Am I unreasonable for thinking of pulling out (leasehold flat)?

eddddy

ThisIsWeird said:

Why is it cheap to extend the lease? Because, the Management Company owns the Freehold :-)

FH ManCo Meeting Agenda Item 1: "Shall we extend our leases to 999 years?" "YAY!" "Cool. What shall we charge ourselves for this?" "50p!"

There's no guarantee that will be the case.

For example, if some leaseholders paid to extend their leases before the freehold was purchased...

... it would be fair and reasonable to expect the remaining leaseholders to pay the 'market rate' to extend their leases now...

...especially if they all contributed the same amount towards buying the freehold.



And/or there might simply be a 'bloody minded' joint freeholder who refuses to agree to give you a lease extension for some reason (e.g. because they don't like you). So you end up having to do a Statutory Lease Extension, and pay the 'market rate'.

ThisIsWeird

The well-known add-on for insurance policies, usually around the £25 mark.
No particular reason you might need it, but it's just recommended for any homeowner.
Also covers things like contracts, purchases, and still like that. Just worth having. :-)

ThisIsWeird

eddddy said:

ThisIsWeird said:

Why is it cheap to extend the lease? Because, the Management Company owns the Freehold :-)

FH ManCo Meeting Agenda Item 1: "Shall we extend our leases to 999 years?" "YAY!" "Cool. What shall we charge ourselves for this?" "50p!"

There's no guarantee that will be the case.
For example, if some leaseholders paid to extend their leases before the freehold was purchased...
... it would be fair and reasonable to expect the remaining leaseholders to pay the 'market rate' to extend their leases now...
...especially if they all contributed the same amount towards buying the freehold.
And/or there might simply be a 'bloody minded' joint freeholder who refuses to agree to give you a lease extension for some reason (e.g. because they don't like you). So you end up having to do a Statutory Lease Extension, and pay the 'market rate'.

The first scenario makes sense, and anyone who paid for an extension before they all bought the FH could well feel put out. Tho' others might just say 'tough'.
The second scenario is interesting - wouldn't it be a majority ManCo decision (or whatever proportion is agreed in the T&C's) for this lease extension decision? Or even, 'if you don't like it, then you sort your own lease out separately'? 
Anyhoo, chances are it'll be fine for the OP, but an easy Q to ask their conveyancer.

eddddy

ThisIsWeird said:

eddddy said:

ThisIsWeird said:

Why is it cheap to extend the lease? Because, the Management Company owns the Freehold :-)

FH ManCo Meeting Agenda Item 1: "Shall we extend our leases to 999 years?" "YAY!" "Cool. What shall we charge ourselves for this?" "50p!"

There's no guarantee that will be the case.
For example, if some leaseholders paid to extend their leases before the freehold was purchased...
... it would be fair and reasonable to expect the remaining leaseholders to pay the 'market rate' to extend their leases now...
...especially if they all contributed the same amount towards buying the freehold.
And/or there might simply be a 'bloody minded' joint freeholder who refuses to agree to give you a lease extension for some reason (e.g. because they don't like you). So you end up having to do a Statutory Lease Extension, and pay the 'market rate'.

The first scenario makes sense, and anyone who paid for an extension before they all bought the FH could well feel put out. Tho' others might just say 'tough'.
The second scenario is interesting - wouldn't it be a majority ManCo decision (or whatever proportion is agreed in the T&C's) for this lease extension decision? Or even, 'if you don't like it, then you sort your own lease out separately'? 
Anyhoo, chances are it'll be fine for the OP, but an easy Q to ask their conveyancer.

In the scenario I mentioned...

• Yes - it's possible that the joint freeholders will be an unfair bunch of people - and give the OP a lease extension for free (or for 50p)

• And it's also possible that the joint freeholders will be an unfair bunch of people - and refuse to give the OP a lease extension

• And it's also possible that the joint freeholders will be scrupulously fair - and tell the OP that they must pay the 'market rate' for a lease extension

ThisIsWeird said:

Anyhoo, chances are it'll be fine for the OP, but an easy Q to ask their conveyancer.

How have you calculated those chances?

How will the conveyancer know if joint freeholders are a fair group of people, or an unfair group of people?

Unless the joint freeholders have done something like signed a deed agreeing that leaseholders can have a free lease extension.


Or alternatively, the OP could agree terms with the joint freeholders for a lease extension - and exchange contracts with the joint freeholders, to make it a binding agreement?

ThisIsWeird

eddddy said:

ThisIsWeird said:

eddddy said:

ThisIsWeird said:

Why is it cheap to extend the lease? Because, the Management Company owns the Freehold :-)

FH ManCo Meeting Agenda Item 1: "Shall we extend our leases to 999 years?" "YAY!" "Cool. What shall we charge ourselves for this?" "50p!"

There's no guarantee that will be the case.
For example, if some leaseholders paid to extend their leases before the freehold was purchased...
... it would be fair and reasonable to expect the remaining leaseholders to pay the 'market rate' to extend their leases now...
...especially if they all contributed the same amount towards buying the freehold.
And/or there might simply be a 'bloody minded' joint freeholder who refuses to agree to give you a lease extension for some reason (e.g. because they don't like you). So you end up having to do a Statutory Lease Extension, and pay the 'market rate'.

The first scenario makes sense, and anyone who paid for an extension before they all bought the FH could well feel put out. Tho' others might just say 'tough'.
The second scenario is interesting - wouldn't it be a majority ManCo decision (or whatever proportion is agreed in the T&C's) for this lease extension decision? Or even, 'if you don't like it, then you sort your own lease out separately'? 
Anyhoo, chances are it'll be fine for the OP, but an easy Q to ask their conveyancer.

In the scenario I mentioned...

• Yes - it's possible that the joint freeholders will be an unfair bunch of people - and give the OP a lease extension for free (or for 50p)

• And it's also possible that the joint freeholders will be an unfair bunch of people - and refuse to give the OP a lease extension

• And it's also possible that the joint freeholders will be scrupulously fair - and tell the OP that they must pay the 'market rate' for a lease extension

ThisIsWeird said:

Anyhoo, chances are it'll be fine for the OP, but an easy Q to ask their conveyancer.

How have you calculated those chances?
How will the conveyancer know if joint freeholders are a fair group of people, or an unfair group of people?
Unless the joint freeholders have done something like signed a deed agreeing that leaseholders can have a free lease extension.
Or alternatively, the OP could agree terms with the joint freeholders for a lease extension - and exchange contracts with the joint freeholders, to make it a binding agreement?

Seriously? What are the chances the other seven directors are oles? 
In any case, the OP can request all that info - have any flats already had their leases extended? When was the FH bought by the ManCo?
You don't really expect me to calculate 'chances' any more than I would you, but the most likely scenario here is that, at 104 years, no-one has yet extended their lease, certainly not after the FH was bought.
You'd agree with that?
And if any had done so, then the purchase of the FH - at quite likely a considerable cost - would be a new start for everyone going forwards. You really think anyone is going to whine, "I paid for my long lease, and now you'll all get it for free! Boo-hoo!"?
So, the sorts of issues that often plague Leasehold properties - lease duration, increasing ground rents, etc - should be non-existent when the FH is owned as here - the ManCo has control.

eddddy

BuyLon said:

Why is extending the lease cheap? 

So just to summarise - there is no guarantee that extending the lease will be cheap.

There are some reasons why it might be cheap, and there are some reasons why it might not be cheap.


And even if the joint freeholders tell you the lease extension will be cheap (e.g. in a letter) - it's likely that the letter won't be binding.  It only becomes binding when you exchange contracts with the joint freeholders.

So before you buy the flat, the joint freeholders might say they'll extend the lease for £2k (or for free) - but after you buy the flat, they might say the price is £12k. Or they might refuse to extend the lease (meaning you have to do a statutory lease extension).

ThisIsWeird

eddddy said:

BuyLon said:

Why is extending the lease cheap? 

So just to summarise - there is no guarantee that extending the lease will be cheap.
There are some reasons why it might be cheap, and there are some reasons why it might not be cheap.
And even if the joint freeholders tell you the lease extension will be cheap (e.g. in a letter) - it's likely that the letter won't be binding.  It only becomes binding when you exchange contracts with the joint freeholders.
So before you buy the flat, the joint freeholders might say they'll extend the lease for £2k (or for free) - but after you buy the flat, they might say the price is £12k. Or they might refuse to extend the lease (meaning you have to do a statutory lease extension).

Yes, that could happen. It's a possibility.
The OP can get relevant info from her solicitor; how many flats have already extended their lease as individuals? When was the FH bought? What does the Lease say? What is recorded in the seemingly-rare meeting minutes? What, if any, discussions can the vendor relate have been carried out regarding this issue? 
And she also seemingly has contact with another flat owner for some inside info.
BuyLon will have a 1/8th say in any decision going forward. So, assuming no previous extensions, we can surmise it's very unlikely that 8 leaseholders will vote to charge themselves a sum for this - other than the solicitor's costs. Why would they?! And, if they did, it would be for the sink/maintenance fund for the building, and not to a remote FHer to line their pockets.
You will hopefully reassure the concerned BuyLon that being one of eight directors of a FH ManCo where all the owners control all the decisions is a very good thing? Especially when it comes to issues such as lease extension, and maintenance, and ground rent?

eddddy

ThisIsWeird said:!

And, if they did, it would be for the sink/maintenance fund for the building, and not to a remote FHer to line their pockets.

By default, money from lease extensions doesn't go into a sink/maintenance fund.

It goes to the freeholder. If the freeholder is a company, it's quite likely they will distribute it to their shareholders. (i.e. in this case, distribute it amongst the leaseholders, or maybe repay loans from leaseholders - which have been put in place to reduce tax liabilities)

ThisIsWeird

eddddy said:

ThisIsWeird said:!

And, if they did, it would be for the sink/maintenance fund for the building, and not to a remote FHer to line their pockets.

By default, money from lease extensions doesn't go into a sink/maintenance fund.
It goes to the freeholder. If the freeholder is a company, it's quite likely they will distribute it to their shareholders. (i.e. in this case, distribute it amongst the leaseholders, or maybe repay loans from leaseholders - which have been put in place to reduce tax liabilities)

They - themselves - could charge each leaseholder/director/themselves a sum, a sum they then repay to themselves. Why would they do this? But, I guess, yes, this 'could' happen.

Anyhoo, I am hoping, even in the absence of your reassurance, that the OP is generally reassured that being one of eight directors of a FH ManCo where all the owners control all the decisions is a very good thing. Especially when it comes to issues such as lease extension, and maintenance, and ground rent.

gm0

Also.  Consider why this has stalled as paperwork. 

It requires a significant expense and SoF director effort - and legal costs to fix all the leases.  For the sake of argument - let's call it >£1000 each in legal support and admin costs.  Ignoring what you pay the share of freehold.  If you can get cheap and good legal help more power to you.

And consider leasehold and common hold reforms coming down the track.  How many times do we want to commission new legal works to sort out paperwork to a "new template".  More money. Possibly.

Shall we in fact wait for new legislation and colouring in to actually land.    And see if it is helpful or necessary to update things.  And do it once.  A lot of people would find that a ready excuse to kick the ball down the pitch.

Until a genuine "not mortgageable" happens.  The incentives are flimsy.  And one ultra cautious solicitor swallow (of unknown experience level with leasehold) doesn't make a summer.

What is the downside of not doing it in the current share of freehold arrangement.  If the answer is "not much" actually.  Nobody wants the legal bill.  To then be told they need to do it again.  Or the work. The explaining and wheedling of the fearful.  (As you probably want to do everyone not only some of the leases and share of freehold owners).

And when you open up leases.  Or SoF company articles to reform them. 

Your SoF owners will have ALL their other pet issues they want to raise which SHOULD of course feature in "new" extended leases.  Allowing or banning things:  BTL. Pet policy. AirBnB use case. Fitment of green energy kit etc. etc. etc.  Rider agreements that need to be signed which provide penalties between "nothing" and "lease forfeiture" in return for permission to do x/y/z thing which can cause nuisances.  Your split of owner occupiers and landlords will create an interesting dynamic unique to you.

It can easily become a scramble where fixing anything demands compromises and fixing everything and the community doesn't REALLY agree across all those topics. 

Sticking through changes on a bare majority - may be correct to the articles but you may still have a lot of !!!!!! off and unco-operative from now on - neighbours who extract their pound of flesh - later.  Even if the articles say simple majority.  They will be offended and feel abused.   But 100% consensus and nicey nicey can be really difficult to achieve.  

Or you just do all the work and expense for a bare extension.  No changes to existing obligations or restrictions.
And it's (arguably) a missed opportunity. 

Or you try - which leads to more work to get ALL the people - meeting attenders and not - to vote on a menu of changes before presenting new leases based on voting outcomes.

And say you do that - and you agree "pets".  But someone says - nope - still don't agree - not in my existing lease. No pets.  Allergies.  Yes I was outvoted but I'm not signing.  Here is my legal letter - freeholder - please enforce the existing restriction for the remaining term of my lease.  Leasehold hat. Not freehold owner hat.

Ah democracy.  The best of all systems.

It's fine - better than the don't care remote owner and agent.  But it has its own dynamics.