Freehold or Leasehold?

critchley

My partner and I bought an upstairs flat in a converted house in1982 leasehold.  I think the lease was for 99 years from 1979.  When the tenants of the lower flat died we also bought that which was freehold.  As we're both in our dotage and thinking about how our property will pass to children I am wondering if we are now our own freeholders since we own the whole house which is only inhabited by us upstairs and our grandchild downstairs.  Is there anything we should have done or could do such as grant an extension on the lease to our flat to make it more saleable on our deaths or anything like that?  I can't get my head round it to be honest.

gwynlas

Yes, you should grant each flat a lease so that they can be sold in the future agreeing how buildings insurance and maintenance charges are to be allocated. A solicitor should advise you on the most straightforward route.

user1977

I can't see there's any advantage in you doing anything now about it, if you're expecting to pass on everything you own to their children. They can decide at the time what's best to do.

LegallyLandlord

In some ways, increasing the length of the lease will make the properties more valuable and therefore more inheritance tax. 

But if you want to sell them while you’re alive, you’ll probably get more if both flats share ownership of the freehold. A solicitor can do this for you. 

NameUnavailable

I expect the ground floor flat has a lease as well as owning the freehold?

I would probably look to give each leaseholder an equal share of the freehold and extend both leases to 999 years at the same time. As the owner of the freehold though I don't think you can actually grant yourself a lease extension but there must be a legal solution to it.

Notebook

have look online about the leasehold 80 year rule and then go on an online leasehold extension calculator

eddddy

So it sounds like...

• There is a freehold house, and just one leasehold flat (upstairs) in the house - so there is no leasehold on the flat downstairs.

• And you own both the freehold house and leasehold flat.

So realistically, there's nothing that needs doing until you (or your children) want to sell one or both flats.

At that time, you could create 2 new leases (one for each flat) on whatever terms will make the property most valuable.


For example, you could include the loft and the right to convert it with the upstairs flat lease...

... or you could retain the loft (perhaps as part of the freehold) in the hope of selling it for more money later.

critchley

eddddy said:

So it sounds like...

• There is a freehold house, and just one leasehold flat (upstairs) in the house - so there is no leasehold on the flat downstairs.

• And you own both the freehold house and leasehold flat.

So realistically, there's nothing that needs doing until you (or your children) want to sell one or both flats.

At that time, you could create 2 new leases (one for each flat) on whatever terms will make the property most valuable.


For example, you could include the loft and the right to convert it with the upstairs flat lease...

... or you could retain the loft (perhaps as part of the freehold) in the hope of selling it for more money later.

We don't envisage moving from here as we are both in poor health and couldn't face the upheaval.  We have just got to that stage of thinking about what happens when we die.  We have made reciprocal Wills as we're not married, leaving everything in trust for each other to do what we like with and after both of us die everything left will be divided initially into into two halves, my half to go equally to my son and grandson and his half will go to charity!  Not happy about that but (long story) he doesn't like my kids and doesn't want them to get it all.  It's complicated isn't it.  

My grandson currently rents the ground floor flat from us but he will be homeless then as the house will have to be sold in order to do as partner wishes with his half.

My head spins when I think about it all.

diystarter7

OP
you say you live on the first floor and both are unwell.
Also try to prepare, and consider longer, mid-term needs about accessing your first-floor flat and taking stuff up and down as well as yourself.

Good luck

eddddy

critchley said:

My grandson currently rents the ground floor flat from us but he will be homeless then as the house will have to be sold in order to do as partner wishes with his half.

You didn't mention that as a concern before...

There are quite a few different things that you could do to prevent your grandson being evicted when you die, if you want. For example, you could give him a lifetime tenancy, or grant him a 999 year lease.

But as a joint owner, your partner would have to agree and cooperate.


The property could still be sold (in a few different ways), with your grandson remaining in the downstairs flat. But the money raised from the sale(s) would be less.

KiKi

I read the situation differently: there are two flats, both of which are leasehold, but the bottom flat owner also owns the freehold to the building.

If that's the case, OP, then you are the freeholder of the whole building, and the leaseholder of both flats.  I would simply speak to a solicitor, and extend the lease to both flats - so as a freeholder you'd be extending the leases to yourself (I assume that's doable - but a solicitor can advise). That way, the flats are sellable, if it comes to it.

Ultimately get some time with a solicitor to look through it - they can best advise on your situation.