Extending lease on flat (own share of freehold)

[outlawlgo]

Would be grateful for any pointers on this, as it makes no sense to me.

Bought freehold of flat several years ago (or believed I did) in complex incorporating several blocks. Completely bamboozled due to receiving letter (sent to all shareholders) regarding extending the lease by 99 years for cost of property management + legal fees. I assumed the days of paying ground rent and the hassles of owning a leasehold property were behind me having invested several hundred pounds to buy the freehold. Perhaps I've only bought a share in the LTD company which is not the same as owning the freehold.

I was wondering if everyone in the block/complex would have to agree to extending the lease for it to work and can you be forced to buy it if you don't agree.

[Ripped-Off]

Re: Extending lease on flat (own share of freehold)

Makes no sense to me either.

What exactly did you buy? You should have a dig, this could be your own 'PPI' type claim.

I can just see it now, on afternoon TV....'Mis-sold a freehold' - contact Dodgy & Scrounge Solicitors

[Noah]

Re: Extending lease on flat (own share of freehold)

In all honesty I can not see you being able to buy the freehold for several hundred pounds. Even extending a leasehold by 99 years can cost several 1000 pounds.
You do need to dig a bit and find out.
Were you maybe given the option of paying ground rent upfront for a discount?

[outlawlgo]

Re: Extending lease on flat (own share of freehold)

Thanks for your replies.

I used to pay ground rent before buying the freehold but since then it was not payable. In fact most years I received a sum which I assume was a share of payment from those who had not bought the freehold but were required to pay ground rent, and in respect of revenue from those who subsequently bought a share of the freehold.

The letter contains the following:

In respect of the extension of the lease, as you are a Freehold owner no premium is being required. The lease extension of 99 years will be granted on the basis that you pay your own legal fees and you also pay the legal fees of the Management Company.

My understanding (which apparently counts for nothing) is that if you own the freehold there is no lease.

[Openlaw15]

Re: Extending lease on flat (own share of freehold)

Would be grateful for any pointers on this, as it makes no sense to me.

Bought freehold of flat several years ago (or believed I did) in complex incorporating several blocks. Completely bamboozled due to receiving letter (sent to all shareholders) regarding extending the lease by 99 years for cost of property management + legal fees. I assumed the days of paying ground rent and the hassles of owning a leasehold property were behind me having invested several hundred pounds to buy the freehold. Perhaps I've only bought a share in the LTD company which is not the same as owning the freehold.

I was wondering if everyone in the block/complex would have to agree to extending the lease for it to work and can you be forced to buy it if you don't agree.

Hello, Outlaw

How could you hope to have purchased a freehold property for several hundred pounds, where in property law it is the closest thing we have to actual ownership, as technically the state owns all property. Freehold simply means that the land is capable of being owned outright. You have at best a lease with some clever wording.

[outlawlgo]

Re: Extending lease on flat (own share of freehold)

How could you hope to have purchased a freehold property for several hundred pounds...

I should have been clearer.

When I bought the flat it was as far as I understood leasehold and I was required to pay grand rent. I did not refer to the purchase price of the flat in my reference to "several hundred pounds". That was the cost of my share in the freehold which was offered after living in the property for some years.

I have since found this article which throws some light on the situation, albeit one with very few lumens.

Extend lease if you own share of freehold

[Openlaw15]

Re: Extending lease on flat (own share of freehold)

I should have been clearer.

When I bought the flat it was as far as I understood leasehold and I was required to pay grand rent. I did not refer to the purchase price of the flat in my reference to "several hundred pounds". That was the cost of my share in the freehold which was offered after living in the property for some years.

I have since found this article which throws some light on the situation, albeit one with very few lumens.

Extend lease if you own share of freehold

ahh, thanks for the clarity

[Noah]

Re: Extending lease on flat (own share of freehold)

I think I get it, you now own a share of a coop that owns the freehold to the flats. Your flat is still leasehold

I know more about extending the leasehold where the freehold is owned commercially , that can be far from cheap

[outlawlgo]

Re: Extending lease on flat (own share of freehold)

I think I get it, you now own a share of a coop that owns the freehold to the flats. Your flat is still leasehold

I know more about extending the leasehold where the freehold is owned commercially , that can be far from cheap

Thanks, it looks like it wasn't such a wise investment after all (buying share in freehold). At a rough guess there are approaching 100 flats so economies of scale should bring the individual cost to a manageable level. That is if everyone agrees to buy.

[Crazy council]

Re: Extending lease on flat (own share of freehold)

Hi [MENTION=8136]outlawlgo[/MENTION]

didn't notice this when you posted. theirs more you can do as a group ( owners ), do u pay management fees, or are they taken out before you get your payment. have they mentioned any figures yet. Keep your eyes on this.

[outlawlgo]

Re: Extending lease on flat (own share of freehold)

Hi @outlawlgo

didn't notice this when you posted. theirs more you can do as a group ( owners ), do u pay management fees, or are they taken out before you get your payment. have they mentioned any figures yet. Keep your eyes on this.

Sorry! Just seen your post.

Proposed lease extension of 99 years. As I'm a Freehold owner there's apparently no premium required which doesn't exactly make sense but obviously in my favour, so who cares. Management fees look to be around £200 plus VAT, which I assume is split between flat owners and at least £300 plus VAT for legal fees, presumably paid by each flat owner.

I assume management fees are included in the service charge that I pay bi-annually if that makes sense.

Thanks.

[outlawlgo]

Re: Extending lease on flat (own share of freehold)

Apparently the deal is done and dusted. Does that mean I've benefited without participating?

A news letter today says the lease has been extended by 999 years.

Presumably there are two mistakes in that. Surely it should have stated the lease has been extended to, and instead of 999 years it should be 99?

Another concern is that the new management has decided that the wooden windows are too old/rotten and will no longer be painted. The plan is that within a year or two everyone will have invested in UPVC. Apart from the fact they appear unsightly (they all have to be brown), the reason why the windows are in bad condition is because they weren't painted as regularly as they should have been even though paid for.

Is there at least a valid claim for the painting charge to be refunded from the amount already paid for the next painting job that won't get done?

[Tulip73]

Re: Extending lease on flat (own share of freehold)

Hi Outlawlgo

I clearly don't have all the details, but from what you've described above my guess would this: Everyone in the block was given the option to buy a share in the freehold of the building. Some of the people (like you) took this offer up and some didn't. The ones that didn't will still have to pay ground rent to the freeholder, which is now a collection of people in your block. You don't pay ground rent as you own a share in the freehold.

Somebody else who also owns a share of the freehold wanted to extend their lease. Since there's no landlord/freeholder requesting thousands of pounds to extend the lease, all that needs to paid is solicitors fees, and in all honestly, it's not much more work to extend all the leases of all folk with a share in the freehold and this is probably what's happened. So your leasehold flat now has a 999 year lease (mine is also 999 years rather than 99 so that may be correct:-)) and yes, sounds like you've benefited from that:-)

Yo're probably not going to get the money back that you paid for the painting though as it sounds like it will now be spent on new windows!

[outlawlgo]

Re: Extending lease on flat (own share of freehold)

Thanks.

In hindsight then it seems as though missing out on the lease extension worked more in my favour than if I'd got round to taking up the offer.

I hope you're right about the windows, but I read the news letter to mean that the windows are paid for by the flat owner:

As I have already mentioned, the woodwork of all windows is too old/rotten to paint. In the same way that we negotiated a "bulk" deal on the lease extensions, we will do the same thing for window replacement, so that we can offer you a discount on the price of replacement. Within a year or two, we hope that ALL windows will be UPVC.

[JaneB]

Re: Extending lease on flat (own share of freehold)

Hi. Without sight of the documents and the Land Registry title information I assume that this is a situation where the leaseholders have clubbed together at some point to buy the freehold which is known as Collective Enfranchisement under the Leasehold Reform Housing and Urban Development Act 1993 (LRHUDA). They may or may not have formed a company to be the registered owner of the freehold and they are directors and shareholders of that company. It is quite common at the same time that collective enfranchisement occurs for the exiting leases to be extended at the for those who want to do so. This is because when seeking to claim an extension to an existing lease under the same Act (LRHUDA) a freeholder wants to be paid a premium for granting it. Usually a hefty sum of thousands. As the leaseholders are the new freeholders they take the opportunity to grant themselves a free or reduced price extension to their lease in their capacity as directors etc. of the company freehold owner to themselves with their leaseholder "hats" on. There is a lot of information on the internet about lease extensions and collective enfranchisement under the Act. Hope that helps you understand the situation. To check the situation further I suggest that you ask the managing agent or go online at HM Land Registry to obtain a search on the freehold owner of the property. There is small fee to pay (£3). That gives you the name of the freeholder. If it is a company, you can do a search at Companies House online to find out who the directors and shareholders are and other information about the company.