Freehold

[Holden McGroin 6454]

I live in 1 of 4 flats in the building.

 

I'm currently a leaseholder and pretty much despise my management company.

 

2 of the 4 flats have got together and are going to buy the freehold and wanted to know whether I'd like to be the 3rd.

 

What are the benefits of me chipping in (eg) £5k? I assume everyone will have to pay into a maintenance fund anyway, so if I decide not to do anything all that will happen is that i would pay less money (than I am now to the evil management company) per month.

[Rob W 0]

Generally it's easier to sell if you own the Freehold - even a 999 year lease will have some lawyers pursing their lips

 

Depends on how long it has to run - less than 50-60 years starts to hit the value and it becomes hard to get a loan to buy the property

 

If you convert the building to freehold then you will still need a management company - that can be just you lot with a solicitor or accountant to keep the paperwork.

 

Take my advice and set up a rolling 10 year maintenance scheme and figure out how much it will cost and get everyone to pay by Direct Debit - it's a bugger chasing after arrears on the maintenance charges

[Park Life 71]

Buy a farm.

[Rob W 0]

bit short in central newcastle

[Holden McGroin 6454]

Generally it's easier to sell if you own the Freehold - even a 999 year lease will have some lawyers pursing their lips

 

Depends on how long it has to run - less than 50-60 years starts to hit the value and it becomes hard to get a loan to buy the property

 

If you convert the building to freehold then you will still need a management company - that can be just you lot with a solicitor or accountant to keep the paperwork.

 

Take my advice and set up a rolling 10 year maintenance scheme and figure out how much it will cost and get everyone to pay by Direct Debit - it's a bugger chasing after arrears on the maintenance charges

 

Understood, but im trying to work out the benefit of chipping in £5k when 2 of the 4 are going to buy it anyway. What do *I* benefit from ?

[Toonpack 9110]

Freeholds a bit funny when it comes to flats I think. For example I have a flat (my pension) and I own the freehold for the upper flat (which isn't mine), and the owner of the upper owns the freehold of mine (the bottom flat). Something to do with making sure there's no weird or wacky extensions etc go on, like that shark through to roof thingy.

 

Not sure how it'd work in a block of 4.

[Craig 6670]

I'm in no way savvy with conveyancing but I would have thought that the freeholder would logistically have to be one single person.

 

Think about it, in a couple of years time say you want to sell the place, you'll still have to sell it as leasehold as the other two property owners would still be retaining their freehold share.

 

I may be wrong like - would think Manc-mag may know the legal answer.

[Holden McGroin 6454]

Freeholds a bit funny when it comes to flats I think. For example I have a flat (my pension) and I own the freehold for the upper flat (which isn't mine), and the owner of the upper owns the freehold of mine (the bottom flat). Something to do with making sure there's no weird or wacky extensions etc go on, like that shark through to roof thingy.

 

Not sure how it'd work in a block of 4.

 

In my case I think that anything on the outside of the building/roof and communal areas = collectively responsible.

[Christmas Tree 4669]

From the independant......May help you

 

 

Question: Our landlord wants to sell the freehold to our building – a house recently converted into four neighbouring flats – to us all... for £20,000. As flat-owners, each of us has a lease of 125 years for each flat and enjoys low service charges of £250 a year. However, the landlord (a development company) has said he'll sell the freehold to somebody else if we don't want it. Now we're worried a new landlord might impose much higher service charges. Should we buy it, or is it a rip-off? Please help. Tina Jones, Guildford

 

Answer: Freehold usually trumps leasehold for one major reason: financial control.

 

Where the former owns the building and land outright, the latter only actually purchases the right to live in the property for a set time – usually for somewhere between 90 and 125 years.

 

Leaseholders must also typically pay ground rent and service charges that can tally up to thousands of pounds a year.

 

Buying the freehold – or "share of freehold" if you and your neighbours go ahead – would spare you such expense, as well as the heinous cost of "renewing" your lease once it runs down to about 80 years.

 

Instead, to maintain your building you can simply set up a small "not-for-profit" management company that just looks after the running of your building. It won't cost you very much to do it, either – after hiring a solicitor to formally set up the company (roughly £400), you've just the annual Companies House register fee (£15 if done online) to pay. Agree to a business bank account for the freehold company ... and away you go.

 

And if repairs are needed, you can choose who to use and better control the costs.

 

For these reasons, buying the freehold may increase its value – by as much as 10 per cent according to estate agents – and make it easier to sell your home in the future.

 

"Freeholders have more control over the management of their homes," says a spokesman for the housing charity Shelter.

 

However, it is hard to tell if the £20,000 price tag is fair, says Gavin Brazg of property advice website Theadvisory.co.uk. But you may have a strong hand to negotiate lower, he adds, since your long leaseholds won't attract many other buyers.

 

"With such a long time left on the lease, the freehold is likely to be of little value to many other buyers – the real reason to purchase is for lease length "extensions" so it may be difficult for the owner to get that price from a third party."

 

Because you've all got 125-year leases, you won't need to extend for decades – leaving little appetite for buyers who could normally expect at least £16,000 for a single 85-year extension on a £180,000 flat sporting a 68-year lease.

 

So while negotiating is a gamble – the landlord could find somebody else intent on simply hiking charges – the likely lack of ready buyers could play into your hands.

 

And don't worry if it falls through and the landlord does eventually sell to a difficult operator who employs a poor, and expensive, managing agent for your flats. New legislation allows leaseholders to club together and, without needing landlord permission, boot out the existing agent via an independent leasehold valuation tribunal.

 

You'd also have a right to see a full breakdown of all costs if the property manager bills you for work costing more than £250.

 

For more information, contact the Leasehold Advisory Service at www.lease-advice.org.uk.

Edited May 26, 2010 by Christmas Tree

[Jusoda Kid 1]

Our resident Manchester batty boy barrister should be able to help out here.

[Jill 0]

Freeholds a bit funny when it comes to flats I think. For example I have a flat (my pension) and I own the freehold for the upper flat (which isn't mine), and the owner of the upper owns the freehold of mine (the bottom flat). Something to do with making sure there's no weird or wacky extensions etc go on, like that shark through to roof thingy.

 

Ahh Tyneside flats, fucking nightmare when you're dealing with lawyers from elsewhere who haven't come across them before.

 

Anyway, I work in conveyancing but don't really deal with your particular query. So, sorry.

[Holden McGroin 6454]

I dont' live in Newcastle by the way! Moved down south years ago.

[Jill 0]

I didn't mean to imply that you did. Your leasehold/freehold situation is totally different from Toonpack's. Hope you get some good advice though anyway.

[Rob W 0]

Freeholders can own an individual flat in a block but there has to be some sort of agreement on maintenance etc etc

[Craig 6670]

Freeholders can own an individual flat in a block but there has to be some sort of agreement on maintenance etc etc

 

Then that's leasehold surely as whoever you're paying the maintenance to is the freeholder?