House which owns the freehold of flat underneath - issues?

dlt1518

Hi all, 

I am looking at purchasing a property and have come across one which I like, however the agents end the listing, with almost a throw away comment, that the property includes the freehold of the flat below which has a long term lease.

I am relatively new to the property game, am I being extremely naïve to assume this shouldn't be much of an issue?

There are no shared hallways/spaces/doors and with the flat being underneath the house, any issues with the roof would be mine to deal with as the owner of the house anyway. We would be cash buyers but with one eye on selling in X years time, would this sort of thing cause issues with someone seeking a mortgage? is the insurance side of things prohibitively expensive? 

Sorry to ask so much, any advice or information that can be shared will be very much appreciated. 

Brie

No - you would both normally be responsible for paying repairs to the roof should it need it because that roof protects you which in turn protects the flat.  Basically you can't have a building without a roof. 

Ask to see the terms of the freehold for the flat plus the insurance that has been bought previously.  The obvious problem might be that the leaseholder won't pay you the annual/monthly fees.  Given that it's a long term lease check if there have been issues in payments being received in the past.  

Section62

dlt1518 said:

Hi all, 

I am looking at purchasing a property and have come across one which I like, however the agents end the listing, with almost a throw away comment, that the property includes the freehold of the flat below which has a long term lease.

I am relatively new to the property game, am I being extremely naïve to assume this shouldn't be much of an issue?

There are no shared hallways/spaces/doors and with the flat being underneath the house, any issues with the roof would be mine to deal with as the owner of the house anyway. We would be cash buyers but with one eye on selling in X years time, would this sort of thing cause issues with someone seeking a mortgage? is the insurance side of things prohibitively expensive? 

Sorry to ask so much, any advice or information that can be shared will be very much appreciated. 

If there's a flat in separate occupation below it then it sounds like this 'house' is also a flat.

There's nothing intrinsically wrong with owning a flat, but there will be things which are different between buying and owning a house and buying and owning a flat.  For me the first question would be why is the EA calling it a 'house', if it isn't?

dlt1518

Brie said:

No - you would both normally be responsible for paying repairs to the roof should it need it because that roof protects you which in turn protects the flat.  Basically you can't have a building without a roof. 

Ask to see the terms of the freehold for the flat plus the insurance that has been bought previously.  The obvious problem might be that the leaseholder won't pay you the annual/monthly fees.  Given that it's a long term lease check if there have been issues in payments being received in the past.  

Good point that I hadnt considered. In that sense then, should a roof issue develop, a potential positive in not necessarily being solely responsible for it. Thankyou for your input.

silvercar

Basically you are buying a maisonette,  even though it looks like a house without the lower ground floor.

user1977

dlt1518 said:

Brie said:

No - you would both normally be responsible for paying repairs to the roof should it need it because that roof protects you which in turn protects the flat.  Basically you can't have a building without a roof. 

Ask to see the terms of the freehold for the flat plus the insurance that has been bought previously.  The obvious problem might be that the leaseholder won't pay you the annual/monthly fees.  Given that it's a long term lease check if there have been issues in payments being received in the past.  

Good point that I hadnt considered. In that sense then, should a roof issue develop, a potential positive in not necessarily being solely responsible for it. Thankyou for your input.

Plus the other structural elements of the building probably have a shared liability.

dlt1518

Section62 said:

dlt1518 said:

Hi all, 

I am looking at purchasing a property and have come across one which I like, however the agents end the listing, with almost a throw away comment, that the property includes the freehold of the flat below which has a long term lease.

I am relatively new to the property game, am I being extremely naïve to assume this shouldn't be much of an issue?

There are no shared hallways/spaces/doors and with the flat being underneath the house, any issues with the roof would be mine to deal with as the owner of the house anyway. We would be cash buyers but with one eye on selling in X years time, would this sort of thing cause issues with someone seeking a mortgage? is the insurance side of things prohibitively expensive? 

Sorry to ask so much, any advice or information that can be shared will be very much appreciated. 

If there's a flat in separate occupation below it then it sounds like this 'house' is also a flat.

There's nothing intrinsically wrong with owning a flat, but there will be things which are different between buying and owning a house and buying and owning a flat.  For me the first question would be why is the EA calling it a 'house', if it isn't?

The house is on the bottom of a hill, if you then imagine the property front in quarters, the top half and bottom right are ours, the bottom left is the flat. the fact the bottom left part is then at the bottom of the hill is what has allowed it the room to become its own standalone flat. Like i say both properties have completely separate front doors.

dlt1518

silvercar said:

Basically you are buying a maisonette,  even though it looks like a house without the lower ground floor.

There is a ground floor with all the rooms you'd expect and a regular frontage, however it looks like at some point a portion of the ground floor was changed into a standalone flat, with the upper floor remaining as was. 

eddddy

Just to clarify the terminology a bit - based on what you've said, it sounds like you would be buying a freehold building (and land). However, the freehold building includes a flat that has been sold on a long lease.

(There are many properties like that in London - the upper floors are essentially a 'house', with the basement flat sold on a long lease.)




Assuming that's correct...

The lease will explain...

• What parts of the building the flat owner is responsible for maintaining
• What parts of the building you would be responsible for maintaining
• Which of your costs the flat owner has to contribute towards

(e.g. the flat owner probably has to contribute to your insurance costs. You probably have to maintain the roof, and the flat owner might or might not have to contribute to the cost of roof repairs.)

As far as the law is concerned, you would be the landlord of the leasehold flat downstairs and the flat owner would be your tenant.

Hopefully the owner of the leasehold flat would be cooperative, so everything could be done fairly informally. But if the flat owner is difficult (e.g. refuses to pay their share of the insurance premium), you'd probably need to get up to speed with landlord and tenant law, etc.


Some people have reported problems getting a mortgage with this kind of set-up. But sometimes there's extra confusion, because people don't explain the set-up clearly to mortgage lenders.


If mortgage lenders are unhappy with the current set-up, one solution might be to create a lease for the upper part - so that you have one freehold building and 2 leasehold properties within it.




Edit to add...

dlt1518 said:

however the agents end the listing, with almost a throw away comment, that the property includes the freehold of the flat below which has a long term lease.

Or could you be describing a criss-cross lease, also known as a Tyneside lease?

Is the property in Tyneside?

Did the estate agent describe the property you are buying as freehold? Or Leasehold?