Landlord offered me the leasehold

AlphaCentauri

Hi, I posted about this on an earlier thread but there's been a development and so I'm posting anew.

I'm a long term tenant (25+ yrs) in a flat.  It's a 2nd floor flat above a shop.  There's a 1st floor flat and ground floor shop.  All 3 properties on the same leasehold.

The leasehold ends in 2030 and the landlord doesn't want to renew with the freeholder.

By all accounts, I would not be able to remain in the property at the lease end in 2030 as a sitting tenant.

The LL has said it's not worth listing the remaining leasehold for sale on the open market with such a short time left on the lease.  After fees, legal costs and hassle, it's not worth it.

After discussion with all parties, the net result is the landlord has ended up offering me the leasehold, which would put it in my name.

Needless to say, this has come as a surprise.

Obviously, before confirming anything, I'm looking for advice as it's a bit of leap.  In effect, I'd become the landlord for the two other properties.

One concern I have is that as soon as the title is transferred the freeholder may introduce a new 'ground rent' or 'service charge' but I don't think this is likely as it'd affect the whole parade of properties.

Rgds.

Emmia

AlphaCentauri said:

Hi, I posted about this on an earlier thread but there's been a development and so I'm posting anew.

I'm a long term tenant (25+ yrs) in a flat.  It's a 2nd floor flat above a shop.  There's a 1st floor flat and ground floor shop.  All 3 properties on the same leasehold.

The leasehold ends in 2030 and the landlord doesn't want to renew with the freeholder.

By all accounts, I would not be able to remain in the property at the lease end in 2030 as a sitting tenant.

The LL has said it's not worth listing the remaining leasehold for sale on the open market with such a short time left on the lease.  After fees, legal costs and hassle, it's not worth it.

After discussion with all parties, the net result is the landlord has ended up offering me the leasehold, which would put it in my name.

Needless to say, this has come as a surprise.

Obviously, before confirming anything, I'm looking for advice as it's a bit of leap.  In effect, I'd become the landlord for the two other properties.

One concern I have is that as soon as the title is transferred the freeholder may introduce a new 'ground rent' or 'service charge' but I don't think this is likely as it'd affect the whole parade of properties.

Rgds.

Without the leasehold being extended you'll need to move out in 2030 as the building will revert to the freeholder then. There's no change to this aspect whether you're a tenant or a leaseholder.

Your current leaseholder having let it run down so much lands you with a gigantic bill if you did want to extend the lease (think tens of thousands) - is the current leaseholder going to transfer for free? Who is paying the legal costs? Can you afford liability for repairs etc. which you'll gain by taking the lease over.

Personally I wouldn't touch this - too many risks and high costs.

eddddy

You should probably instruct a surveyor to read the lease and inspect the whole property and report on repairs required, and how much they are likely to cost you.

Similarly, you should instruct a solicitor to ask the leaseholder and freeholder about any planned repairs - and how much you would have to contribute to the cost, and advise you on any other risks.

For example, in a previous post you mentioned a leaking roof. That might indicate that roof is reaching the end of its life and might need replacing soon. That might cost you tens of thousands of pounds.



TBH, your landlord's story doesn't sound very plausible to me. I suspect there is another factor (like huge future repair costs) that they haven't mentioned to you.



(And FWIW, it seems you might not understand what Leasehold 'Service Charges' are. They are not a fixed charge like ground rent. They are your share of building repair costs, etc and will vary depending on the amount of repairs required, etc.)

ExEstateAgent

Are you saying that your Landlord has leases on the two flats and the shop which all expire in 2030? 

Why would you want to buy the other leases? You only want the lease for your flat. You would need to pay probably about £3K in legal fess (assuming no charge is being asked) and you'd want to get a survey on the building. Then you need to pay for a lease extension which is going to be very expensive (tens of thousands rather than thousands). 

Do you have that sort of money available? If so it might be worth considering but you need specific advice from survyors/solicitors. 

AlphaCentauri

Emmia said:

AlphaCentauri said:

Hi, I posted about this on an earlier thread but there's been a development and so I'm posting anew.

I'm a long term tenant (25+ yrs) in a flat.  It's a 2nd floor flat above a shop.  There's a 1st floor flat and ground floor shop.  All 3 properties on the same leasehold.

The leasehold ends in 2030 and the landlord doesn't want to renew with the freeholder.

By all accounts, I would not be able to remain in the property at the lease end in 2030 as a sitting tenant.

The LL has said it's not worth listing the remaining leasehold for sale on the open market with such a short time left on the lease.  After fees, legal costs and hassle, it's not worth it.

After discussion with all parties, the net result is the landlord has ended up offering me the leasehold, which would put it in my name.

Needless to say, this has come as a surprise.

Obviously, before confirming anything, I'm looking for advice as it's a bit of leap.  In effect, I'd become the landlord for the two other properties.

One concern I have is that as soon as the title is transferred the freeholder may introduce a new 'ground rent' or 'service charge' but I don't think this is likely as it'd affect the whole parade of properties.

Rgds.

Without the leasehold being extended you'll need to move out in 2030 as the building will revert to the freeholder then. There's no change to this aspect whether you're a tenant or a leaseholder.

Your current leaseholder having let it run down so much lands you with a gigantic bill if you did want to extend the lease (think tens of thousands) - is the current leaseholder going to transfer for free? Who is paying the legal costs? Can you afford liability for repairs etc. which you'll gain by taking the lease over.

Personally I wouldn't touch this - too many risks and high costs.

I don't plan to extend the lease in 2030 and so 'dilapidation' costs should be irrelevant?

As for legal costs, the LL said that I'd have to pay but I have no idea how much this'd be; I mean how much does it cost to transfer a name to a title?

Liability for repairs is of course an open question.  However, the other 2 tenants are long established and plan to remain til end of lease.  The ground floor shop manage their own repairs and it's always been that way.  The remaining flats just require occasional plumbing maintenance.

As the new leaseholder I would of course be the new LL and receive the rents from the other properties, which I could use to pay off any maintenance issues.  

FWIW, the building has had many well documented issues over the years, which have always been taken care off by the leaseholder i.e. I could cite this status quo as precedent.

What is not clear to me is whether I'd be liable for a 'dilapidation' bill at the end of the lease?  I understand the freeholder are known to try and ask for extra money for repairs but given my long history and documenting of issues, I believe I could rebuff their requests.

AlphaCentauri

eddddy said:

You should probably instruct a surveyor to read the lease and inspect the whole property and report on repairs required, and how much they are likely to cost you.

Similarly, you should instruct a solicitor to ask the leaseholder and freeholder about any planned repairs - and how much you would have to contribute to the cost, and advise you on any other risks.

For example, in a previous post you mentioned a leaking roof. That might indicate that roof is reaching the end of its life and might need replacing soon. That might cost you tens of thousands of pounds.



TBH, your landlord's story doesn't sound very plausible to me. I suspect there is another factor (like huge future repair costs) that they haven't mentioned to you.



(And FWIW, it seems you might not understand what Leasehold 'Service Charges' are. They are not a fixed charge like ground rent. They are your share of building repair costs, etc and will vary depending on the amount of repairs required, etc.)

The leaking roof got repaired in the end and is guaranteed for 10 years.

Yes, I need to establish whether there are any hidden repair costs although the roof was the only real issue.

In fact, the property's EPC rating was recently raised substantially.

There are no service charges with the property and a nominal ground rent.

AlphaCentauri

ExEstateAgent said:

Are you saying that your Landlord has leases on the two flats and the shop which all expire in 2030? 

Why would you want to buy the other leases? You only want the lease for your flat. You would need to pay probably about £3K in legal fess (assuming no charge is being asked) and you'd want to get a survey on the building. Then you need to pay for a lease extension which is going to be very expensive (tens of thousands rather than thousands). 

Do you have that sort of money available? If so it might be worth considering but you need specific advice from survyors/solicitors. 

I believe it's one lease and there are 3 sub-leases for each property: ground floor shop, 1st floor flat, 2nd floor flat.  All 3 tenants pay to the same landlord.

I don't want to extend the lease beyond 2030.

It's a shop with 2 flats above on a parade.  Would the leaseholder be responsible for a survey or is that the responsibility of the freeholder?

Emmia

AlphaCentauri said:

Emmia said:

AlphaCentauri said:

Hi, I posted about this on an earlier thread but there's been a development and so I'm posting anew.

I'm a long term tenant (25+ yrs) in a flat.  It's a 2nd floor flat above a shop.  There's a 1st floor flat and ground floor shop.  All 3 properties on the same leasehold.

The leasehold ends in 2030 and the landlord doesn't want to renew with the freeholder.

By all accounts, I would not be able to remain in the property at the lease end in 2030 as a sitting tenant.

The LL has said it's not worth listing the remaining leasehold for sale on the open market with such a short time left on the lease.  After fees, legal costs and hassle, it's not worth it.

After discussion with all parties, the net result is the landlord has ended up offering me the leasehold, which would put it in my name.

Needless to say, this has come as a surprise.

Obviously, before confirming anything, I'm looking for advice as it's a bit of leap.  In effect, I'd become the landlord for the two other properties.

One concern I have is that as soon as the title is transferred the freeholder may introduce a new 'ground rent' or 'service charge' but I don't think this is likely as it'd affect the whole parade of properties.

Rgds.

Without the leasehold being extended you'll need to move out in 2030 as the building will revert to the freeholder then. There's no change to this aspect whether you're a tenant or a leaseholder.

Your current leaseholder having let it run down so much lands you with a gigantic bill if you did want to extend the lease (think tens of thousands) - is the current leaseholder going to transfer for free? Who is paying the legal costs? Can you afford liability for repairs etc. which you'll gain by taking the lease over.

Personally I wouldn't touch this - too many risks and high costs.

I don't plan to extend the lease in 2030 and so 'dilapidation' costs should be irrelevant?

As for legal costs, the LL said that I'd have to pay but I have no idea how much this'd be; I mean how much does it cost to transfer a name to a title?

Liability for repairs is of course an open question.  However, the other 2 tenants are long established and plan to remain til end of lease.  The ground floor shop manage their own repairs and it's always been that way.  The remaining flats just require occasional plumbing maintenance.

As the new leaseholder I would of course be the new LL and receive the rents from the other properties, which I could use to pay off any maintenance issues.  

FWIW, the building has had many well documented issues over the years, which have always been taken care off by the leaseholder i.e. I could cite this status quo as precedent.

What is not clear to me is whether I'd be liable for a 'dilapidation' bill at the end of the lease?  I understand the freeholder are known to try and ask for extra money for repairs but given my long history and documenting of issues, I believe I could rebuff their requests.

If you take over the leases of your flat and the other occupants, you'll be liable for those repair costs - new roof? Congratulations, you'll need to pay at least 33% of that (and 100% of that if you own all the leases) and you'll then also have to get money out of the other occupants.

It's not the plumbing you need to worry about - when was the last time major works like redecoration and maintenance done?

What precedent would you be citing? The fact that repairs were not needed previously or have not been actioned doesn't let you off the hook financially if they're needed now. You'd be the responsible leaseholder...  Not the current guy.

If the building is dilapidated then yes, you'll be the one paying for it - the fact you keep a written record of the issues doesn't rebuff the need to fix them (and pay for the privilege). Your long history would be irrelevant - you'd only have been the leaseholder for ~4 years.

Emmia

AlphaCentauri said:

ExEstateAgent said:

Are you saying that your Landlord has leases on the two flats and the shop which all expire in 2030? 

Why would you want to buy the other leases? You only want the lease for your flat. You would need to pay probably about £3K in legal fess (assuming no charge is being asked) and you'd want to get a survey on the building. Then you need to pay for a lease extension which is going to be very expensive (tens of thousands rather than thousands). 

Do you have that sort of money available? If so it might be worth considering but you need specific advice from survyors/solicitors. 

I believe it's one lease and there are 3 sub-leases for each property: ground floor shop, 1st floor flat, 2nd floor flat.  All 3 tenants pay to the same landlord.

I don't want to extend the lease beyond 2030.

It's a shop with 2 flats above on a parade.  Would the leaseholder be responsible for a survey or is that the responsibility of the freeholder?

You'd be responsible for the survey, and in this scenario I'd be going for a very thorough and comprehensive survey to avoid the risk of "surprises".

eddddy

AlphaCentauri said

I don't plan to extend the lease in 2030 and so 'dilapidation' costs should be irrelevant?

You'll need to return the property at the end of the lease in the same condition it was when the lease was granted.

So if it's dilapidated, you'll have to pay to get it back up to standard.

AlphaCentauri said:

There are no service charges

If the roof was repaired by the freeholder, your landlord would have paid their share of the cost.

Your landlord's share of the cost is called a "service charge".

If future repairs to the building are required, you would have to pay your share of the cost.

Your share of the cost will be called a "service charge".


Whoever told you that there is no service charge might mean that they don't pay service charges in a regular pattern - e.g. yearly, six-monthly, or monthly. Instead, they just pay service charges when they arise (e.g. when the roof needs repairing.)


Who arranges buildings insurance? (If it's the freeholder, your share  of the insurance cost  will be a "service charge" payable each year for that as well.)


 

ExEstateAgent

OK so you don't intend to extend the lease/s beyond 2030, so what do you think will be the benefit to you in buying the lease/s now?