Should I buy a flat with freehold to the whole building?

eddddy

NameUnavailable said:

Without getting into the minutae of lease terms, IF you own the freehold and IF there was some urgent repair needed and IF the other party (leaseholder) said they couldn't pay towards the work at least you are in a position to proceed and do it anyway and then recover your costs later.

But only if....

• you do a legally valid Section 20 consultation - which takes about 3 months

• or you apply to a tribunal for dispensation from doing a Section 20 consultation

• and you issue Service Charge Demands in the correct legal format

• and you issue the Service Charge Demand (or written notice) within 18 months

• and you are able to prove that the Service Charge Demand is reasonable, if it is challenged at a tribunal

etc.

If you fail to do any of the above, you cannot legally claim the full 50% share from the other leaseholder.



Plus, realistically...

• If you pay a scam builder who does a runner with the money - you lose 100% of the money. You cannot claim 50% from the other leaseholder.

• If you hire a cowboy builder who does a botch job - you are liable for 100% of the losses. You cannot claim 50% from the other leaseholder.

• If you hire a builder who misleads you into doing more work than is necessary - a tribunal can rule that you cannot claim 50% of the cost of the unnecessary work from the other leaseholder 

• If you hire a builder who charges you more than a reasonable amount for a job - a tribunal can reduce the amount you can claim from the other leaseholder

So you need to know a reasonable amount about building repairs and maintenance, and competent at dealing with (potentially dodgy) contractors, tradespeople, etc.

ThisIsWeird

Taking all the pros and cons mentioned in the previous posts into account, can it be said that there is an overall 'best' arrangement regarding this LH/FH situation?

1) Proceed as is - the OP is the FHer, and the other flat is LH only.

2) The OP 'invites' the other flat owner to also become a FHer - eg they set up a Ltd Co with them as directors.

3) Ideally both are LHers, with a separate FH - the OP considers selling off the FH?

Which of these three setups would you wish to find when buying a flat?

eddddy

There's no problem with being a freeholder if you understand leases, understand the law and are prepared to put the effort in.

I'd say there are more 'complaints' about shared freeholds on this site than other set-ups. They seem like a botched solution to a problem. They could workout well, or they could be a nightmare. In some circumstances, they can be a very high risk option.

An independent freeholder can be good or bad - you need to do your diligence when buying. But the problem is that a good freeholder might later sell the freehold to a bad freeholder.

GTG

eddddy said:

NameUnavailable said:

Without getting into the minutae of lease terms, IF you own the freehold and IF there was some urgent repair needed and IF the other party (leaseholder) said they couldn't pay towards the work at least you are in a position to proceed and do it anyway and then recover your costs later.

But only if....

• you do a legally valid Section 20 consultation - which takes about 3 months

• or you apply to a tribunal for dispensation from doing a Section 20 consultation

• and you issue Service Charge Demands in the correct legal format

• and you issue the Service Charge Demand (or written notice) within 18 months

• and you are able to prove that the Service Charge Demand is reasonable, if it is challenged at a tribunal

etc.

If you fail to do any of the above, you cannot legally claim the full 50% share from the other leaseholder.

A mutual enforceability clause.... anyone? 

eddddy

GTG said:

eddddy said:

NameUnavailable said:

Without getting into the minutae of lease terms, IF you own the freehold and IF there was some urgent repair needed and IF the other party (leaseholder) said they couldn't pay towards the work at least you are in a position to proceed and do it anyway and then recover your costs later.

But only if....

• you do a legally valid Section 20 consultation - which takes about 3 months

• or you apply to a tribunal for dispensation from doing a Section 20 consultation

• and you issue Service Charge Demands in the correct legal format

• and you issue the Service Charge Demand (or written notice) within 18 months

• and you are able to prove that the Service Charge Demand is reasonable, if it is challenged at a tribunal

etc.

If you fail to do any of the above, you cannot legally claim the full 50% share from the other leaseholder.

A mutual enforceability clause.... anyone? 

Do you have a question about mutual enforceability clauses?

(If so, does it relate to anything in this thread? If not, maybe start a new thread.)

GTG

eddddy said:

 This is probably heading off down a rabbit hole, way beyond the scope of the OP's original question...

GTG said:

There are rules on the percentage of leaseholders that need to be onboard with the variation before the tribunal would consider it. In the case of two leaseholders it is very likely that both would have to agree to it.  

No - you introduced the topic of a defective lease, with no provision to recover insurance costs (and maybe no provision to recover repair costs).

That only requires an application from one party - typically the freeholder - for a compulsory lease variation.

It's covered by Section 40 and Section 35 of the Landlord and Tenant Act.

(I think you're talking about other types of lease variations which are covered by Section 37 of the Landlord and Tenant Act. They require support of 75% of leaseholders.)

GTG said:

I know of at least 44 in my neighbour hood without these fundamental lease terms! Don't underestimate how many there are out there, especially very old leases.

So any leaseholder or the freeholder should apply for  compulsory lease variation - as described above.

GTG said:

Forfeiture is a rarity and not a process to endure for someone that just wants a place to live, please reference your comment below.

It's rare because leaseholders pay their service charges, rather than face forfeiture.

If any leaseholder seeks advice from any reputable organisation, they will always be told to pay their service charge.






But overall, I agree with your sentiment that the OP (and some other posters) don't seem to understand the  responsibilities and risks of becoming a freeholder.

If the other leaseholder is reasonable, cooperative, honest and knowledgeable - maybe the 2 of them can 'muddle through' and make it work.

But if the other leaseholder is difficult, and/or dishonest and/or clueless - it could turn into a complete nightmare for both parties.

(And even if the other leaseholder is a 'good person', they might sell to  a new leaseholder who is a 'bad person'.)

 "So any leaseholder or the freeholder should apply for  compulsory lease variation - as described above."

Yes, that would be the rational thing to do. Do most people act in a rational or logical manner. Say yes and I think you have never been a freeholder and/or a leaseholder before are young or have lived a sheltered life or any combination of those. No disrespect intended. It was rumoured that Neil Kinnock never became prime minster of the UK because he had ginger hair. Based on my experience of life I can believe that!

"It's rare because leaseholders pay their service charges, rather than face forfeiture."

In addition as a last resort a mortgagee would step in and pay the service charge where they have a sufficient financial interest to do so.   

GTG

eddddy said:

GTG said:

eddddy said:

NameUnavailable said:

Without getting into the minutae of lease terms, IF you own the freehold and IF there was some urgent repair needed and IF the other party (leaseholder) said they couldn't pay towards the work at least you are in a position to proceed and do it anyway and then recover your costs later.

But only if....

• you do a legally valid Section 20 consultation - which takes about 3 months

• or you apply to a tribunal for dispensation from doing a Section 20 consultation

• and you issue Service Charge Demands in the correct legal format

• and you issue the Service Charge Demand (or written notice) within 18 months

• and you are able to prove that the Service Charge Demand is reasonable, if it is challenged at a tribunal

etc.

If you fail to do any of the above, you cannot legally claim the full 50% share from the other leaseholder.

A mutual enforceability clause.... anyone? 

Do you have a question about mutual enforceability clauses?

(If so, does it relate to anything in this thread? If not, maybe start a new thread.)

Nope. A mutual enforceability clause in a lease is a method by which a leaseholder gains additional rights.

Because there is no contractual relationship between the leaseholder of one flat and the leaseholder

of another flat, the freehold reversioner of both can be used as a vehicle for a complaining

leaseholder to enforce leasehold covenants against an offending leaseholder. The freehold

reversioner has full power to do that, but the complaining leaseholder cannot force the freehold

reversioner into action unless there is a “mutual enforceability” clause.

eddddy

GTG said:

eddddy said:

GTG said:

eddddy said:

NameUnavailable said:

Without getting into the minutae of lease terms, IF you own the freehold and IF there was some urgent repair needed and IF the other party (leaseholder) said they couldn't pay towards the work at least you are in a position to proceed and do it anyway and then recover your costs later.

But only if....

• you do a legally valid Section 20 consultation - which takes about 3 months

• or you apply to a tribunal for dispensation from doing a Section 20 consultation

• and you issue Service Charge Demands in the correct legal format

• and you issue the Service Charge Demand (or written notice) within 18 months

• and you are able to prove that the Service Charge Demand is reasonable, if it is challenged at a tribunal

etc.

If you fail to do any of the above, you cannot legally claim the full 50% share from the other leaseholder.

A mutual enforceability clause.... anyone? 

Do you have a question about mutual enforceability clauses?

(If so, does it relate to anything in this thread? If not, maybe start a new thread.)

Nope. A mutual enforceability clause in a lease is a method by which a leaseholder gains additional rights.

Because there is no contractual relationship between the leaseholder of one flat and the leaseholder

of another flat, the freehold reversioner of both can be used as a vehicle for a complaining

leaseholder to enforce leasehold covenants against an offending leaseholder. The freehold

reversioner has full power to do that, but the complaining leaseholder cannot force the freehold

reversioner into action unless there is a “mutual enforceability” clause.

Great!

I guess you copied and pasted that fr.om somewhere. I can't see how it's relevant to this thread - can you?

I suspect you're trolling, so I'll leave you to it.