Leasehold to freehold

cpats

We are about to buy a flat but the estate agent has said it is leasehold until all the flats are sold then it will become freehold. Is this normal? has anyone had a similar experience?

RAS

Flats are leasehold with some exceptions. If this is a conversion, it may include a share of freehold but that has it's own issues. Freehold flats are rare and not generally recommended.

Suggest the EA gets some training in English/Welsh property law?

From your own point of view, check whether the flat is on the Land Registry.

loubel

It might be that the freehold will be transferred to a management company once all flats are sold and you and the other leaseholders will have shares in that company. You can then take part in decision making over the running of the building.

RAS

loubel said:

It might be that the freehold will be transferred to a management company once all flats are sold and you and the other leaseholders will have shares in that company. You can then take part in decision making over the running of the building.

Which is NOT the same as owning a freehold flat.

Someone (company) owns the freehold. They don't appoint an external management company because management is transferred to a management company in which all the leaseholder have a share. As shareholders, the leaseholders all become responsible for managing the properties, but they are not freeholders.

NameUnavailable

The EA doesn't know what they're talking about. Ask to speak to someone who does.

gm0

There are often two steps with head leases and new property.  A phase when the property is not  yet all sold i.e. flats all leased out. And once this is done the long term arrangements cut in.  Which are - the property has a freeholder and an initial managing agent appointed by them.  Some of this is just a legal bulwark in leases against a first few lease takers immediately taking the mickey *before* the others are sold and their "votes" appear.  From the developer perspecive getting sold and getting out is the motivation and they commission the drafting of the lease. 

Sometimes a cosy developer/MA arrangement is also perceived as profit seeking behaviour but this is always shortlived. As lease rights are clear cut.

It is quite common for leaseholders i.e the people who own the flat leases but not the ground and building to then take two steps sometime in the decade after purchase (and after any warranty/snagging phase)

Right to manage - i.e take over and direct and appoint their own managing agent (who still has to do at minimum the basic obligations that fall across all - such as buildings insurance, fire inspection, communal energy supply etc.  Or do the work themselves.

Purchase of Share of freehold.  The property is purchased for the freehold valuation into a company.  This company is then owned by the leaseholders as 1/n (or in whatever shares).  They own the company (together).  And the company owns the freehold and is effectively the freeholder from then on. Nobody (can) directly own part of the freehold aligned to their lease. So they now collectively own a company which has the freeholder (lessor) interest.  And each owns their own lessee interest (with the rights to that as described in the lease to the demised area and any rights/obligations over the rest).  A few of the lessee flat owners have to volunteer to step up and act as unpaid (usually) directors of the company which is not a big deal with a managing agent but it does involve listening to a lot of complaining about how the service charge is too high and yet the services provided are inadequate and insufficiently prioritised towards what that indvidual most values.  A bit thankless frankly.

Some developer nowadays may be dumping the freehold straight into a share of freehold setup rather than going the long way around.


Smaller house conversions may not have the full ltd company share of freehold setup with only 2/3.  The legal form varies.