Can we insist on/force a 50/50 split as Freeholders?

[russellwebb]

My wife and I are the Freeholders of a typical Victorian house, split into two flats. We are also one of two Leaseholders as we live in one of the flats. We have been living there for five years and now we want to sell.

Very long story short, lenders (like HSBC) have stipulated that the current ad-hoc maintenance agreement is insufficient and have refused to lend. The other leaseholder has rejected a default 50/50 proposal to cover costs, as they are not looking to sell, do not want to incur surprise costs and five years ago extended their lease to 150 years at a cost of £25k. They are both paying peppercorns rent.

Question; If I was to set up a maintenance company, can I insist on/force a 50/50 split?

[leaseholder64]

No.

I'm not even sure you can set up a maintenance company without a change in the lease, agreed by the other leaseholder.

What are the current provisions in the lease about who pays for maintenance. I suspect your only hope is that the lease doesn't cover 100% of the costs, in which case you may be able to get the FTT to force a variation.

[russellwebb]

I thought not.

We have already propositioned the other Freeholder. Our Solicitor recommended Indemnity Insurance as a one-off payment. The other leaseholder has accepted this or a 15 year exemption of liability. But as there are no provisions in either leases regarding who pays maintenance (it is ad-hoc, a not-so-much gentlemens agreement, so to speak), and their lease is valid for 150 years they, off course, will not expose themselves future costs.

Is this a usual set-up? It seems just because the other leaseholder has a bullet-proof lease, we cannot sell our property.

[russellwebb]

Just to add to the current provisions, the communal areas are split (just the entranceway) and the remainder of the property is split at the ceiling level for the downstairs flat // the floor level at the upstairs flat. We live upstairs. In the five years we have lived there, nothing has had to be repaired, so I'm both unclear and skeptical on how that maps out in reality.

[leaseholder64]

Does this area not have any lighting? The guidance is that electrical systems should be inspected every five years.

Also, who does the fire risk assessments?

[russellwebb]

There is lighting. One light, linked up to the downstairs flat. It is on push button, so must be on 5-10 minutes a day MAX. Very roughly, £15 p/year.

And the FRA was complete in June 2018 by NSUK Environmental LTD, as well as a RICS Building Survey complete in the same month.

The key point is the big lenders, as I'm lead to believe, insist on joint maintenance agreements, specified in the both leases. We do not have that.

[leaseholder64]

I wasn't talking about the cost of the electricity, but rather the cost of inspecting the wiring. Also the question was about the cost of the FRA. Both things are costs that I would have expected you to have had to share in the last five year.

I would say that the fact that the other leaseholder doesn't want to pay "surprise costs" is exactly why the lenders insist on specific rules about who pays.

[russellwebb]

As the freeholder we have to cover those costs ourselves as the other leaseholder do not pay for surveys of communal areas. This is the obligation only of freeholders. The only shared cost is the building insurance which is an annual payment split proportionately, we have a three-bed, they a one-bed. So it is one third, two third split.

And I appreciate what lenders are looking for, my base reason for posting was the find a workable and legal solution. I understand my predicament, but following five months of negotiation ranging from our insistence to execute all legalities regarding updates to freeholder/leasehold agreements POST sale, to as mentioned earlier, organising indemnity insurance we are nowhere nearer Exchange, let alone Completion.

Electricity and survey costs, in the big picture, are inconsequential. Essentially I'm looking to excercise my rights as a freeholder - but how exactly can I do that? I just need to know my legal position. My number one aim is sell the property.

[russellwebb]

Any update anyone on this?

My update is, I've lost my sale and the on-going forward chain has collapsed. Massively disappointing but it is, what it is.

Now we have time. With no maintenance agreement in place, I assume potential new buyers will not look favourable on our sale. Can you experts confirm, that as the Freeholder, the only way of implementing an equal (or at least documented and enforced - doesn't have to be equal) maintenance agreement is with the other leaseholders agreement?

As @Leaseholder64 rightly points out, any agreement has to be ratified with new leases for us both. Of course, we will do that, but the other flatly refuses for the reasons mentioned above (not looking to sell, surprise costs , lease extension). What can I do?

Sell with leasehold only, and gift or keep the Freeholder after?

[leaseholder64]

The FTT has discretion to modify leases, in certain circumstances.

[russellwebb]

Apologies, with FTT am I to presume you are referring to First-tier Tribunal (Property Chamber)?

If so, I have booked an appointment for a telephone interview with them. Asking the same questions as all the above. Is there anything I should concentrate on, anything specific I should also ask as I'm unsure what they do?

If not, can you advice what FTT is?

[leaseholder64]

Yes. FTT is that. See https://www.lease-advice.org/advice-...chamber/#s-3-7 I believe there will be costs beyond the tribunal fees.

[Gordon999]

This website has some info on mortgage lenders willing to finance flats without maintenance agreements.

http://www.fridaysmove.com/why-lende...ld-flats/13225

[Moderator2]

Gordon999,

Just send me a PM if your posts are being blocked.

[Anna1985]

Any update on your situation re lease? Thanks