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Flat: Leasehold vs. Freehold

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  • Flat: Leasehold vs. Freehold

    Hi all, my partner and I are first time buyers and we are looking for a 2 bed flat. We have seen a few in our local area, some a leasehold some are freehold.
    I am reluctant to buy a leasehold because it will feel like we're in a ticking time bomb, all the time we're living there the lease is diminishing and you have to pay monthly maintenance and ground rent in some cases for no apparent reason. We went to view a leasehold flat the other day (a converted house into 5 flats) with maintenence costs of £500 per year and it smelt, the hallway walls were heavily marked, the carpet was shabby, in short, it wasn't pleasant. So this particularly makes me interested in freehold flats because the length of time you live there won't expire, the next buyer wont have that worry either etc. But, what happens when work needs doing? If the roof leeks, as I understand it, all of the flats share the expense of repairs, but what can you do it other residents in the block refuse to pay?

    The only reason I ask is because I have seen a flat with a share of the freehold but its on the seafront. Its going to take a battering from the elements and will need regular maintenance. I can see the potential problems that can arise when getting 5 shareholders to decide on priorities of work to be carried out, who deals with organising the work, choices with regards to external colour, internal communal areas fixtures etc. Is there a standard agreement in which flats with a share of the freehold or is every block individual? Should I steer a clear of a freehold block of flats all together - so confused!!

  • #2
    Re: Flat: Leasehold vs. Freehold

    First of all, please understand the terminology.

    A "share of freehold" flat is not a freehold flat - it is still leasehold. The difference is that you and others will directly or indirectly (thoruhg a company you collectively own) also togther own a separate freehold title to the building.

    Freehold flats where each flat has its own freehold are virtually unmortgageable (except for some reason in the Scarborough area) and so are definitely not a good thing.

    Have a look at Shared Freehold Flat Conveyancing, Information from Solicitors Richard Webster & Co and the pages on my main web site linked from it. Not having an outside landlord can be a good thing in that you will not be ripped off with spurious admin charges etc, but this is not always the case, and it depends so much on the circumstances of each case - how maintenance and insurance of the building is actually organised and the attitudes of the individuals concerned.

    You may well have various legal rights as lessee against the group of individuals that make up the freeholder but they can be quite expensive to enforce. This is particularly the case if you have a small building with say 2-4 flats and some of the lessees flatly refuse to act in a sensible and responsible manner and won't contribute when work is needed. Telling that they must is all very nice but unless you are happy to get the heavies in (and face the consequences) it can be very expensive to make someone do what they should do.

    Also if the freehold is literally jointly registered at the Land Registry in the flat owners names then when you want to sell your flat you will have to get the others to join in a separate transfer of the "share of freehold". If any of them have disappeared (or had their leasehold flat repossessed) or won't sign for some reaosn or the other it can again be very time consuming and expensive to deal with the issue through the courts.
    Last edited by Richard Webster; 31-01-2013, 10:08 AM.
    RICHARD WEBSTERwww.rwco.co.uk
    As a conveyancing solicitor I want to be helpful (England/Wales only) but can't accept liability for this.