Buying property as freeholder with a leaseholder flat

Highspirits

I have bought a freehold property as a buy to let. There is a leasehold flat within the property which has a short lease ~60 years. As the freeholder I do not charge any ground maintenance. I am being asked to extend the lease which I am reluctant to do without including terms for building maintenance where use is joint e.g. drainage etc. Am I legally obliged to extend the lease and if so can I then include a maintenance charge? 

i_like_cats

Do you mean there currently is no service charge?   Then yes it would be advisable to add one.   They can be anything from £60 to £600 a month.  I think £100 is quite standard for a city flat.  Note that your flat would also need to pay it.

Ground rent is a separate and smaller amount you can charge, but it won’t pay for maintenance or building insurance.

I expect you’re being professionally advised on how much to charge for the lease extension.  Since the lease is under 60 years, are you due a lot because of the marriage value?:

https://www.lease-advice.org/lease-glossary/marriage-value/

eddddy

There's a few points to consider...

The leasehold flat will have a lease. That lease will state your rights and responsibilities, and the leaseholder's rights and responsibilities.

Typically (but not always), a lease might say that

• the freeholder (you) is responsible for insuring and maintaining the building
• the leaseholder is responsible for paying you a percentage (maybe 50%) of the insurance and maintenance costs

So you need to read the lease to see what it says.


Regarding the lease extension. The leaseholder has 2 options...

• An informal lease extension - You have to reach agreement with the leaseholder. There are no rules about what each party can or cannot do. So you can try to negotiate different lease terms if you want.

• A Statutory lease extension - The rules for this are set out in law. You cannot do things like change the maintenance terms in the lease.

I might be misreading, but your post gives the impression that you are not very familiar with leases, leasehold law, landlord and tenant law, etc.

If that's the case, I'd strongly suggest that you get professional help with the lease extension, and maybe get advice on the role of a freeholder (i.e. a landlord) as well.

eddddy

i_like_cats said:

Do you mean there currently is no service charge?   Then yes it would be advisable to add one.   They can be anything from £60 to £600 a month.  I think £100 is quite standard for a city flat.  Note that your flat would also need to pay it.

Ground rent is a separate and smaller amount you can charge, but it won’t pay for maintenance or building insurance.

If the leaseholder voluntarily agrees to pay £100 a month - that's great.

If not, the lease (and the law) will determine what service charge a freeholder can enforce.

A freeholder cannot pick numbers out of the air (like £100 a month) and legally force a freeholder to pay it.

(If nothing else, most leases say that estimated service charges can only be demanded every 6 or 12 months - not every month.)

The lease will specify what percentage of insurance and maintenance costs the leaseholder has to pay - it may not be a 50/50 split.

DullGreyGuy

Highspirits said:

I have bought a freehold property as a buy to let. There is a leasehold flat within the property which has a short lease ~60 years. As the freeholder I do not charge any ground maintenance. I am being asked to extend the lease which I am reluctant to do without including terms for building maintenance where use is joint e.g. drainage etc. Am I legally obliged to extend the lease and if so can I then include a maintenance charge? 

You sound to be mixing up ground rent and service charge? 

You need to read the lease about these two separate matters and what contribution they should be paying towards maintenance (service charge).