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Purchasing a freehold flat in London

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  • eddddy said:

    Just taking a step back...
    • Also does the person upstairs want to be a joint owner of the freehold? Are they happy to pay a fair price? Are they happy to instruct and pay for their own solicitors?
    Hi Eddddy - thanks for your input. We haven't spoken to her yet - so no idea!!

    So currently the flat we are trying to buy does not have a lease from the freehold. Apologies if I didn't make that clear earlier. We need the seller to grant a lease from the freehold onto the flat so the flat is easier to sell / mortgage (so we've been told). Then when we complete on the leasehold flat, they will later transfer the freehold to the leaseholders (us and upstairs) with a section 5 notice.

    We hope therefore after that process the upstairs flat don't fancy the share of the freehold (costs, solicitors etc), and then eventually we end up being the sole freeholder anyway and having a lease on our flat (easier to sell / mortgage).

    We understand that is marginally better than just retaining the freehold of the building with no lease on our flat at all.

    Please correct me if I'm wrong here!
  • eddddy
    eddddy Posts: 18,026 Forumite
    Part of the Furniture 10,000 Posts Name Dropper
    edited 17 November 2024 at 11:29AM
    herbarium said:


    So currently the flat we are trying to buy does not have a lease from the freehold. Apologies if I didn't make that clear earlier. We need the seller to grant a lease from the freehold onto the flat so the flat is easier to sell / mortgage (so we've been told). Then when we complete on the leasehold flat, they will later transfer the freehold to the leaseholders (us and upstairs) with a section 5 notice.


    Yep, I understood that. But it seems unnecessarily complex. Did your solicitor advise you to do that, or did you devise it?

    It strikes me that there should be a simpler solution. For example, let's assume completion day is 16th Jan, and you are buying as Mr H and Mrs H...
    • On 16th Jan, the seller sells the property exactly as it is to Mr H (it doesn't sound like the downstairs flat has a qualifying tenant - so no section 5 would triggered.)
    • On 16th Jan, Mr H now owns the freehold and grants a lease for the downstairs flat to Mr H and Mrs H
    • The end result is that Mr H own the freehold building, and Mr H and Mrs H own the leasehold flat.

    (A freeholder can't grant a lease to themselves, so the freeholder and leaseholder have to be different.)

    You could ask your solicitor if that would work.

    herbarium said:

    We hope therefore after that process the upstairs flat don't fancy the share of the freehold (costs, solicitors etc), and then eventually we end up being the sole freeholder anyway and having a lease on our flat (easier to sell / mortgage).


    This answers the question I was asking - so you prefer to be sole owner of the freehold.

    You don't have to "hope". Even if you go down the section 5 route, you can stop the "share of freehold" happening.

    It would work like this:
    • The current owner wants to sell the freehold to you 
    • Section 5 "Right of First Refusal" is triggered
    • In order to take up the "Right of First Refusal" both leaseholders have to participate
    • You refuse to participate - so the other leaseholder cannot do anything without you. So the "Right of First Refusal" fails
    • So the current owner is free to sell the freehold to you

    Maybe the only downside is that the other leaseholder might feel aggrieved - because they wanted to buy a share of freehold, you stopped them - but then bought the freehold yourself.


  • eddddy said:
    Yep, I understood that. But it seems unnecessarily complex. Did your solicitor advise you to do that, or did you devise it?
    Getting a leasehold on the flat we're buying was strongly advised by both our solicitors and mortgage brokers. Don't know why exactly.

    Thanks for the suggestion with MR & Mrs H - will ask solicitors.

    And with regards for right of first refusal - that is a good idea - hadn't thought we could simply refuse to participate. My guess is the upstairs wouldn't want a share of freehold anyway, given the cost and the faff, so hopefully they wouldn't be aggrieved either way!
  • sevinc
    sevinc Posts: 1 Newbie
    First Post
    herbarium said:
    Hello,

    I'm buying a freehold flat in London and I was hoping to find advice about how to proceed with the purchase.

    It's a downstairs flat in a victorian conversion and property includes the full freehold of the building including garden, side access, front garden and the upstairs flat who is on a leasehold.

    From doing our research we understand this is rare and peculiar. (And no, it's not a share of freehold, we've read about this on the forum already!) Mortgage providers are not happy about it, but some have agreed to work with us. We understand it is hard to sell a flat onwards with this arrangement too.

    We have asked the sellers to draw up a lease for our flat, and then offer the freehold to the leaseholders (us & upstairs) via the statutory processes (Section 5 notice). We hope this will allow us and the upstairs to share the freehold which is a more normal arrangement. 

    I was wondering has anyone else done this before? Is this the correct thing we should be doing? Is there any benefit to maintaining the full freehold of the building and land and having a leaseholder live above?

    Best!


    Hello, I’m I exactly your position right now and finding it extremely difficult pros and cons of both options, I’ve spoken to two mortgage brokers and two solicitors and each of them are on opposite ends of the spectrum on the topic. It would be super helpful to know which route you ended up taking and hear from someone that has experienced it first hand. Would really appreciate if you could share with me your reasons and if you feel comfortable with the decision you ended up making! 
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