Viewing 28 posts - 1 through 28 (of 28 total)
  • Buying a freehold flat – to be avoided or not to worry?
  • pondo
    Full Member

    A friend of ours is moving out of That London to escape the stress of a decade of helping the needy and moving to North Yorkshire for a fresh start – she’s found a freehold flat that she really likes but her (Manchester-based) solicitors have raised serious objections based on it being freehold and said she shouldn’t go ahead and, if she does and instructs them, she’ll need to sign a disclaimer absolving them of all responsibility. Now, she can see that there are loads of freehold flats in the area so it seems like this isn’t entirely unusual, but should she steer clear? She can buy the flat outright so there’s no mortgage application to worry about, but will it then be impossible to shift if she decides to move on? TIA. 🙂

    finbar
    Free Member

    Why would you *not* want a freehold flat? Genuine question – leaseholds seem to bring nothing but problems in my limited knowledge.

    I guess it might be that if others in the building are also freeholds and they don’t do appropriate maintenance, it could jeopardise your place? But that might not be much different to being in a semi or a terrace anyway. Is it in a block or half a house?

    martinhutch
    Full Member

    Freeholders can be on the hook for their share of building repairs, so if a massive bill comes up (eg replacing all the cladding post Grenfell), that can be a bit of a disaster.

    This may not be it, but why hasn’t the solicitor explained their objections to her properly?

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    mattyfez
    Full Member

    I thought freehold flats were more desireable as you don’t have to pay some associasion/building management firm for ‘maintenence’?

    Might be missing something though!

    pondo
    Full Member

    I guess it might be that if others in the building are also freeholds and they don’t do appropriate maintenance, it could jeopardise your place?

    I think that’s where the issue is, and, like, insurance and things? But I don’t know, hence the question! 🙂 I think, from the pictures and IIRC, it looks like a terraced house (or houses) converted to flats.

    nickc
    Full Member

    I thought most flats were leasehold? If it’s freehold and there are major repairs to be done to the structure (a La Grenfell), she’ll be on the hook for them?

    hels
    Free Member

    So, the whole of Scotland is to be avoided then? Leasehold sounds like a proper stitch-up to me, that is probably why the lawyers are moaning, the gradual erosion of their fee base.

    pondo
    Full Member

    If it’s freehold and there are major repairs to be done to the structure (a La Grenfell), she’ll be on the hook for them?

    Dunno, but I suspect that might be it?

    martinhutch
    Full Member

    As I mentioned, if she’s still in the dark as to why, the solicitor hasn’t done a great job.

    toby
    Full Member

    Having dealt with a problem Leaseholder who half the time couldn’t be bothered with any paperwork and half the time thought he was a landlord, I’d actually be drawn to avoiding them. Particularly in small converted houses.

    I suspect that in most cases where there’s a significant job to do the cost is passed on to the flat owners anyway, probably with a mark-up and no say over who does the job.

    When you say a freehold flat, does that mean there’s a share of the freehold between all the flats, that her flat comes with the freehold for the whole building?

    dannybgoode
    Full Member

    I thought most flats were leasehold? If it’s freehold and there are major repairs to be done to the structure (a La Grenfell), she’ll be on the hook for them?

    The leaseholders are on for the repair bills also – this is what all the fuss is about with the government scheme which isn’t covering the bill for a huge number of leasehold flats to have the cladding remediated.

    Most leasehold flats have a sink fund to cover major expenses however this is still all money paid in by leaseholders over time. Sometimes though the sink doesn’t cover the cost and the leaseholders have to stump up.

    poolman
    Free Member

    Share of freehold is the gold standard of flat ownership in england. Or share of 1000 year lease, I have one, pay no ground rent as we own the freehold, control the appointment of directors and managing agent, don’t allow jobs be given to friends of the agents…i could go on.

    A leasehold flat run badly in a large block is just a cash cow for the managing agent. You cant get rid of him as you need 75% agreement, he just spends your money as he earns a commission on purchases so no spend = no income.

    Come resale I reckon a share of freehold 1 bed will be worth more than a leasehold 2 bed, the running costs are about half and you get far better value for money.

    andrewreay
    Full Member

    Yeah – freehold is absolute ownership of the property on the plans. But if that’s an upstairs flat, what happens if your downstairs neighbour saws through the stair supports or ceiling joists?

    That sort of activity is precluded in a leasehold! And structural repairs and upkeep of common areas are split between all the residents in a leasehold.

    That doesn’t happen in a freehold. So if you have to walk through a landing belonging to your freehold neighbour to get to your flat, and it looks a mess / is dangerous, it’s on them to fix it. And you have no rights to intervene. Although you could ask to fix it.

    But this reliance on neighbours is the main reason solicitors are so nervous about freeholds in buildings of more than one property / residence.

    chakaping
    Free Member

    Dunno but very curious, please do get your pal to ask her solicitors to explain their position and report back.

    If they can’t or won’t, you need to start another thread asking for solicitor reccomendations.

    vinnyeh
    Full Member

    Pretty much what poolman said- is this actually a separate freehold title, or share of freehold? Some houses converted to a couple of flats can be on seperate freeholds, with only one party on the hook for eg roof repairs, but these are pretty rare.

    tonyf1
    Free Member

    Very few mortgage lenders will approve a loan on a freehold flat and those that do will have a rate to reflect the significant additional risk. Knock on is this will hugely impact potential numbers of purchasers for a future sale and therefore onward desirability.

    Unless the flat is unique or priced to reflect the lease position then I wouldn’t purchase. You may think it’s a forever home but you never know what might happen in future and force a sale.

    towzer
    Full Member

    Friends daughter in Scotland got stitched up, (apparently), did up own flat then the ‘block’ was done up and they had to contribute to the overall new windows cost, but not get any as they done their own. I’d be very carefully understanding all your liabilities and how any shared costs and liabilities (decorating, repairs. Lawns, stair wells, communal lighting parking, heating bills, maintenance charges, absolutely everything, waste disposal, fire cladding, alarms to new stds etc etc etc, etc , etc, etc etc etc) are managed and allocated across the flat owners) apparently maintenance charges we’re evenly spread across all flats………..,

    Edit, in fact having seem some right flat f***wittery I wouldn’t be doing it, if everybody is in the same boat they’ll band together it’ll be a common cause, but if there are a few freeholders I suspect they might be hung out to dry.

    greyspoke
    Free Member

    I once had to convey a freehold flat in Tunbridge Wells (where they were common). The conclusion I came to was that they could be OK, but this one would have needed waaay better drafted documentation to work. And it was a three story house, not a large block, which actually makes a difference in terms of enforcing obligations. Being the trainee, I had been told to go off and draft the documents to convert the thing to a set of leaseholds with a commonly held freehold, on account of the thing being virtually unsaleable because… it was a freehold flat.

    mattyfez
    Full Member

    Interesting stuff, ‘buying’ a flat seems to a big mine field.

    You might get ripped off by the management company on a leasehold for ‘repair and maintenence’ that they can basiacly invent to keep the cash rolling in.

    But with freehold you might get stung if the other flats in the bulding are leasehold…

    Maybe a small 1 or 2 bed terrace ‘starter home’ would be a better investment?

    Flats are OK but typicaly have no storage space, so if you’ve got a collection of bikes and tools etc… it’s gonna be a problem.

    stealthcat
    Full Member

    My guess would be that the conversion and freehold have been done in such a way that the top floor owner is responsible for the roof and the ground floor owner for the foundations. Fine as long as there’s no subsidence and the roof doesn’t leak, but solicitors get nervous, and so do a lot of buyers, for some strange reason…

    maccruiskeen
    Full Member

    It may not be an objection to the idea of freeholds in general, but to the specifics of the freehold of that property.

    Purpose built flats will be physically much more clearly defined in terms of the individual housing units and the shared and common areas which means the responsibilities, shared or otherwise, are clear too. If the property in question is a conversion then a house converted to flats then that may include some compromises of layout, access, services, drainage and so on that result in problematic paperwork..

    big_n_daft
    Free Member

    Freeholders can be on the hook for their share of building repairs, so if a massive bill comes up (eg replacing all the cladding post Grenfell), that can be a bit of a disaster.

    Most of the freeholders impacted by cladding issues etc are passing the costs to leaseholders but they are large entities with expensive lawyers

    Personally I wouldn’t touch a flat at the moment, the building standards/ fire/ cladding issues has still a long way to run

    espressoal
    Free Member

    towzer
    Free Member
    Friends daughter in Scotland got stitched up, (apparently), did up own flat then the ‘block’ was done up and they had to contribute to the overall new windows cost, but not get any as they done their own. I’d be very carefully understanding all your liabilities and how any shared costs and liabilities (decorating, repairs. Lawns, stair wells, communal lighting parking, heating bills, maintenance charges, absolutely everything, waste disposal, fire cladding, alarms to new stds etc etc etc, etc , etc, etc etc etc) are managed and allocated across the flat owners) apparently maintenance charges we’re evenly spread across all flats………..,

    There is no leasehold in Scotland, so she wasn’t stitched up, she didn’t read her terms and conditions as per her communial liabilities/shared costs.

    Actually from a Scottish point of view I can’t get my head around why anyone would want to lease the ground their home is on, it’s a very strange concept, can’t imagine why it’s even legal.

    squirrelking
    Free Member

    That doesn’t happen in a freehold. So if you have to walk through a landing belonging to your freehold neighbour to get to your flat, and it looks a mess / is dangerous, it’s on them to fix it. And you have no rights to intervene. Although you could ask to fix it.

    Any time there are communal areas, in Scotland anyway, these are defined in the deeds and your share of the liabilities detailed.

    Also as above, if nobody approves freeholds then where is my sister in law getting a mortgage from? You guys have weird ideas about property.

    toby
    Full Member

    Any time there are communal areas, in Scotland anyway, these are defined in the deeds and your share of the liabilities detailed.

    Yeah, that’s the sane way of doing it – each flat having a share of the fabric of the building as a whole with a share of the costs and decisions, rather than paying ground rent to someone else who then just passes on the bills for work with a markup. Having given the job to their mate Dave, the world’s most expensive roofer. [*]

    There seems to be a (rare) other case where each flat owns their “bit” of the building. Seems to be a pain both practically (what you can do if whoever owns the roof is away on a cruise when it starts leaking) and from a risk point of view (discovering shortly after the building burns down that one flat wasn’t insured).

    I’d not heard of the latter case before; It does seem to be a minefield. If the buyer really likes the flat, could she approach the other flats with a view to drawing up a normal shared freehold?

    [*] sarcasm for emphasis….

    chakaping
    Free Member

    I can’t get my head around why anyone would want to lease the ground their home is on

    Do you think people actually want to?

    Economic necessity innit.

    big_n_daft
    Free Member

    There is no leasehold in Scotland, so she wasn’t stitched up, she didn’t read her terms and conditions as per her communial liabilities/shared costs.

    I believe the Local Authority can step in for some situations in Scotland. Plenty of people stitched up by poor quality over priced work supervised by a council official. TJ was a victim of this IIRC.

    greyspoke
    Free Member

    Actually from a Scottish point of view I can’t get my head around why anyone would want to lease the ground their home is on, it’s a very strange concept, can’t imagine why it’s even legal.

    Are you referring to the ground rent scandal? This is pretty much a different thing from the issue with blocks of flats. In that, it is not just the land that is leased, the house is as well (despite the rent being called “ground rent”).

    As to flats, a slightly longer explanation to follow my anecdote above. Warning – this was not my area of practice or teaching, but I think this accurate enough to be helpful:

    As a result of technical differences between Scottish and English/Welsh land law, English/Welsh law struggles/struggled to make mutual obligations enforceable against successors-in-title to flats in a large block, whereas Scots law deals with it OK. Historically, leases were the answer in England and Wales. There is now the https://en.wikipedia.org/wiki/Commonhold_and_Leasehold_Reform_Act_2002. I don’t know whether the lack of take-up of that is cultural or technical.

    Leasehold itself is not bad, but the issue is that property developers who build flats generally decide not to sell the freehold to a community-owned entity, though this has always been possible (as I did with Mrs whatsits flat in Tunbridge Wells). It ends up being held and managed in a way that is not transparent or particularly accountable. So problems end up being blamed on the system even when they are unavoidable.

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