Can the residents management company which I run, extend the leasehold for my flat?

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  • ULAK
    replied
    Are you still paying ground rent under the terms of your lease, even though you also own a share of the freehold? Assuming there are several shareholders, then you as a director seem to have a conflict of interest, especially as the length of the lease might create marriage value. I would suggest another director to deal with this on behalf of the freehold company, involving an independent surveyor to determine the fee and then get shareholder agreement in an Extraordinary General Meeting (EGM). You seem conflicted in this scenario to act in the best interest of the majority of shareholders.

    We are setting up a freehold company, and anticipate a comparable scenario, where we even consider issuing different classes of shares, to ensure a leaseholder does not have a vote when it comes to the premium to extend his own lease.

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  • sgclacy
    replied
    Originally posted by umshamrock View Post
    Thanks for the messages, all. We have notified the other directors to see if they would like to extend their leaseholds at the same time. We all own equal shares of the freehold and all of our leases expire at the same time, in 69 years. Everyone paid an equal amount when the company acquired the freehold. I have spoken to a couple of solicitors and have been told the freehold needs a different solicitor than the leasehold so we'll have to pay for two solicitors! This just seems crazy since we are only dealing with ourselves, and the three other owners who all work together regularly.
    The company can indeed grant you a 999 years lease at a peppercorn but at the same time must grant an option to the other three lessees giving them the right to call for a lease extension on the same terms. That option must be capable of registration against the freehold title and your solicitor will need to draft it and register it against the title

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  • Gordon999
    replied
    I would suggest you could proceed by :

    1. Getting valuation for your flat from 2 or 3 estate agents who might be appointed to sell your flat based on ( a) 69 years lease ( as now) and (b) 159 years lease at Peppercorn GR after statutory 90 year lease extension. There may show 10% difference in value. .

    2. Getting quotes from 2 or 3 solicitors for lease extension work for ( a) one flat to 159 years lease only and ( b) all 4 flats extended at same time. Based on changing the existing lease from 69 years to 159 years ( or longer to 999 years lease ) and no premium charged for lease extension. Assume 1 solicitor can be found willing to act for both sides due to Nil Premium ).

    3. The difference in price ( between 69 years and 159 years ) will be around 10%, Say £10K

    4. The solicitor costs may be quoted at £750 ( one flat) and £2000 ( 4 flats at same time ) - I am guessing figures.

    5. When the lease falls below 70 years, its difficult to get a mortgage. So should be easy to get agreement for all to extend together.

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  • AndrewDod
    replied
    The freeholder doesn't need a solicitor. But I strongly suggest that you get unanimous agreement and extend the whole lot equally.

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  • Section20z
    replied
    Strictly speaking you don't have to be represented so you could appoint one solicitor to represent lessees jointly (to appease mortgagees).
    I have granted lease extensions in the past as a freeholder without appointing solicitors.

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  • umshamrock
    replied
    Thanks for the messages, all. We have notified the other directors to see if they would like to extend their leaseholds at the same time. We all own equal shares of the freehold and all of our leases expire at the same time, in 69 years. Everyone paid an equal amount when the company acquired the freehold. I have spoken to a couple of solicitors and have been told the freehold needs a different solicitor than the leasehold so we'll have to pay for two solicitors! This just seems crazy since we are only dealing with ourselves, and the three other owners who all work together regularly.

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  • sgclacy
    replied
    When your company acquired the freehold did you all pay an equal amount or was the price split according to the value and length of each lease

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  • theartfullodger
    replied
    Originally posted by umshamrock View Post
    Hi,

    I own a flat in a building that is managed by a residents management company. I am also the company director. I want to sell the flat but there are only 69 years on the lease so I need to extend it. Can I extend my leasehold myself without using a solicitor? ...................


    No. No!

    The RMC if it is the freeholder could do this, but you are not the RMC, different entity. I appreciate you are a director. Suggest you call a meeting of shareholders and directors using whatever the process is.

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  • Section20z
    replied
    There's not really a need because you will sell a "share of freehold" but you could all extend your leases at the same time while your solicitor is dealing with the sale.
    Not something for you to do yourself.

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  • umshamrock
    replied
    Thank you, AndrewDod. I wasn't implying that I was going to make a unilateral decision. What do you mean by insist theirs is done at the same time? It doesn't matter to me if they do theirs at the same time, does it? Or do you mean they can insist that I pay to extend their leases?

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  • AndrewDod
    replied
    Originally posted by Section20z View Post

    Telepathy must be a wonderful gift
    It is.

    OP, you can certainly agree unanimously with your fellow lessees that the extension could be at zero premium, but they would have the same right and would likely insist either that theirs is done at the same time, or that there is a resolution passed of the absolute right to do so in the future (if I were a fellow lessee I would not agree to that option as it might somehow be revoked later leaving them in a precarious position).

    What you cannot do is act unilaterally as director agreeing with something that is in your own self-interest as lessee.

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  • umshamrock
    replied
    Hi,
    Sorry I was unclear. The RMC is the freeholder of the building, which contains four flats owned by four different people. I am a director of the RMC, along with the other three owners. We all have 69 years left on our leases. Why would extending my lease be to the detriment of the other owners? Who charges the premium? How is that determined?
    Thank you for your help,
    umshamrock

    Leave a comment:


  • Lorimer
    replied
    Is your RMC the freeholder of the building or is there a third party freeholder of the building?There will be a premium to be paid for your lease extension and this premium will have 'marriage value' added to it because your lease has less than 80 years remaining. You will need to instruct a solicitor to handle the lease extension and also a valuer. This is not a DIY job.

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  • Section20z
    replied
    Originally posted by AndrewDod View Post

    OP thinks he is the freeholder
    Telepathy must be a wonderful gift

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  • AndrewDod
    replied
    Originally posted by Section20z View Post
    Only the freeholder can grant a lease extension
    OP thinks he is the freeholder

    Leave a comment:

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