Short lease but share of freehold flats

badger09

SXX said:

JM68 said:

If I was selling a share of freehold flat but it had a short lease and it was easy to extend (e.g. because all the other share of freeholders agreed and also had short leases and there were no other complicating factors) then I would extend before marketing.

The only reason I would do so is if there was an issue with doing so.

We viewed several like this when we were looking last year, including maisonettes where there were only two sharing the freehold, and the EA always said 'share of freehold, no problem to extend'. 

I always then responded with 'why has the vendor not done it already to make the sale easier?'. 

Never got an answer....

Thanks to all for your responses - all taken on board.   When I've queried a short lease/share of freehold with EA, the response has been a breezy -'it doesn't matter if the lease is short as the prop comes with a share of the freehold.'   I didn't think it was as simple as that hence posting on here.      

BIB unfortunately that’s the nature of a typical EA’s response to any question which suggests a purchase/sale might not be quick & easy. We were given all sorts of guff and impossible statistics about the fact that our vendor’s onward property was tenanted. We invested time, money & emotions in that aborted purchase, as did our vendors. 

TLDR don’t believe an EA’s blasé reassurance on anything. Check for yourself if you can. If not, walk away. 

Good luck

NameUnavailable

I was looking for a shared freehold flat and came across a lot with short leases. The EA's always said it doesn't matter because you just tell the solicitor to extend the lease when you buy.

It's not that simple! The 'freeholder' (in this case the collective of leaseholders who own the freehold) is still entitled to the market value of a lease extension, so it doesn't follow that they will just let you extend without any cost. If you had to pay, let's say £10K for a lease extension and there were 10 members of the freehold co, each would be entitled to £1K (including you so in effect it would cost £9K).

The first question is why wasn't the lease extended to 999 years when they bought the freehold? Next question, can the vendor extend to 999 years before you buy? (after all it's not a problem according to their EA!).

As long as you can resolve the lease issue then having a share of freehold is significantly better than just a leasehold - you effectively own a share of the building itself, you have some degree of control over maintenance (or at least you know that fellow freeholders are unlikely to want to overcharge themselves!), and it should also have a peppercorn ground rent.

In my block about a third of the leaseholders chose not to buy into the freehold, so they still pay ground rent and will have to pay to extend their leases when the time comes, the funds going into a pot that is then shared between the freeholders.

SXX

Thanks to everyone for your responses - really, really helpful.