Freehold/Leasehold benefits

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    Freehold/Leasehold benefits

    Hi new to the forum so please move the post or point me in the right direction if im in the wrong place. I apologies now as this could be very long.

    im a first time buyer and i am going to purchase a house with a friend 50/50 split. we have seen a few flats we like and have found one that is right at the top of our price range but "seems" to have a few advantages

    When buying the flat for 249,000 we would also be buying the freehold of the entire building, two flats including the one i would own and one downstairs. here is where the fun starts. the flat downstairs has never been charged ground rent or maintenance. the current owners say they have, under advice, invoiced the lower house for the backdated maintenance but is leaving the ground rent debt as apparently this is an asset to the house (im honestly not 100% on this part the estate agent was babbling to long at this point). i have been trying to read up on leasehold freehold acts etc and am getting a little confused to say the least.

    now for the questions, if we were to buy the flat and freehold of the entire building

    1) What defines the ground rent you can charge

    2) How is the Maintenance cost calculated as we would want a sinking fund in case of emergencies
    2a) should i be concerned there is no sinking fund now. they have stated there is a leak in one of the guttering which they are getting quoted for and taking the bill with them. however if the roof collapse in 6months would the cost not then be split between us and the flat below?

    3) Apparently the lease on the flat below has about 85 years (again a guestimate of what i think the agent said). I have been reading about 'marriage value' if the lease is below 80 years. how much would this be on a property value (our flat) 249,000. also is this on top of the lease renewal cost

    4) is there a lower limit at which the leashold has to renew as they could not bother renewing far past the time we intend on staying in the house, 10 years probably. Then the main asset would go to who ever we sell to!!

    5) Owing the freehold would by default make me in charge of flat insurance maintenance etc. is this a great deal of work?

    6) the big Q what are the advantages of owning the freehold as right now it is just seeming like more hassle than its worth. The only reason i am contemplating pushing my financial limit on the house was the freehold. Once i read up on it i cant see many advantages. The only advantages i can see are that;

    - you can make sure you are getting the best deals when it comes to any work that needs to be done.
    - Money IF they renew the lease when we are there, which there is no guarantee
    - selling the freehold, but then wouldn't this decrease the price of the flat

    i dont expect the answers to everything but any advice would be appreciated as im a bit in over my head i feel

    #2
    Really, most of these questions are best answered by your solicitor. Ensure that he/she draws-up a Trust Deed between you + co-purchaser.
    However:
    1. The lease.
    2. Whatever the lease provides.
    3. -
    4. No, as a leaseholder has no obligation to renew (but would be a twerp not to).
    5. Not a lot.
    6. Avoids nasty people/companies buying it and making your life a misery.
    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


      #3
      Ill add my tuppence worth to Jeffreys answers.

      1) and 2) and 2a). This will be stipulated in the lease so depending on what it says will bind you to how much, how often, sinking fund, wether in advance, regarding the service charges you can recover.

      There is a lot of legislation regarding this and you could find yourself out of pocket if you dont understand it.

      5) May not be a great deal of work but could be problematic if people dont pay up.

      6) You avoid being at the mercy of landlords and management companies who will try to extract as much money from you as possible.

      Andy
      Advice given is based on my experience representing myself as a leaseholder both in the County Court and at Leasehold Valuation Tribunals.

      I do not accept any liability to you in relation to the advice given.

      It is always recommended you seek further advice from a solicitor or legal expert.

      Always read your lease first, it is the legally binding contract between leaseholder and freeholder.

      Comment


        #4
        Thanks for the fast replies the information has really helped. It seems before i make any commitments i need to have the details of the lease below. I would assume this information, being so crucial to the sale, should be available for me before putting any offer in.

        With regards to to my last question i should have rephrase my question.

        250,000 is literally my limit. we were planning on spending around 230,000 realistically. For a flat/house of around 230,000 we did not want to do anything just move in and be happy. We had seen places for about 215,000 that needed work but this is reflected in the price.

        now the only reason i am contemplating this house is due to owning the freehold on the entire building. there is some work that needs doing but very little. Is this really worth the extra 20,000 and pushing my limit. This may be down to personal preference but would like to know other peoples thoughts.

        Thanks again for the help

        Comment

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