Splitting the Costs of a Freehold flat

gwynlas

If your daughters wish to seek permission to develop the basement level then they are best keeping their fellow freeholders on side.

They could use this as a bargaining tool as once they increase the footage of their property then whilst it might constitute 50% of habitable space in the property they would otherwise have to renegotiate their percentage

MyRealNameToo

https://forums.moneysavingexpert.com/discussion/comment/81881818#Comment_81881818

There shouldn't be ambiguity or change, the lease will state how the costs will be split between the leaseholders. That doesnt change just because the freeholder has changed. To have changed the lease to be something other than it says would have been a notable process and each leaseholder would have had to agreed to it.

JiggerandJolley

Thank you, everyone your comments are all very helpful. Woodstok, when you say everyone is individually responsible for their own flat, including windows, this is where I think there may be difficulties. Up to now, as leaseholders, they have been responsible for their own flat's maintenance and decorating including the interiors of the windows. But the maintenance and painting of the windows on the outside had been down to the freeholder. My daughters' flat has two windows and one french door. The upstairs flat has 6 windows at the front and I'm not sure how many at the back but there are some. There has been a change to the payments previously made under their old leasehold agreements as these charges were increased for this year for the upstairs flat and decreased for my daughters'. As I understand it, having now just bought the freehold both owners have to draw up a new agreement with their solicitor which will outline how their management company (run by themselves) will operate. The flat above are not happy that their share of maintenance costs were being increased by the previous freeholder whereas my daughters' were being decreased and they think it should revert back to 50/50 each.

I take your point gwynlas, that it may work to their advantage to agree to what the upstairs owners want so that it smooths the way before any building work is done. It's just a bit difficult to see the justification for it, especially as the upstairs flat has more windows and a considerable amount of roof that is only over a part of their flat.

ExEstateAgent

Are your daughters buying the whole freehold or are they buying a 50% share (with the other flat who will also own 50% of the freehold) ?

Regardless of that, the existing leases will continue and the existing terms will still apply. So if the existing leases state that maintenance of the building is split 50/50 then that's what applies.

The leases can only be changed if both parties agree (so if the other flat is currently liable for 50% of the costs why do you think they would want to now pay more?).

If the current lease/s are 'short' it's probably a good idea to agree with the neighbours that you get the solicitors to extend both to 999 years now, and zero the ground rents.

Where the lease/s currently refer to the freeholder, those points will still apply but the freeholder will be the neighbour and your daughters together - so for example, if it states that freeholder permission is required to make any alterations to the individual flats, both parties need to agree that such work is OK (give permission to each other).

Your solicitors should also advise you about setting up a deed of trust to avoid any problems down the line, basically agreement that both freeholders agree to cooperate with any requests etc.

fullyrendered

It is quite possible the existing leases do not specify the % apportionment, this is common with council/HA leases, and it will state it is up to the freeholder to apply any reasonable share of relevant costs.

Now you are buying the share of freehold it would be worth agreeing and getting this in writing. Is the basement already part of the demise of their flat? Best to do this at the same time.

JiggerandJolley

They have bought the freehold with the flat above. I'm assuming it is a 50/50 share although they paid different amounts due to size of flat and length still on lease.

I don't think there was a fixed apportionment of percentage of the costs each year and this is why this year the council had notified them that the charges were going up percentage wise for this coming year for upstairs and costs were going down for my daughters' flat. The damp, dark basement is part of their flat already and even if they can develop it, it will still only be a 2 bedroom flat with a sq. foot area still around less than half the size of the upstairs flat.

eddddy

JiggerandJolley said:

The flat above is over 2 floors and has 3/4bedrooms.  The valuer determined the freehold split at 35/65.  They are setting up their own management company for the property and are running into difficulties as the people upstairs are adamant all bills should be split 50/50 despite the fact that they have many more windows and part of their flat juts out from the main body of the building and therefore has an extra roof. 

As others have said, the leases will still exist after the leaseholders buy the freehold.

The most sensible and fairest approach would be to keep maintenance responsibilities and cost splitting exactly as it says in the leases.

Your daughters (and the upstairs neigbours) agreed to those terms when they bought the flats - so it's not really reasonable to ask for different terms now.

JiggerandJolley said:

The valuer determined the freehold split at 35/65. 

I think you've misunderstood.

• The valuer won't be advising on how maintenance and repair costs should be split.

• The valuer will be advising on how the cost of buying the freehold should be split

For example, if the freehold ends up costing £10k, your daughters should contribute £3.5k and the neighbours should contribute £6.5k

(That split will be based on things like ground rent payable by each flat, length of lease for each flat and market value of each flat.)

Read the lease to see how to split maintenance and repair costs.

JiggerandJolley

I'll get them to look at their lease again and see what it says about the splitting of costs. This has really only cropped up because what they were billed this year by the council (the previous freeholder) was percentage wise out of line with what they were paying in previous years and seemed to be taking into account the relative size of each flat. But as you say, hopefully the lease should clarify this.

Woodstok2000

https://forums.moneysavingexpert.com/discussion/comment/81881957#Comment_81881957

So up until now they've been quite happy paying the 50% share, seems reasonable for that to continue...

WIAWSNB

Check the existing deeds carefully.

The usual, and reasonable I think, arrangement in leases is that all the 'communal' parts are shared equally, including parts of the building fabric that affect all the properties.

For instance, the roof should be equally shared, since it - in effect - provides 'equal' protection to all the properties. If it leaks, the fabric of the building is affected, and that will include the lower flats.*

Communal front door? Equal. Communal hallways and stairs? Ditto. Foundations? You bet.

Windows? No. The responsibility for these should be devolved to each property. That will also include each individual entrance door, and all of the interior.

Outer wall fabric? This might seem unfair, but on balance it should be considered communal, so equally split, and I understand that is how it's shown in most leases.

It may seem unfair if, for example, the different storeys have costly hung tiles or is simply larger, but as with the roof, the deterioration of this building 'fabric' will affect the whole building.

So, what do the current leases say?

• exceptions would be if one property extended their home with additional roofing - that would then be all theirs to upkeep.