Subdividing leasehold flat into two

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    Subdividing leasehold flat into two

    Hi

    I am considering dividing my leasehold flat (one of three leasehold properties comprising a Victorian detached house) into two flats, with creation of two new leases (and presumably some sort of annulment of the existing lease). All three flats have leases (varying lengths) and the freeholder is a fourth party.

    From what I have read, it seems clear that this is something I shouldn't attempt without "buying the freehold" in some form. I gather that if I were to attempt this as a leaseholder, the freeholder could refuse altogether, and otherwise demand whatever price he wanted to, with half the "value added" (valuation of both new flats less valuation of original flat) being usual. Paying that sort of premium would make the whole idea pretty much a non-starter.

    Note that the conversion itself would be straightforward, involving no party walls, no removal of supporting walls, and no exterior changes -- not even addition of a new entrance or modifications to shared areas, as the "lobby" for the two created flats would be behind the existing flat's indoor entrance door.

    My question is about what rights I might have to do this if I were to own a share of the freehold (i.e. a share in a company owning the freehold, created via enfranchisement).

    I realise that one option - the simplest - would be to make an offer to the current freeholder for the entire freehold. Since the proposed alterations have no effect on shared or exterior parts of the flats, I imagine I would be free to do pretty much as I pleased so long as the other lessee's leases were not infringed. Whilst this would be expensive, it would actually work out much cheaper than paying half the value added to the existing freeholder, as well as avoiding me having to extend my existing lease. It would be a reasonable option given the large anticipated value added from subdividing the flat, even if the intrinsic value of the freehold itself is likely to fall due to upcoming leasehold law reforms.

    But of course the current freeholder could choose to ask a price for the freehold which was well in excess of the fair valuation of the freehold which might be obtained through enfranchisement, not to mention the fact that first refusal on the freehold would have to be offered to the lessees - one of which is me! - which confuses things further.

    So instead suppose I were able to convince one or both of the other two current lessees to go through enfranchisement, after which I would own either 1/2 or 1/3 of the freehold company. In each of these two cases, would I have an automatic right to split my lease into two and carry out the work required? Or would this need to be negotiated with the other freehold partner or partners, with the potential that they could refuse, or hold me over a barrel and demand whatever payment they wished to from me in order to allow me to proceed (in which case I would perhaps be no better off than trying to negotiate a lease-split with the current freeholder)?

    Though this question is rather specific, I suppose it is related to a more general question regarding the rights of someone with a share of a freehold company. In theory, couldn't the other 50-50 partner, or the other two 1/3 partners, refuse me even the right to extend my existing lease (their leases are longer) or demand a price to do so, even though I owned a share of freehold?

    Thanks


    #2
    This appears to be a continuation of another thread.

    Having a share of the freehold gives you no special rights.

    There are fire safety implications in this, so you will need building control consent, and the freeholder may need to redo their fire risk assessment, or you will have to do a fire risk assessment for your new, shared lobby.

    Comment


      #3
      Originally posted by leaseholder64 View Post
      This appears to be a continuation of another thread.
      As answers to both this thread and the other one could both be useful independently to other people, I thought it more helpful to make them separate threads.

      Originally posted by leaseholder64 View Post
      Having a share of the freehold gives you no special rights.
      Well, this is the issue this question is all about. Unfortunately 11 words on the subject is not especially helpful What would "non-special" rights be? What about the right to extend ones own lease? What about clauses which might be written into the agreement to form a shared freehold company (I don't know what form that might take - company articles? a separate contract of some type?).

      Thanks

      Comment


        #4
        You don't get any special rights under leasehold law. The lease still has to be complied with.

        You don't get a right to extend your lease, beyond the statutory one. It may well be a lot more likely that a leaseholder owned company would extend for a nil premium, but that is a decision that they would make in each individual case.

        Comment


          #5
          Originally posted by leaseholder64 View Post
          beyond the statutory one
          I don't understand ... what is the statutory right to extend a lease?

          I'm puzzled as to why you are being deliberately curt with me. I can't imagine how I might have offended you or anyone else.

          Comment


            #6
            The statutory right is the one that extends the lease by 90 years, at a nil ground rent, and for a premium agreed by the FTT.

            I'm maybe a bit sensitive because many people think the law no longer applies to them when they have a share of the freehold. Also, as an owner occupier, people who come in from outside and do this sort of thing tend to cause problems for the existing residents.

            Comment


              #7
              I haven't "come in from the outside". I've lived in my flat for 18 years and now I need some equity and would like to subdivide it and sell half.

              Comment

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