Buying share of freehold in converted house

Chippie_07

Hi everyone, we’ve recently moved in to the ground floor flat of a Victorian house as leaseholders. There’s one other flat upstairs (also leaseholders) and a freeholder (private landlord, not an agency etc). The freeholder is an older man who has said he is willing to sell the freehold to us. I get the vibe he doesn’t want the hassle of dealing with it anymore and would rather sell it now and make a few quid off it. We don’t pay service charge and ground rent is peppercorn. Buying the freehold is definitely something we’d love to do as it just makes life easier for us with getting permissions for works etc. Our problem is the upstairs leaseholder doesn’t want to buy it and can’t be convinced. He has tenants living there currently and I can imagine he doesn’t see the value in it in the same way that we do. My question is, what are the downsides to just us buying the freehold on our own? Is this even doable or advisable? Quite hard to find anything about this online in relation to a converted 2 flat house like ours. Thanks in advance!

Brie

Well it gives you control over things but also responsibility.  So you have to get the insurance sorted each year and deal with any major things like the roof etc.  And collect money from the leaseholder for anything.  Obviously there's no guessing if there's going to be a major hurricane or whatever but if the house is in pretty good condition and the price is right I'd go for it.  If you have the money available.  It may very well add value for when you get round to selling it.

eddddy

Chippie_07 said:

My question is, what are the downsides to just us buying the freehold on our own? Is this even doable or advisable? Quite hard to find anything about this online in relation to a converted 2 flat house like ours. 

As far as the law is concerned, you would become a landlord - with all the associated rights and responsibilities.

So you should read both leases to see what the rights and responsibilities of the freeholder / landlord / lessor (i.e. you) are.

Often the responsibilities include:

• Insuring the building 
• Arranging maintenance and repairs of the building
• Sending bills to the other leaseholder (for insurance, repairs, maintenance, admin etc.)
• Granting consents
• Providing management packs whenever the other flat is sold
• Taking enforcement action, if the other leaseholder breaches the lease
• Undertaking section 20 consultations for major repairs etc

Ideally, you should go through 'The Landlord and Tenant acts' and 'The Commonhold and Leasehold Reform Act' to make sure you understand your legal responsibilities. 


Maybe a good starting point is to read advice sites for leaseholders - like this one: https://www.lease-advice.org/
It tells leaseholders what their freeholders are required to do etc, so you can get an insight from that perspective.



But if you get on well with the other leaseholder, and he/she trusts you, you might be able to do things on a more informal basis.

For example, maybe you could just say....

"The roof is leaking. John the roofer has quoted £800 to fix it. Are you happy to give me £400 towards it?"

If the other leaseholder says 'Yes' - it's all good. But if the other leaseholder says 'No' - you'd probably have to do a section 20 consultation, which would take 2 or 3 months, and involve serving notices, getting 2 or more quotes etc.

Grumpy_chap

Chippie_07 said:

Hi everyone, we’ve recently moved in to the ground floor flat of a Victorian house as leaseholders. There’s one other flat upstairs (also leaseholders) and a freeholder (private landlord, not an agency etc). The freeholder is an older man who has said he is willing to sell the freehold to us. I get the vibe he doesn’t want the hassle of dealing with it anymore and would rather sell it now and make a few quid off it. We don’t pay service charge and ground rent is peppercorn. Buying the freehold is definitely something we’d love to do as it just makes life easier for us with getting permissions for works etc. Our problem is the upstairs leaseholder doesn’t want to buy it and can’t be convinced. He has tenants living there currently and I can imagine he doesn’t see the value in it in the same way that we do. My question is, what are the downsides to just us buying the freehold on our own? Is this even doable or advisable? Quite hard to find anything about this online in relation to a converted 2 flat house like ours. Thanks in advance!

In considering this, one has to assume that the current older gentleman who owns the freehold will sell at some point. Either by choice or by his Executors.  (Assuming that "older" means "rather near the end of days".)
Will a new freeholder be as amenable as the current freeholder?
Will the new freeholder be as easy to get along with as yourself?

Set against that, being the freeholder will come with obligations and a certain proportion of hassle.

NameUnavailable

Yes, you can buy the freehold yourself as long as the current freeholder is willing to sell it to you.

Try to get something in writing from the other leaseholder to confirm they aren't interested in purchasing or they could later say they weren't given right of first refusal.

If you don't buy the freehold and someone else does, then what happens with the building in terms of maintenance is out of your hands - i.e. you could find another freeholder wants to carry out a lot of maintenance work and charge you an annual fee, sinking fund etc., or just as bad, one that does nothing and lets the place fall into disrepair leaving you to have to take action to enforce works etc.

The other leaseholder is being very short sighted IMHO.

Chippie_07

Thanks everyone. By older, I just mean a man in his 70s who can’t be bothered with the admin side of things currently. The freehold was originally in his parents name and has been since handed down to him. Sounds like it’s been his families since at least the 70s, looking at old leases. Thing is, we currently have little to no relationship with the upstairs landlord. We attempted to make contact with him on moving in and he said he didn’t see the point in being put in contact with us. In other words, he doesn’t want to be bothered about anything! So if I’m being honest, not someone I want to have much responsibility over. Sounds like I’ve answered my own question

NameUnavailable

Chippie_07 said:

Thanks everyone. By older, I just mean a man in his 70s who can’t be bothered with the admin side of things currently. The freehold was originally in his parents name and has been since handed down to him. Sounds like it’s been his families since at least the 70s, looking at old leases. Thing is, we currently have little to no relationship with the upstairs landlord. We attempted to make contact with him on moving in and he said he didn’t see the point in being put in contact with us. In other words, he doesn’t want to be bothered about anything! So if I’m being honest, not someone I want to have much responsibility over. Sounds like I’ve answered my own question

As I said, the issue isn't the other leaseholder, it's who might be your freeholder if the current one sells it. I had an absolute nightmare for about 3 years dealing with a very vindictive freeholder who was basically trying to engineer a situation to forfeit everyones leases.

ThisIsWeird

Hi Chippie.

Going by what folk have said above, and also my own experience with my first home - a flat in a converted Edwardian house, where the FHer was happy to sell the FH to us - I would say jump at the chance right now. Buy the FH regardless of the occupier of the flat above.

I'd go further - you'd be better off buying this by yourself, without sharing it with the flat above.

Why? Because there's only two properties involved - ie, potential 1:1 stalemate with any decision to be made.

With a shared FH - ie with a management co set up to control the FH - if you have more than two LHs, then there's a better chance of majority common sense prevailing. Tho' not guaranteed... But, with only two, the potential to be stuffed is very large - nigh-on 50:50.

If you have the FH, then you make the call on significant decisions, although you obviously would need to conform with all the requirements.

With my first home, a flat in a converted Edwardian house, a company bought the house's FH, converted the basement into a flat which they sold on for a nice sum, and then - thankfully - said they had no further interest in the property, so were happy to sell the FH for a nominal sum, essentially the legal fees. Thinking back, I could kiss that duo.

Even with, then, four 'directors' in this new FH management co, some decisions were fraught. This was an old house, and occasionally a roof tile would slip off. The new owners of the garden flat, who had a seating patio area outside their front door, asked if we'd all contribute towards fitting a tile-catching net over that side of the house as they felt unsafe when sitting out there. My thoughts were 'off - if you want to sit out in 'safety', then you pay for this, pal. Am I going to ask for ditto 'cos of the risk of being struck by a dislodged tile when walking up to my front door? Nope. But, the other 'directors' thought - because they didn't want to upset anyone - perhaps we should.

And, when that flat's owners decided to sell and move on, a meeting was held to decide whether their contributions made over the past few years towards the 'sink fund' should be returned to them when they left? Clucking bells, the obvious answer to me was 'non', but some others thought this reasonable. Loonies.

Hey-ho - so, if you are a rational person, then grab that FH with both poochies, or else you'll run the very serious risk of idiots dictating some stupid decisions on your building.

Unless there are very good reasons not to, then do. :-)

ThisIsWeird

NameUnavailable said:

Chippie_07 said:

Thanks everyone. By older, I just mean a man in his 70s who can’t be bothered with the admin side of things currently. The freehold was originally in his parents name and has been since handed down to him. Sounds like it’s been his families since at least the 70s, looking at old leases. Thing is, we currently have little to no relationship with the upstairs landlord. We attempted to make contact with him on moving in and he said he didn’t see the point in being put in contact with us. In other words, he doesn’t want to be bothered about anything! So if I’m being honest, not someone I want to have much responsibility over. Sounds like I’ve answered my own question

As I said, the issue isn't the other leaseholder, it's who might be your freeholder if the current one sells it. I had an absolute nightmare for about 3 years dealing with a very vindictive freeholder who was basically trying to engineer a situation to forfeit everyones leases.

Nice warning there. Avoid that potential situation at all costs. 

It may come as a surprise to some, but half the human race are (expletive not deleted, but best left to the imagination).