Buying Freehold

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    #16
    Originally posted by Macromia View Post
    The expense of maintaining the building shall be borne in equal shares by the tenants - but who does the lease say is actually responsible for getting the repairs done?

    If the lease doesn't specify this it is definitely defective because the requirement for the tenants to share the cost of maintenance is irrelevant if no one is required to arrange any work and thereby incur any costs.
    There is nothing, but for the bit where it states that the freeholder has a right to inspect the property twice a year and give written notice to the tenant to carry out the repairs and if no repairs works do not start in the 4 months than to permit freeholder to enter upon the demisted premises to execute such repairs and the cost thereof shall be a debt due to the landlord from the tenant and be forthwith recoverable by action.

    Comment


      #17
      Originally posted by Anna1985 View Post

      There is nothing, but for the bit where it states that the freeholder has a right to inspect the property twice a year and give written notice to the tenant to carry out the repairs and if no repairs works do not start in the 4 months than to permit freeholder to enter upon the demisted premises to execute such repairs and the cost thereof shall be a debt due to the landlord from the tenant and be forthwith recoverable by action.
      There has to be something in the leases stating who is responsible for repairs, otherwise nothing has to be maintained.
      The clause you quote here would likely be of limited use because the freeholder cannot insist that a tenant carries out repairs if the tenant can justifiably claim that the repairs aren't his responsibility.

      Similarly, the leases need to make it clear what maintenance each leaseholder is responsible for, and whether or not other leaseholders are expected to contribute 1/3 of the cost of all maintenance or just certain maintenance jobs.
      The internal parts of a flat will usually need to be maintained by the leaseholder of that property at their own expense, but if (for example) the leaseholder of the upper flat is responsible for maintaining the roof he will usually be entitled to have other leaseholders contribute to the cost.

      If the leases really don't state who is responsible for what, then who is supposed to be 'sued' if there is no work carried out?
      You can only sucessfully sue someone if they have failed to carry out a responsibility.

      If there really is nothing in the lease about responsibilities for maintenance, you need to take advice from a suitably qualified lawyer and get the leases changed.

      Comment


        #18
        Originally posted by Macromia View Post

        There has to be something in the leases stating who is responsible for repairs, otherwise nothing has to be maintained.
        The clause you quote here would likely be of limited use because the freeholder cannot insist that a tenant carries out repairs if the tenant can justifiably claim that the repairs aren't his responsibility.

        Similarly, the leases need to make it clear what maintenance each leaseholder is responsible for, and whether or not other leaseholders are expected to contribute 1/3 of the cost of all maintenance or just certain maintenance jobs.
        The internal parts of a flat will usually need to be maintained by the leaseholder of that property at their own expense, but if (for example) the leaseholder of the upper flat is responsible for maintaining the roof he will usually be entitled to have other leaseholders contribute to the cost.

        If the leases really don't state who is responsible for what, then who is supposed to be 'sued' if there is no work carried out?
        You can only sucessfully sue someone if they have failed to carry out a responsibility.

        If there really is nothing in the lease about responsibilities for maintenance, you need to take advice from a suitably qualified lawyer and get the leases changed.
        According to the lease, the tenant is responsible for maintaining the demised property in good repair.
        The roof, the outside area and all the part which are common are specifically mentioned in the lease to be maintained and the expense of maintaining them to be born in equal parts by all tenants.

        So it is a responsibility of the tenant it is just the landlord won't issue a written notice or anything at all unless we either buy freehold or sue the landlord to sue the tenant.

        According to the legal advice :

        Unfortunately you have acquired a lease which simply does not oblige the freeholder to repair, and where you have to engage with other leaseholders to deal with repairs. If the other leaseholder/s refuses, you can ask the freeholder to take action against that lessee but at your cost. It is very unsatisfactory but not uncommon for converted houses with older leases.

        Comment


          #19
          I presume the flats are roughly all the same size and inmn good condition. .

          If the flats with long leases really have a market value of £700K to £800K , then paying £4K should be an easy decision. The leaseholder of flat with only 57 years remaining on the lease may be persuaded to pay £44K ( = 5% ) by adding the sum onto existing mortgage loan.

          If you talk to a local estate agent , you may get a rough market value for the flat on a lease lease with 57 Years ( now ) and for 147 years. ( after 90 years extension ). It should gain much more than £44K.


          Alternatively, the simplest solution is to form a RTM company to take over the maintenance of the building . The RTM company has legal right to demand service charge payment from the leaseholder of each flat in the building .

          You can pay about £100 to an online supplier for incorporating the RTM company with Memorandum and Articles and sign the notice to claim the right to manage the building. A "Free Guide to RTM" can be downloaded from www.lease-advice.org .

          If 2 leaseholders agree to support the RTM and one flat does not and no objection from freeholder , it is a proper way forward becuase to sell your flat at future date , the prospective buyer needs to show 3 years of service charge accounts to support his mortgage application.

          Comment


            #20
            Definitely not the kind of lease I'd want to have.

            Maintenance/repairs do seem to be covered, but it is likely to be difficult to get work done unless all three leaseholders are willing to cooperate and able to reach agreement.
            If your building needs work that is going to cost each leaseholder over £20,000, it is likely to be difficult to get agreement. Having an independent freeholder who is responsible for maintaining a block isn't always ideal, but at least it means there is someone who can make a decision.

            Buying the freehold may not help much in this case. It looks like all that would achieve would be to mean that, as freeholder, you could take action to enforce the requirement for the third leaseholder to contribute (at your expense unless you could convince the court/tribunal to award you your costs).
            You can already do pretty much the same thing by getting the current freeholder to take action (again at your expense). Owning the freehold might give you a little bit more control over the action taken and how much it costs, but probably won't make much difference.

            Presumably you've already discussed the work that needs doing with the other leaseholders (or at least with one of them?).
            Whoever actually organises the work will need to make sure they keep evidence that all leaseholders have agreed to the work or, at the very least, that they have sufficient evidence from independent surveyors to show that the work is necessary - this might be needed if one of the leaseholders claims the work wasn't required or challenges the costs as unreasonable.

            Comment


              #21
              Gordon: RTM isn't really relevant in this case - the leaseholders are already in a situation where they are expected to agree any work that is required between them and split the cost.

              Comment


                #22
                Originally posted by Gordon999 View Post
                I presume the flats are roughly all the same size and inmn good condition. .

                If the flats with long leases really have a market value of £700K to £800K , then paying £4K should be an easy decision. The leaseholder of flat with only 57 years remaining on the lease may be persuaded to pay £44K ( = 5% ) by adding the sum onto existing mortgage loan.

                If you talk to a local estate agent , you may get a rough market value for the flat on a lease lease with 57 Years ( now ) and for 147 years. ( after 90 years extension ). It should gain much more than £44K.

                The flats vary in price between 350 -380 for downstairs with the good lease to 250 - 270 for the long lease flats.



                Comment


                  #23
                  Originally posted by Macromia View Post
                  Definitely not the kind of lease I'd want to have.

                  Maintenance/repairs do seem to be covered, but it is likely to be difficult to get work done unless all three leaseholders are willing to cooperate and able to reach agreement.
                  If your building needs work that is going to cost each leaseholder over £20,000, it is likely to be difficult to get agreement. Having an independent freeholder who is responsible for maintaining a block isn't always ideal, but at least it means there is someone who can make a decision.
                  .
                  unfortunately our "independent" freeholder won't do anything to the property.
                  There is number of repairs, if we can agree going forward we do not need to do them all in one go and can space over the years. Unfortunately, we were unable to get freeholder to do anything, and the short leaseholder won't do anything unless there is a looming legal action.

                  So far, we just patched things with another leaseholder and paid for the costs ourselves as the legal costs are not worth the hassle, but going forward the bigger repairs will need to be done and we really are at the point where we would happily sell to any hapless soul coming in our place, just being advised that we need to adjust the price to cover for the freeholder, who may not answer any queries (loosing us a sale) and the state of the property.



                  Comment


                    #24
                    Originally posted by Anna1985 View Post

                    unfortunately our "independent" freeholder won't do anything to the property.
                    There is number of repairs, if we can agree going forward we do not need to do them all in one go and can space over the years. Unfortunately, we were unable to get freeholder to do anything, and the short leaseholder won't do anything unless there is a looming legal action.
                    Your freeholder doesn't seem to have any obligation to do anything to the property - that is your problem.

                    In more typical leases with a freeholder in charge of the block, the freeholder obligations to keep the structure and communal parts in a good state of repair. If one leaseholder refuses to pay their share the freeholder is usually still obliged to maintain the building - and then takes action to recover their costs.

                    In your case, it is the leaseholders who have the obligation to maintain the building, and the problem of getting other leaseholders to pay.

                    Comment


                      #25
                      Originally posted by Macromia View Post
                      Your freeholder doesn't seem to have any obligation to do anything to the property - that is your problem.

                      In more typical leases with a freeholder in charge of the block, the freeholder obligations to keep the structure and communal parts in a good state of repair. If one leaseholder refuses to pay their share the freeholder is usually still obliged to maintain the building - and then takes action to recover their costs.

                      In your case, it is the leaseholders who have the obligation to maintain the building, and the problem of getting other leaseholders to pay.
                      yes, indeed. 2 of us who live in the property are happy to do things that are necessary and possible a bit more, but the 3rd leaseholder is only playing the ball when there is a threat of a fine or additional expense.

                      Comment


                        #26
                        I would suggest you take up the offer and if the short leaseholder doesn’t want to take part buy his share and then create an overriding lease and sell that in to an investor . That investor would have a 999 year lease and pays you a peppercorn rent but they will get the ground rent and lease ext premium in the future

                        you will make a loss on buying and then selling with the overriding lease but it will off-set a fair amount of the acquisition cost . You should get about 70% of the price you pay on enfranchisement for that short lease flat

                        Comment


                          #27
                          Originally posted by sgclacy View Post

                          you will make a loss on buying and then selling with the overriding lease but it will off-set a fair amount of the acquisition cost . You should get about 70% of the price you pay on enfranchisement for that short lease flat
                          thank you for this suggestion, the only benefit is that we may reclaim 70% in a shortish time frame if I understood your correctly?




                          Comment


                            #28
                            Originally posted by sgclacy View Post
                            I would suggest you take up the offer and if the short leaseholder doesn’t want to take part buy his share and then create an overriding lease and sell that in to an investor . That investor would have a 999 year lease and pays you a peppercorn rent but they will get the ground rent and lease ext premium in the future

                            you will make a loss on buying and then selling with the overriding lease but it will off-set a fair amount of the acquisition cost . You should get about 70% of the price you pay on enfranchisement for that short lease flat
                            This seems to require the forced insertion of an intermediate lease. Is that really possible. In any case, the investor needs to make a significant profit, and also to consider the risk that legislation will remove the ground rent and any consents revenue streams, in the future, so I can't see them paying anything like the third leaseholder's fair share of the enfranchisement cost.

                            Comment


                              #29
                              Yes, this is our concern and taking into account that house prices are funny at the moment. Is it a good value for money? If the amount was 10-20k , we would just went for it but 52k ... is a lot of monies... for no future revenue stream and a possible loss on the short lease extension
                              ​​

                              Comment


                                #30
                                One other consequence of not having a properly formulated service charge, if you have a leaseholder who is in genuine financial difficulty, is that they will probably not be able to get the State to pay the costs, whereas, those parts of service charges that are genuinely for maintenance (except ground floor window cleaning) will be covered by the State if you are on UC.

                                Comment

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