people seem to be posting as many (or more) issues about irrational or dishonest or incompetent shared/joint freeholders, as about 3rd party freeholders. 

pieroabcd

It's a balanced view, thanks.

Out of curiosity: is there any type of ownership for flats that doesn't expire?
I find extremely hard to accept the idea that you spend hundreds of thousand of pounds to "buy" what is essentially a right to use the flat for a given amount of years (however long it may be). I find it no different from a letting, except for the duration and the fixed price.

Of course the management and the communal expenses are a totally different story.

eddddy

pieroabcd said:

It's a balanced view, thanks.

Out of curiosity: is there any type of ownership for flats that doesn't expire?
I find extremely hard to accept the idea that you spend hundreds of thousand of pounds to "buy" what is essentially a right to use the flat for a given amount of years (however long it may be). I find it no different from a letting, except for the duration and the fixed price.

Of course the management and the communal expenses are a totally different story.

Some flats are initially sold with 999 year leases.

If leaseholders club together to buy a freehold (i.e. it becomes a 'shared freehold'), if they're sensible they would extend everyone's lease to 999 years. But many don't.

So the time limit on the lease isn't really an issue.



Edit to add...

And whilst your description is essentially correct, historically, people who buy leasehold flats with about 90 year or 100 year or 125 year leases live in them for a while, then resell them at a profit.

Generally, they've probably performed just as well as freehold houses in terms of percentage increase in value over the years.

Although, it's sensible to pay for a lease extension as the lease reduces towards 80 years, in order to retain the value.

NameUnavailable

pieroabcd said:

I find extremely hard to accept the idea that you spend hundreds of thousand of pounds to "buy" what is essentially a right to use the flat for a given amount of years (however long it may be). I find it no different from a letting, except for the duration and the fixed price.

That is exactly what it means - you are buying a long term rental agreement. Obviously with a share of freehold and 900+ year lease it's almost as good as buying freehold but you are still bound by the terms in the lease.

eddddy

NameUnavailable said:

...but you are still bound by the terms in the lease.

Which is generally a good thing, when you're living in a shared building.

It sets out the rules that everyone in the building should follow, in order to live harmoniously.


For example, the lease might prevent neighbours from keeping loads of barking dogs in their flat, or from damaging the building by knocking down walls in their flat, or leaving rubbish in the communal hall or refusing to contribute to building repairs, or making the building look a mess by fitting non-matching windows, etc, etc.

I guess if you find a flat with a set of rules you don't like, you should walk away and find a flat with a set of rules that you're happy with.


But unfortunately you usually have to pay somebody to 'police' the rules. And you might not like the way they 'police' the rules, or you might feel they charge too much for 'policing' the rules, etc.

pieroabcd

Is the freeholder obligated to keep services charges fair and to justify the expenses showing invoices on request?