Buying a flat with a share of freehold

cherry76

What questions should one be asking EA if buying a flat with share of freehold? Interested to hear member’s experiences. Who is responsible for building maintenance or insurance? I know these questions need to be asked to the seller but I am interested in others experience. With no management and two co_freeholders left to manage, there are bound to be some conflict and disputes with payment. Should there be some agreement in the lease who is responsible for roof, external painting etc. There is still 111 yrs left on the lease.Wonder whether the conveyancing solicitor could ask for it to be extended to 999 or does one need to instruct another specialist for lease extension. Any advice much appreciated. Thanks

Mark_d

Responsibility for maintenance/buildings insurance is described in the lease.  I imagine that the management company would comprise both freeholders.

Both freeholders would need to decide about the roof, painting etc.  You could maintain a s savings account that you both pay in to - so that you already have the funds accessible if the roof needs replacing - or you could deal with roof replacement costs as and when the time comes.  Maybe the lease constrains your options.

Why do you want the lease extended to 999 years?  If you live there fore 50 years then there's still plenty of time left on the lease.

Personally I wouldn't buy this flat because how well things works depends largely on how well you get on with the other freeholder

propertyrental

cherry76 said:

What questions should one be asking EA if buying a flat with share of freehold? None. They won't know. Speak to your solicitor

Interested to hear member’s experiences. Pointless. Every case is different

Who is responsible for building maintenance or insurance? Read the lease

I know these questions need to be asked to the seller via your solicitor but I am interested in others experience. Pointless. Every case is different

With no management and two co_freeholders left to manage, there are bound to be some conflict and disputes with payment. Depends on the people involved. Can work very well. Can cause problems

Should there be some agreement in the lease who is responsible for roof, external painting etc. Yes - read the lease There is still 111 yrs left on the lease.Plenty Wonder whether the conveyancing solicitor could ask for it to be extended to 999 Can ask but unlikely to get anywhere as 111 is plentyor does one need to instruct another specialist for lease extension. No

Any advice much appreciated. Thanks

Answers in bold

DullGreyGuy

cherry76 said:

What questions should one be asking EA if buying a flat with share of freehold? Interested to hear member’s experiences. Who is responsible for building maintenance or insurance? I know these questions need to be asked to the seller but I am interested in others experience. With no management and two co_freeholders left to manage, there are bound to be some conflict and disputes with payment. Should there be some agreement in the lease who is responsible for roof, external painting etc. There is still 111 yrs left on the lease.Wonder whether the conveyancing solicitor could ask for it to be extended to 999 or does one need to instruct another specialist for lease extension. Any advice much appreciated. Thanks

So it's two flats that are both share of freehold? Or are there more flats that aren't share of freehold?

Ultimately its two things... you are both a leaseholder and hold a share in the freehold so your lease will still say what you need the permission of the freeholder for, if lease or free holder are responsible for various things etc. The only difference is if you need to ask permission you are asking permission to yourself and your co-freeholder.

I'd want to know if you are directly the freeholder or if you are a 50% shareholder of a company that is the freeholder. If its the later then there is more public information you can get from Companies House. The potential challenge of having 2 freeholders is how disagreements are settled... it can be a boon or a curse. Certainly in a different scenario with 3 equal freeholders it was frequently 2 against 1 and their articles of association had decisions as a simple majority vote so the one out of favour could be over ruled on everything. 

propertyrental

Just to add, you can get a copy of the lease using form OC2 here:

https://www.gov.uk/government/publications/official-copies-of-documents-registration-oc2 (£7).

NameUnavailable

There may be a deed of trust between freeholders to ensure there are agreements to co-operate over works and paperwork when selling etc.

Re. the length of lease, usually when obtaining the freehold the leases would be extended to 999 years and ground rent reduced to peppercorn. Sometimes this isn't done and the existing lease term remains (is ground rent payable? Moot point as you would effectively be paying each other!).

Extending the lease may not be a simple case of getting the solicitor to draw up documents, the other party may want payment (as would a freeholder in other cases). It would be worth checking if both leases have the same term left and if so, maybe suggesting to the other party that you both extend to 999 years now (legal costs only) so that matter is dealt with and put to bed.

gm0

Two pronged approach.  Due diligence on financial+legal and facts on the ground

Title plan and lease for the demised bits and not demised bits.  Download them or otherwise get them. It's cheap.

These tell you what you are responsible for 100% (inside the flat) and the share of freehold 50% outside the flat Building insurance will be freeholder.  Contents will be leaseholder. 

How much the share of freehold vs lease subject even matters is a function of facts on the ground. 

Windows - age/condition - demised to flat or not.  Do not assume.  Check. You pay for them either way but your independence of action varies.  Likely time to action.  Ditto roof.  Ditto a lift if present.  External space / parking / dropped kerbs / rubbish arrangements.  How tall is it for roof/gutter work.  Scaffold or trades with a van and ladder.  Shared or unshared gardens and use of / responsibility for these.  Trees with or without TPOs on them.  Extensions along the street. Common/Rare ?   Something the ground floor unit may want to do ?  What does the lease and demised plans (for say garden use) have to say about that ?

Informality and an even split of voting is more tolerable if the shared elements are few and inexpensive in good order and decades from needing attention (especially roofs).   A flat with adverse factors and cost multipliers - say a flat roof, a lift, listed building status (cost multiplier) - then with no sinking fund established and nothing saved up.  Is an accident waiting to happen.  You at some point get the monster section 20, then get bogged down in angry denial of reality with other leaseholder(s), and you cannot progress the project or sell at anything resembling a fair value as nobody sane would now buy the lease and inherit the freehold obligation which is not a risk.  But a live issue.  A bill has come due.  Resale wise it becomes "untouchable" until the lease price drops to accommodate the works and a premium below that for the ballache.

In 2024 I'd also be looking at the whole "how is heated and what can be done later" thing with an eye on feasibility of change from gas if that is current.  The lease and demised/shared areas may be more, or less supportive of being able to do anything sensible - especially upstairs.

More optimistically - by contrast the upstairs and downstairs of a decent renovated townhouse or solid old semi - with a roof in good order (that you have climbed up into to see it dry and well insulated).  In a house with stairs only.  And just a communal hall and front parking/paved area.  Already extended into a groundfloor demised rear garden.  With recently updated wiring at conversion - so independent modern energy supply.  Is not much to be worrying over.  The stakes for neighbourly collaboration over fixing a broken tile on the path or LED lights in the hall are quite low.

Loop over the two aspects.  Legal arcana -  and actual real world potential liabilities.