Freehold of flat over Commercial (restaurant) premises?

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    Freehold of flat over Commercial (restaurant) premises?

    We live in a split level flat above a restaurant.

    The Freehold comprises ground floor double unit restaurant and two split level flats above.
    The restaurant is on a 20 year lease (about 12 to run), we have 78 years to run of 99 year lease. I believe the other flat has similar lease.

    We want to sell and the only enquiries are all about extending the lease.

    I wondered if another alternative might be to buy the freehold - if it is possible to buy the freehold interest of the flat in this sort of situation.

    All advice / suggestions appreciated.

    #2
    You would only ever want to have the freehold of the whole building and if there is restaurant paying a commercial rent below then the value of the right to receive that rent will be considerable. Therefore quite apart from the legal issues, it is not going to be a sensible thing to seek to do.

    If you bought the freehold of just the flats then in my view that would render the flats unmortgageable!
    RICHARD WEBSTER

    As a conveyancing solicitor I believe the information given in the post to be useful (provided it relates to property in England & Wales) but I accept no liability except to fee-paying clients.

    Comment


      #3
      Originally posted by Richard Webster View Post
      You would only ever want to have the freehold of the whole building and if there is restaurant paying a commercial rent below then the value of the right to receive that rent will be considerable. Therefore quite apart from the legal issues, it is not going to be a sensible thing to seek to do.

      If you bought the freehold of just the flats then in my view that would render the flats unmortgageable!
      I agree with Richard.
      Jackieh- even without the f/r, you can extend existing lease by 90 yrs. once you've owned it for more than 2 yrs. See s.42 of 1993 Act.
      JEFFREY SHAW, solicitor [and Topic Expert], Nether Edge Law*
      1. Public advice is believed accurate, but I accept no legal responsibility except to direct-paying private clients.
      2. Telephone advice: see http://www.landlordzone.co.uk/forums/showthread.php?t=34638.
      3. For paid advice about conveyancing/leaseholds/L&T, contact me* and become a private client.
      4. *- Contact info: click on my name (blue-highlight link).

      Comment


        #4
        Richard, Jeffrey, why would you think that the purchase of the freehold on just the flat might render the flats unmortgageable ?
        Many tks

        Comment


          #5
          This is all about the fact that you cannot enforce positive covenants (e.g. to maintain and insure a property) against a neighbouring freeholder (i.e. the owner of the part of the building above or below you) just because he happens to own that property - there must be a direct covenant entered into between you - so every time a freehold flat changes hands the new flat owner would have to enter into a deed of covenant with all the other flat/shop owners in the building (who would all have to sign) - this makes it completely unworkable.

          If the property is leasehold then the landlord/lessor can enforce such covenants against the lessees.
          RICHARD WEBSTER

          As a conveyancing solicitor I believe the information given in the post to be useful (provided it relates to property in England & Wales) but I accept no liability except to fee-paying clients.

          Comment


            #6
            very interesting Richard - tks for that
            But what is the difference between this situation (purchasing the freehold on the flats and leaving that of the restaurant to the current freeholder)and having a share of freehold in terms of enforcing positive convenants ? is it the fact that share of freehold only works if it refers to the whole building ?
            Tks

            Comment


              #7
              Share of freehold is not a separate type of title - leaseholdanswers is trying to find the person who invented the term to do nasty things to him because it causes so much confusion.

              If 3 or 4 people have separate leasehold flats in a building and then those same people own the freehold of the whole building together they constitute the freeholder and it is no different from an outside freeholder - it is a collective ownership (and collective decision making as freeholder). No person can say "I have this part of the building as my part of the freehold..."
              RICHARD WEBSTER

              As a conveyancing solicitor I believe the information given in the post to be useful (provided it relates to property in England & Wales) but I accept no liability except to fee-paying clients.

              Comment


                #8
                Share of freehold is not a seperate title
                I have just read a Deed of Variation Draft
                with the words Freehold Title DT123456 Leasehold title DT 7891011
                This document was prepared by a local Solicitor
                I have a flat which is decribed as a freehold share or other words
                I hold a share of the freehold
                any comments
                Many Thanks to you guys for the site

                Comment


                  #9
                  which means there is still a ONE freeholder (which is a company where ppl are together directors) as opposed to TWO in the situation described above - Richard this is very clair and insightful - many thanks !

                  Comment

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