Less than 50% of freehold

[raskitt]

I have just started conveyancing for a share of freehold flat. The flat is the ground floor of a converted house.

I have just found out that the other 2 share of freehold flats are owned by the same person (who originally owned the whole building).

How much of a problem is this? I am concerned that because I have less than 50% of the freehold the owner of the other 2 flats can make all the decisions and I would have limited say

Any feedback would be greatly appreciated

[Lawcruncher]

Do you mean that you are buying a leasehold flat with a share of the freehold?

[AndrewDod]

If you own a minority share of the freehold, then true you have no say at all. The freeholder still has to obey the lease and the law though.

I would not buy it. Owning a minority share in a "share of freehold" situation is far worse than not owning any share at all (and having an independent external freeholder or even a freeholder who is also a lessee).

[raskitt]

Do you mean that you are buying a leasehold flat with a share of the freehold?

Yes that is correct

[raskitt]

AndrewDod,

Thank you, my thoughts are going this way. Could you explain briefly why it would be worse? I assume because I'm on the hook for shared costs whereas if I had the same flat but without the freehold I would not

[AndrewDod]

No. Your obligations and those of the FH are determined by the lease. When the FH does not obey the lease (or cheats) you have recourse via the courts. If you are part of the freeholder (but with no actual ability to uphold those obligations) you would be taking legal action against yourself. If as a result of those actions (against yourself) the freeholder was bankrupted, you would lose your asset to the crown.

People are often attracted by "share of freehold" as they consider that it adds value. Occasionally it does, but it is more often a poison chalice. If in a minority situation there is almost no upside, and plenty of potential downside.

[flyingfreehold]

another problem with share of freehold is that neighbours can end up in dispute and at each others throats. And having to sue neighbours is most undesirable. Those campaigning for leasehold reform havent gone into print as to how to enforce against leaseholders who refuse to pay. We have one leaseholder who has paid no ground rent or service charges since 2015, the balance is around ten thousand pounds owed. There are two county court judgements and both registered as a charge against the leasehold. Not had a reply to any letter but some sent back from the property "not here" In theory we could apply for a possession order but the debt is racking up at a compound interest at 8 per cent with monthly rest dates.

[Gordon999]

I have just started conveyancing for a share of freehold flat. The flat is the ground floor of a converted house.

I have just found out that the other 2 share of freehold flats are owned by the same person (who originally owned the whole building).

How much of a problem is this? I am concerned that because I have less than 50% of the freehold the owner of the other 2 flats can make all the decisions and I would have limited say

Any feedback would be greatly appreciated

If you own a 1/3 rd share in the freehold title , you do not pay ground rent and you can give your flat a statutory lease extension at nil premium.

The service charge for maintenance of the building should contributed 1/3rd by your flat. If the other freeholder contributes 2/3rds for 2 flats , why should you be worried?

[AndrewDod]

If you own a 1/3 rd share in the freehold title , you do not pay ground rent and you can give your flat a statutory lease extension at nil premium.

Neither of the above are necessarily true

The service charge for maintenance of the building should contributed 1/3rd by your flat. If the other freeholder contributes 2/3rds for 2 flats , why should you be worried?

Read this forum and the comments already made. Plenty of reason to worry.

[Gordon999]

Obviously, my feedback can be wrong. OP 's solicitor should check the terms in the lease are all acceptable before he commits to exchange of contract for purchase of "leasehold flat".

He should not try to buy a "freehold flat" which does not qualify for mortgage loans.

[AndrewDod]

Obviously, my feedback can be wrong. OP 's solicitor should check the terms in the lease are all acceptable before he commits to exchange of contract for purchase of "leasehold flat".

I think the issue here is not so much the lease (if it is bad, that is a problem) but what the options are when the lease/law are disobeyed (as is commonly the case). Certainly if one is charitable and generous (as you are) and assumes the lease/law will be obeyed rigorously, then the lease is key. But fraud is the name of the game in the leasehold sector and the assumption is that there will be fraud now or in the future.