Freehold / leasehold question

[Paul]

I'm looking to buy a flat in a period property that contains two flats. I've been told by the agent that with the flat I want to buy comes the freehold for the whole building (and presumably the other flat must have a lease). Does anyone have any experience of this situation? My concern is that if, say, the roof needed expensive repairs would I as the freeholder bear the entire cost? I'd like to get a better idea of the costs and benefits of this sort of situation.

[Jeremy]

I am in a similar position - but I bought the freehold after moving in.

Repairs to the roof or common areas would definitely be the responsibility of both flats. The freeholder is in no way obliged to pay for any maintainence. Your solicitor will be able to advise more clearly, but it really isn't a problem.

If you don't want the freehold, you will probably be able to sell it on at auction for a few grand (although I'm not necessarily recommending it).

[peckhamboy]

It would depend on the terms of the lease - your solicitor will advise you though. I'd be surprised if the lease didn't contain a covenant to repair or to contribute 50% of the cost. It might be your obligation to carry out the work though.

[Jah Lush]

Buy the lease. Until I bought mine a couple of years ago I was constantly being ripped off by the freeholders who were in bed with the people who did the maintenance and charged me a fortune in maintenance and insurance fees. Also, if you were late in paying they'd charge a percentage of interest per-day and you'd have to pay their lawyers too who they also colluded with. They were complete bastards.

I'm in a small block of eight flats. We all bought our share of the lease a couple of years ago and got our own management company in to do the maintenance. It saves us at least ?1,000 a year each in fees and we haven't looked back.

[Paul]

Great, thanks guys.

[Carrie]

The lease of the other flat will almost certainly contain a clause requiring you as freeholder to carry out the works but not until you have received the contribution towards the cost from the owner of the other flat - so you should not end up out of pocket. Obviously there is always a chance that the other flat owner does not pay up and you have to get the work done anyway to prevent the property from falling into disrepair but you can then take court action to recover the money and recoup the money either via the mortgagees (if the owner of the other flat has a mortgage) or eventually by forfeiting the lease!

If you are getting a flat with a freehold I would advise you to hold onto it rather than trying to sell it off - makes your flat easier to sell in the future and prevents you from getting shafted by one of the unscrupulous freehold companies that are around!

[ruffers]

Can you buy it, then sell a share to the other flat?

[cate]

Everyone who answered your question has made very good points. If you really like the flat then the fact that you get the entire freehold is good news in my opinion. You can decide who to employ to do the work. You should also be getting some sort of ground rent from the other flat, and possibly some service charge - say for cleaning the communal parts - or to put towards a sinking fund for repairs. Is that information not in the HIPS pack? Also make sure you find out who the insurers are for the building from the current freeholders. It could be useful to keep the same insurers.

And like ruffers said it could be that in the future you could offer half the freehold to the other flat. It should be worth upwards of 2k.

Some people freak out at the idea of being a 'freeholder' because they think it must mean too much responsibility. It's a lot better than being ripped off by a management company though. Personally I would never buy a flat that didn't have freehold or share of freehold.

[firstchoicegary]

i agree with the last post, i live in a victorian conversion (two flats) i own freehold,and so does the other flat but there is a share with maintenance etc on whole property i am on ground floor but shera cost of roof with upstairs. Same as if there are gutter or water mains issues on ground level the cost is shared. you normally only have a lease on larger blocks of flats but these again can be bought out. building insurance etc on smaller converted properties is shared. As the above post said buying a flat unless in a 10 plus block i.e say is better to be freehold to have more say.

[womanofdulwich]

YOU absolutely must see the lease of the other flat and check there are no clauses that are onerous to you as a freeholder. You don't know if it says that the freeholder has to do all external repairs it is not a given. your solicitor can get you a copy of the other lease. you might find the lease has less than 80 years left and therefore you might even be able to sell the other leaseholder a lease extension/share of freehold in due course. You do have responsibilities as a freeholder and you must get advise at the offset to make sure you are not being negligent ( but a freehold is generally a good thing).

[firstchoicegary]

i agree

[MsAliP]

firstchoicegary - can I ask an off-on-a-tangent question?? We've just bought the freehold with our neighbours (2 flats victorian conversion like you) but our solicitor isn't sure how to proceed with a binding agreement for just two parties. I know... odd! Can I ask what how your shared freehold is set up? The solicitor's best option is a covenant of some sort where we list sensible things like sharing all building costs but he fears it won't be fully legally binding and could lead to trouble if one of us moves and sells to a less friendly and responsible sort.

Very interested to hear about your - or anyone else's - arrangement. Cheers!

[ClareC]

Change solicitors!!

It really isn't legally challenging to draw up an agreement of this sort!!

In all seriousness my grandparents hired a solicitor who, had they have followed his advice, would have cost my father thousands in IHT. Fortunately I was made aware of the advice before they acted on it and suggested they questioned it.... at which point the solicitor concerned admitted it was "beyond his expertise" and he was thefore unable to act. They went elsewhere and were given entirely different advice consistent with what I expected given the circumstances.

It shouldn't happen, but it does, firms (generally small \ sole practitioners) taking on work that isn't within their expertise - fine if they are happy to do the necessary research (at their own cost) but not fine if the advice is detrimental to the client!! I would check what your solicitors expertise is - you can do this looking him / her up on the law society website. Find out what is so complicated about your situation, on the limited facts you have provided certainly doesn't sound complicated.

[Sharon_H]

we bought our share of freehold some years ago along with the other leaseholders (2 other flats) and we all decided to keep our existing leases as we'd all agreed to them when we originally bought our flats, it's all worked out quite well since then. Since then 2 of the the flats have been sold and it's still working well.

[pcmesq]

Im in the process of buying a leasehold flat with a share of the freehold. This will be shared with the owners of the flat above us. I have been advised by my solicitor that we will need joint buildings insurance for the whole house. has anybody had experience of this? Is it an easy thing to arrange? I've read that Dulwich is one of the most expensive areas in the county for building insurance....

[sophiesofa]

pcmesq I live in a share of freehold building (1 of 3 flats) you need to go to a insurance broker to get the insurance not direct. Ours is about ?960 a year but the previous owner to our flat made 3 claims totaling over 30k within the last few years so that put our premium up and made it incredibly difficult to find anyone to insure us, so your premium should be lower. Your estate agent or solicitor will be able to find out how much they currently pay and who with.

[MsAliP]

pcmesq - the building will already be insured. Ask the people you're buying the freehold from for a copy of the policy certificate (our freeholder always sent us a copy with the bill we had to pay for it). When I bought our freehold, I then just contacted the broker named on the certificate and changed the name on the policy (the policy was paid up until June and we purchased the freehold in March). Now we have to renew the insurance policy, the insurer and broker we're with already are offering us a good deal to stay with them.

[Smiler]

RE. buildings insurance, it is quite hard to get, as most of the main insurers won't do it, we went to a broker and got a much better deal with Allianz.