House which owns the freehold of flat underneath - issues?

dlt1518

eddddy said:

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?
 

Got some paperwork today. Maintenance costs are done on a "as and when basis", so no formal agreements for anything and ground rent is peppercorn. Think I'll leave it

user1977

dlt1518 said:

eddddy said:

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?
 

Got some paperwork today. Maintenance costs are done on a "as and when basis", so no formal agreements for anything and ground rent is peppercorn. Think I'll leave it

Surely there's a lease and that's the formal agreement?

eddddy

dlt1518 said:

Got some paperwork today. Maintenance costs are done on a "as and when basis", so no formal agreements for anything and ground rent is peppercorn. Think I'll leave it

As above, the lease will be a formal agreement about insurance, maintenance, repairs etc.

But I suspect they mean that when there are some repairs to be done, the house owner and the flat owner have an informal chat about it and agree a plan.

As opposed, to the house owner sending formal service charge demands, serving legal notices, carrying out section 20 consultations, etc

It's much easier if it's all done on an informal, friendly basis.

But problems arise if the house owner and flat owner can't informally agree on things - then the house owner has to start sending formal service charge demands, serving legal notices, carrying out section 20 consultations - and in extreme circumstances, consider taking legal action against the flat owner.