Shared freehold block but not all flats own shares - question about lease extensions/ground rents

NameUnavailable

Hi,

I'm looking at a flat which has share of freehold. Some of the flats obviously didn't buy into the freehold at the time - about 1/3.

When those flats pay ground rent, or when they want to extend their leases, that money presumably goes to the freehold company? Will that ususally be used towards maintenance costs for the parties that have shares in the freehold?

TIA

princeofpounds

No. Service charge is for maintenance costs and will be paid by all leaseholders as defined in the leases.

Ground rent is pure income for the freehold. The freehold may choose to dividend it out to shareholders in the freehold. Or it could be used to offset service charge liabilities for those shareholders in the freehold, which is similar to what you said in practical effect, but legally slightly different. 

Ideally don't muddy the waters between service charge and ground rent in the way you think about things.

tacpot12

The proceeds from lease extensions should be divided between the share holders as compensation for the lost of their share of the ground rent. As has been suggested the money might remain undistributed, but used to offset the service charge (or ground rent) laibilities of the share holders.  

NameUnavailable

Thank you both for clarifying that.

tom741

So if in a building some apartments bought the lease and they created head lease with different ground rent , are they legally responsible for the lease ground rent ? I have similar problem and trying to find sources for this question 

NameUnavailable

tom741 said:

So if in a building some apartments bought the lease and they created head lease with different ground rent , are they legally responsible for the lease ground rent ? I have similar problem and trying to find sources for this question 

I think you mean if some buy the freehold. Usually (but not always!) those buying into the freehold would grant themselves new leases of 999 years with no ground rent. Those who didn't buy into the freehold continue with their existing lease terms (length of lease, ground rent payable etc).

tom741

NameUnavailable said:

tom741 said:

So if in a building some apartments bought the lease and they created head lease with different ground rent , are they legally responsible for the lease ground rent ? I have similar problem and trying to find sources for this question 

I think you mean if some buy the freehold. Usually (but not always!) those buying into the freehold would grant themselves new leases of 999 years with no ground rent. Those who didn't buy into the freehold continue with their existing lease terms (length of lease, ground rent payable etc).

Yeah exactly. So my solicitor insists that they still have legal responsibilities to the short lease. In my case the short lease also have growing ground rent and she don’t accept the fact that head lease have fix ground rent with 999 years.

do you have any idea how I can provide evidence that I’m right here ?