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Sale of freehold - any concerns?

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IrishIceHawk
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Sale of freehold - any concerns?

#338378

Postby IrishIceHawk » September 5th, 2020, 4:00 pm

Hi

I own a leasehold maisonette which I current let out, and have recently received a letter to let me know that the freehold is being sold.
as I don't live there, I don't know any of the neighbours, I'm not looking at banding together and buying it, so I'm just wondering what impact a change of freeholder may have.

Since I bought it over 20 years ago, all we've needed to pay is the ground rent, as there isn't a management company/service charge (as there isn't basically much, if any, common ground, and we all handle our own maintenance - the maisonettes are also fair self contained, so there aren't any common hallways/lifts/stairs , etc, like there would be in large flats.

From other people experience, is it possible/likely for a new freehold to start a service charge (for whatever reason), or is it more likely that the only change would be to where we pay the ground rent?


(the only part of the lease I can see that might allow this is that we are required to "bear and pay a reasonable proportion" for cleaning/repairing the access road /drains/walls/ and "appurtenances", but as this has not been required for 20 years, can't imagine it could change much now, but I've never dealt with a freehold change before, so don't know whether they tend to go almost unnoticed or cause problems.


Regards,
Martin

jackdaww
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Re: Sale of freehold - any concerns?

#338390

Postby jackdaww » September 5th, 2020, 4:50 pm

sadly , i think they can do pretty much what they want , and they probably will if they have bought the freehold as an investment .

perhaps find a good independent solicitor (if possible) , and read leasehold blogs.

:(

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Re: Sale of freehold - any concerns?

#338396

Postby Mike88 » September 5th, 2020, 5:16 pm

If there is a management company to be formed wouldn't a service charge be necessary for painting, gutter maintenance and any exterior repairs along with, most importantly, buildings insurance.

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Re: Sale of freehold - any concerns?

#338422

Postby mc2fool » September 5th, 2020, 9:02 pm

No to all of the above -- unless it is already allowed for in the lease.

Who owns the freehold is irrelevant, the relationship between the freeholder and leaseholder, including what each sides obligations are and what costs the freeholder can charge the leaseholder for, is defined in the lease, and that cannot be unilaterally changed by either party.

They absolutely can not do pretty much what they want, only what they are allowed to by the lease. If it isn't in the lease, they can't do it.

P.S. Suggest you click on the "!" at the top right of your post and ask the moderators to move this thread to the Legal Issues board; there are some solicitors that hang out there.

mc2fool
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Re: Sale of freehold - any concerns?

#338424

Postby mc2fool » September 5th, 2020, 9:23 pm

BTW, the Leasehold Advisory Service is a very comprehensive resource (maybe at initial glance overwhelmingly so!), and they offer a free 15 minute telephone chat for general leasehold advice, which should be more than enough for your query. :D https://clients.lease-advice.org/Appointment/Appointment

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Re: Sale of freehold - any concerns?

#338466

Postby Mike88 » September 6th, 2020, 9:04 am

mc2fool wrote:No to all of the above -- unless it is already allowed for in the lease.

Who owns the freehold is irrelevant, the relationship between the freeholder and leaseholder, including what each sides obligations are and what costs the freeholder can charge the leaseholder for, is defined in the lease, and that cannot be unilaterally changed by either party.

They absolutely can not do pretty much what they want, only what they are allowed to by the lease. If it isn't in the lease, they can't do it.

P.S. Suggest you click on the "!" at the top right of your post and ask the moderators to move this thread to the Legal Issues board; there are some solicitors that hang out there.


There won't be a lease if the owners purchase the freehold. My bet is that the existing leaseholders, including the original poster, pay no attention to the lease and if the new freeholders decide to do things their own way who is there to stop them?

Dod101
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Re: Sale of freehold - any concerns?

#338469

Postby Dod101 » September 6th, 2020, 9:19 am

Mike88 wrote:
mc2fool wrote:No to all of the above -- unless it is already allowed for in the lease.

Who owns the freehold is irrelevant, the relationship between the freeholder and leaseholder, including what each sides obligations are and what costs the freeholder can charge the leaseholder for, is defined in the lease, and that cannot be unilaterally changed by either party.

They absolutely can not do pretty much what they want, only what they are allowed to by the lease. If it isn't in the lease, they can't do it.

P.S. Suggest you click on the "!" at the top right of your post and ask the moderators to move this thread to the Legal Issues board; there are some solicitors that hang out there.


There won't be a lease if the owners purchase the freehold. My bet is that the existing leaseholders, including the original poster, pay no attention to the lease and if the new freeholders decide to do things their own way who is there to stop them?


Why will there be no lease? Surely the new freeholder will take it over as is? Otherwise it is quite meaningless. For all I know it may be but it does not sound right.

Dod

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Re: Sale of freehold - any concerns?

#338475

Postby Mike88 » September 6th, 2020, 9:33 am

Dod101 wrote:
Mike88 wrote:
mc2fool wrote:No to all of the above -- unless it is already allowed for in the lease.

Who owns the freehold is irrelevant, the relationship between the freeholder and leaseholder, including what each sides obligations are and what costs the freeholder can charge the leaseholder for, is defined in the lease, and that cannot be unilaterally changed by either party.

They absolutely can not do pretty much what they want, only what they are allowed to by the lease. If it isn't in the lease, they can't do it.

P.S. Suggest you click on the "!" at the top right of your post and ask the moderators to move this thread to the Legal Issues board; there are some solicitors that hang out there.


There won't be a lease if the owners purchase the freehold. My bet is that the existing leaseholders, including the original poster, pay no attention to the lease and if the new freeholders decide to do things their own way who is there to stop them?


Why will there be no lease? Surely the new freeholder will take it over as is? Otherwise it is quite meaningless. For all I know it may be but it does not sound right.

Dod


You could be right. Let's wait to see what others say. I come from this from practical experience as a former landlord where lease conditions tend to be ignored by the occupants so whether there is a lease or not is not particularly relevant from the practical viewpoint especially if the building is old and there is nobody around to enforce the conditions. Take my own property for example where I want to enforce lease conditions relating to covenants; the company concerned ceased to exist 80 years ago so there is virtually no chance of enforcement.

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Re: Sale of freehold - any concerns?

#338495

Postby Dod101 » September 6th, 2020, 10:45 am

Mike88 wrote:
Dod101 wrote:
Mike88 wrote:
There won't be a lease if the owners purchase the freehold. My bet is that the existing leaseholders, including the original poster, pay no attention to the lease and if the new freeholders decide to do things their own way who is there to stop them?


Why will there be no lease? Surely the new freeholder will take it over as is? Otherwise it is quite meaningless. For all I know it may be but it does not sound right.

Dod


You could be right. Let's wait to see what others say. I come from this from practical experience as a former landlord where lease conditions tend to be ignored by the occupants so whether there is a lease or not is not particularly relevant from the practical viewpoint especially if the building is old and there is nobody around to enforce the conditions. Take my own property for example where I want to enforce lease conditions relating to covenants; the company concerned ceased to exist 80 years ago so there is virtually no chance of enforcement.


I can quite see what you are saying. I have only ever owned one leasehold property and from the point of view of the leaseholder the freeholder could do pretty much as he wanted and did! It would have needed all the leaseholders to get together before there was any chance of forcing the freeholder to do anything and even then........As it was there always seemed to be a lot of movement of the leaseholders/occupiers and so it was almost impossible in practice.

Dod

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Re: Sale of freehold - any concerns?

#338511

Postby mc2fool » September 6th, 2020, 11:31 am

Mike88 wrote:There won't be a lease if the owners purchase the freehold. My bet is that the existing leaseholders, including the original poster, pay no attention to the lease and if the new freeholders decide to do things their own way who is there to stop them?

No, this is a maisonette (a flat with its own front door to the outside), so there will still be leases. See Collective Enfranchisement. Of course, now owning the freehold the collective owners could change the leases to whatever they collectively agreed to.

As the OP has demonstrated in their post that they're quite aware of what's in their lease, methinks you have already lost your bet. :D

Mike88 wrote:I come from this from practical experience as a former landlord where lease conditions tend to be ignored by the occupants so whether there is a lease or not is not particularly relevant from the practical viewpoint especially if the building is old and there is nobody around to enforce the conditions. Take my own property for example where I want to enforce lease conditions relating to covenants; the company concerned ceased to exist 80 years ago so there is virtually no chance of enforcement.

Well now you're talking about leaseholders doing as they please, but if you were the landlord then you (the courts on your application) can enforce it.

In regards to your own property, if the freeholder has disappeared then it reverts to the crown and you can get it. Start here: https://www.gov.uk/guidance/apply-to-buy-your-freehold-reversion-bvc4

Dod101 wrote:I have only ever owned one leasehold property and from the point of view of the leaseholder the freeholder could do pretty much as he wanted and did! It would have needed all the leaseholders to get together before there was any chance of forcing the freeholder to do anything and even then........As it was there always seemed to be a lot of movement of the leaseholders/occupiers and so it was almost impossible in practice.

No, the freeholder could only do what was allowed (or obligated) within the lease, which is a one-to-one contract between you and them, and if that was breached then any one leaseholder could take them to court over it.

Of course, there are plenty of situations where the freeholder is acting (or not acting) strictly within the lease but the leaseholders just don't like it, and there is a "reasonableness" clause in the law that the leaseholders could try to apply, and that does require collective action as the judge will almost certainly want to know what all the leaseholders think.

(Although if the freeholder decided, under the clause in the lease that requires them to maintain the grounds, to put up and charge the leaseholders for the cost of putting up a golden statue of himself then the judge would almost certainly decide that was unreasonable straight off. :D)

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Re: Sale of freehold - any concerns?

#338580

Postby JonE » September 6th, 2020, 4:35 pm

IrishIceHawk wrote:there isn't basically much, if any, common ground, and we all handle our own maintenance


Is this a letter such as is required by law giving the leaseholders 'first refusal'?

Freeholds are often held by a company and a change in effective ownership is accomplished by selling the shares of the company. That means the freehold per se is not changing hands so does not need to be offered to the leaseholders(s). Perhaps the bank details are changing or the company is changing its name or maybe the company is being sold completely - but that's very different from the actual freehold changing hands. If it's the actual freehold changing hands then I just wonder if there are enough absentee leaseholders such as yourself that the resident leaseholders won't be able to gain sufficient support for buying the freehold in the place of whoever is interested in it.

As a leaseholder you don't own the bricks & mortar and it's usual for leases to contain provision for the repairs and maintenance of the freeholder's property (including roof covering) plus, of course (and as already mentioned), the insurance of the freeholder's building. Holders of the lease for the top-most part of the accommodation often believe they have rights to use the loft space and seek to extend into it - but it may not have been carved out of the whole of the property and therefore remain with the free-holder.

If some other party has thought it worth buying the freehold then it's highly likely that they can see an income opportunity arising at some time which is greater than just the stream of ground rents. The detail will be in your lease so study it as if wearing their hat and consider every detail. How long remains on the leases, for example? Is the freeholder's consent (or licence) required to conduct internal alterations, to alter external decorations, to let or even to assign (aka sell) the lease - and is there provision for reasonable fees to be charged for any such licence or consent?

You may all have been happy to undertake maintenance on a piecemeal manner hitherto but there's no reason why a new freeholder should be prepared to tolerate that if the leases give him power to control and co-ordinate required works and utilise lease provisions to collect the costs from leaseholders (assuming correct procedures for 'major works' are properly observed). Windows might be the responsibility of each leaseholder individually - but might not be. Know your lease and what every part of it means (in isolation and also given interactions with other parts) - or pay someone else to give you the understanding.

Cheers!

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Re: Sale of freehold - any concerns?

#340642

Postby brightncheerful » September 16th, 2020, 1:38 pm

Buying the freehold puts you in control. there may be development potential in the roof space or add another storey to the building. But watch out for what is expected of a freeholder under the lease: for example, busing insurance, if repair to the structure of the building were necessary then would the onus be on you to pay the cost in the first instance then recover a contribution from the leaseholders.

When you come to sell your maisonette, you don't has to sell it freehold, but could grant a new lease at a higher ground rent than you pay now.

And what about the current freeholder: a passive benign freeholder might be allowing you to do things to your maisonette that are not allowed under the lease, such as alterations, sub-letting, for example. A new freeholder might have other ideas.


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