Steps to build dormer/roof terrace in share of freehold

gp_FTB

Hi all,

sorry for the long post! I am looking for some advice: we own a split level flat in a Victorian conversion and have a share of the freehold (together with 4 other owners, the building is managed through our own limited company to take care of maintenance expenses etc).
We are considering getting a new dormer built to allow access on a flat portion of the roof which is over our bedroom and use it as a roof terrace. From the floor plans it looks like we own the bedroom below but the roof itself is shared space between all owners.

We also know that a neighbour a few flats down the road had a similar extension done a few years back (we've seen the planning permission details), so we would aim to do something very similar and would hope that it's possible to get permission as the conditions are nearly identical.

From my understanding, we need approval of all the other 4 owners to build the dormer, but does this need to happen in a specific written/legal form? We are unsure of which steps would be best to take first, if we should first "test the grounds" with them and see if anyone is strongly against it and think of potential negotiations, or should we seek some expert advice first? I should also mention that 3 of the owners are landlords and do not live in the property

Thanks in advance for any tips and advice! 

eddddy

So it sounds like there are 5 joint freeholders - so 5 people jointly own the roof (i.e. 20% each.)

So you probably need to think in terms of "How much would each of the other 4 joint freeholders want me to pay them for their 20% share of the roof?"

It's a tough question. One joint freeholder might be happy to accept £5k because they regard it as "free money", another might want to negotiate you into ground in the hope of getting tens of thousands.


Maybe start 'casually' sounding out the other joint freeholders - bearing in mind that if you sound too keen/desperate they're likely to ask for more money.



There'll be lots of other hassles and costs to consider like:

• Your lease and leaseplan will need to be updated (and perhaps all the other leases as well)
• If the freeholders are responsible for maintaining and repairing the building, will they become responsible for repairing and maintaining your new dormer and/or roof terrace?
• Assuming this increases the rebuild cost of the building, how is the increase in insurance paid for?
• Should the service charge percentage splits be changed, if you're increasing the size/amenities of your flat?

AlexMac

Great reply from eddddy; I can't add much except a couple of comments based on a similar more radical scenario from when I lived in a shared freehold.  An incoming purchaser of the top floor flat (in a big early Victorian converted mansion) asked prior to completion if we'd sell him the loft space so he could build up into it. 

We and another owner (in two flats on the bottom floor of a 4-level, 6-unit property) were cool about the idea, especially as the newbie was realistic that he'd have to pay to buy the loft and also cover all the legal costs of re-writing leases and re-calculating the floorspace/RV-based maintenance and service charge formulae. Your proposal is far less ambitious but you'd still have to eventually check if you need to adjust the leases and possibly the "red line" of your title or you would have trouble selling-on without clarity about rights of access to something you don't own.  One of our conveyancing solicitors once noticed a similar glitch when we were buying the flat above and tidied up an ambiguity in our title - (whether a small external patio was communal/shared or for our exclusive use) - very quickly and cheaply with a"Deed of variation"   

In the loft extension case above, the leaseholder on the third floor was incandescent with rage at the prospect of noise and work immediately above his ceiling and worried about the use by builders of the shared stairs.  His outburst was something along the lines of "I'm Chairman of the joint freehold company... over my dead body"!

I suspect that if the majority of the owners are absentee landlords they'd be more flexible and less concerned about any  negligible inconvenience to their tenants of your fairly minor building work.  

So, you're in with a good chance, and as I guess you already have a relationship with your fellow shared freehold Company members/directors(?), I guess  it's worth asking; I'd start informally (in your words) "to ... see if anyone is strongly against it..."

As regards "should we seek some expert advice first?" presumably a starting point is to ask a local estate agent if this feature will add much cash value to your flat? I suspect it wouldn't increase it by much, although it would be a lovely feature for you to enjoy and will make it easier to sell on.  A decent Agent might even have an idea of likely legal or building costs. Good luck; sounds a nice project. 

gp_FTB

Thanks both for your advice, lots of points to consider but I have a better idea now! Good suggestion to ask about potential value increase of the flat, this might be a useful figure to have at hand also when discussing potential payoffs and changes in the service charge!

princeofpounds

One technical but important correction. You do not need permission of all 5 shareholders of the freehold. You need the permission of the freehold company itself, which usually means the permission of the Board of Directors in practice but that depends on the articles of association of the company. Of course it makes sense to bring everyone on board, but if there are one or two in opposition it does not necessarily mean it is legally impossible.

The Board, if they are doing their job properly, will request plans and a fee to have them looked over by a suitably qualified professional (probably a surveyor, maybe a structural engineer). Then separately there are the more commercial aspects to the negotiation which have already been mentioned.

As you can tell, it's a bit of a hassle. But it's probably worth a try - if everyone else is happy then that could smooth your path a lot.

TripleH

If planning to use the roof as a balcony, I assume you will pay for reinforcement (assuming it needs it) and resurfacing?

What state is the roof in now? If it is nearing the end of its life, you having work done could be sold as you paying for the work and saving the others money. If you get the rest of the roof looked at, they might get no money for the deal but they also don't have to fork out any money that otherwise they'd have to.

Remember they don't have to be paid money to get a monetary benefit.

gp_FTB

princeofpounds said:

One technical but important correction. You do not need permission of all 5 shareholders of the freehold. You need the permission of the freehold company itself, which usually means the permission of the Board of Directors in practice but that depends on the articles of association of the company. Of course it makes sense to bring everyone on board, but if there are one or two in opposition it does not necessarily mean it is legally impossible.

The Board, if they are doing their job properly, will request plans and a fee to have them looked over by a suitably qualified professional (probably a surveyor, maybe a structural engineer). Then separately there are the more commercial aspects to the negotiation which have already been mentioned.

As you can tell, it's a bit of a hassle. But it's probably worth a try - if everyone else is happy then that could smooth your path a lot.

Thanks for this clarification, I've taken a look at our Articles of association (pretty old document from when there were fewer joint freeholders) and the only relevant snippet I could find states:

"A Director may vote in respect of any contract or arrangement in which he, or any person with whom he is connected, is interested and be counted in the quorum present at any meeting of the Directors or any General Meeting of the Company at which any such contract or arrangement is proposed or considered, any if he shall so vote, his vote shall be counted". 

which to me sounds like we would be involved in the discussion/voting process - does this imply a majority vote even if it doesn't explicitly mention it? Thanks again!

gp_FTB

TripleH said:

If planning to use the roof as a balcony, I assume you will pay for reinforcement (assuming it needs it) and resurfacing?

What state is the roof in now? If it is nearing the end of its life, you having work done could be sold as you paying for the work and saving the others money. If you get the rest of the roof looked at, they might get no money for the deal but they also don't have to fork out any money that otherwise they'd have to.

Remember they don't have to be paid money to get a monetary benefit.

Good point, unfortunately the roof was recently renovated (prior to us buying the flat so were unaware of this) so this won't apply to our case. We'll need to get it looked at but assuming our situation is similar to the one of our neighbours who did a similar conversion I didn't see any mention of reinforcement in the plans they submitted for the planning application. In any case yes, I think we would cover the cost of any work that needs to be done, and probably also on the longer run if anything needs to be fixed in that portion of roof (I need to look more in detail at what happens in a scenario of "sole access" vs actually buying & owning the portion of roof in the demise 

princeofpounds

gp_FTB said:

which to me sounds like we would be involved in the discussion/voting process - does this imply a majority vote even if it doesn't explicitly mention it? Thanks again!

Yes that's how I would read that too. You do not need to recuse yourself.

Whether it is a majority vote or not would be specified (by implication probably) elsewhere in the articles. It is highly likely (like 98%) to be an ordinary resolution of the Board and so yes, majority vote. But I can't tell you that for sure because I don't know your company.