Buying a freehold when you are a leaseholder

[bellaozzydog]

Looking for a steer/commercial property ninja advice.

My (unmortgagable) flat is above a shop, the freehold covers my flat and the shop.

After the freeholders annual inspection root around my flat “for insurance purposes” he suggested he was going to die soon getting old and would I like to buy the freehold off him.

The idea absolutely appeals to me but I haven’t got the first fucking idea what it would cost, how it’s calculated and how I would do it.

Googling brings up weird and wonderful equations and loads of legal complications, such as having to buy it as a limited company !!

Any thoughts, steers, links, advice gratefully received

It’s my soul pad and I’ll be retiring in it for sure so having more control over it would calm my jittery nerves

 

[Puddy_Tat]

You (or the building) are in england, aren't you? Some of the law round this is definitely different in scotland, and for all i know, may be in wales as well.

if so, leasehold advisory service may be the place to start.

Advice - The Leasehold Advisory Service

www.lease-advice.org

but you are almost certainly going to need to get a lawyer involved in this - it may cost more in the short term but could avoid a lot of shit further down the line.

 

[Puddy_Tat]

another thought, if you became the freeholder, what are you going to do with the shop?

does it currently have a tenant, or is the current owner also the shop-keeper, and would he be looking to close the business down / sell it as a going concern or what?

you would become responsible for the bits that freehold landlords are responsible for, and then any income from this would be taxable.

 

[bellaozzydog]

another thought, if you became the freeholder, what are you going to do with the shop?

does it currently have a tenant, or is the current owner also the shop-keeper, and would he be looking to close the business down / sell it as a going concern or what?

you would become responsible for the bits that freehold landlords are responsible for, and then any income from this would be taxable.

In England

Shop is leased at 14,000 quid a year, got two years left on lease.

Guy running the shop is on dodgy health grounds (cardiac issues) so likely the lease on the shop will run out after two years.

Freeholder responsibility seems to be finding insurance for the building and billing myself and the shop guy halfers for it.

 

[mx wcfc]

I believe the freeholder can be liable for business rates if the shop is vacant.

Of course, that may not happen, but ......

 

[Puddy_Tat]

I believe the freeholder can be liable for business rates if the shop is vacant.

also worth bearing in mind that freeholder will have certain responsibilities for maintenance / repairs to anything that's the whole building.

 

[Idaho]

I organised the four flats in our converted house collectively buying our freehold... back in the 90s... It was complicated because it was an absentee freeholder. I did set up a limited company with four shares - one for each flat. However, there is no reason why you'd need to do that if it's just you owning it.

There are formulas to work out the value - but at the same time, it's worth what you'll pay for it, as who else would possibly want it? And what if you don't buy it - what difference to you?

I had assistance from a solicitor who had experience of freehold negotiations - and naturally I would recommend you find someone similar. Good luck

 

[zahir]

Shop is leased at 14,000 quid a year, got two years left on lease.

Guy running the shop is on dodgy health grounds (cardiac issues) so likely the lease on the shop will run out after two years.

Freeholder responsibility seems to be finding insurance for the building and billing myself and the shop guy halfers for it.

The tenant of the shop would normally have the right to renew the lease if he wanted to, presumably at a revised rent. Alternatively the lease could be left to tick over after the end of the term if both sides are happy with the situation - which might suit a tenant with health problems who doesn't want to commit to a new lease period.

eta: If you have an empty shop on your hands you would be liable to pay the business rates.

 

[bellaozzydog]

also worth bearing in mind that freeholder will have certain responsibilities for maintenance / repairs to anything that's the whole building.

Freeholders generally do the work and back bill the leaseholders.

I’m responsible for my roofs and all internals, freeholders only responsibility is the vertical
walls of the building.

I’ve reroofed it and sorted out plenty of plumbing issues

 

[bellaozzydog]

The tenant of the shop would normally have the right to renew the lease if he wanted to, presumably at a revised rent. Alternatively the lease could be left to tick over after the end of the term if both sides are happy with the situation - which might suit a tenant with health problems who doesn't want to commit to a new lease period.

I’m just going to ask him what his plans are. It’s a family business and seems to turn over a decent profit.

 

[Puddy_Tat]

Freeholders generally do the work and back bill the leaseholders.

I’m responsible for my roofs and all internals, freeholders only responsibility is the vertical
walls of the building.

I’ve reroofed it and sorted out plenty of plumbing issues

here, the freeholder look after the roof and haven't billed me for a recent repair.

ETA - as in they told me they wouldn't bill me (i contacted them and asked how i went about claiming on buildings insurance) but they said they would deal with it.

 

[marty21]

We bought the Freehold jointly with the downstairs flat , about 25 years ago. It was from the insolvency folk as the freeholder went bankrupt , so it cost us about £3k between us I think. So now I lease my flat to myself . I also need to extend the lease to myself at some point , as it is about 72 years I think. I hope I do a good deal with the freeholder (I hear he's a bit of a cunt)

 

[Epona]

here, the freeholder look after the roof and haven't billed me for a recent repair.

When we had major works done, it took Newham homes over 6 years to bill me for the work
I was sort of hoping they'd forgotten, but I think they just got into a panic when they realised they might have a problem legally enforcing payment later if they didn't pull their finger out and actually send out bills to leaseholders.

(Apologies, that was at a bit of a tangent to the OP and didn't address the question - I got a bit sidetracked looking at new posts)

 

[A380]

It seems like a good idea. I'd definitely think it was worth £2/300 for some advice from a solicitor. That would be good value if they say, 'yeah crack on it will cost you X' and really really excellent value if they say 'don;t go near it with a fucking barge pole*". Do you know a decent solicitor near you? I've used an excellent one too many times recently although they aren't local to you.


(* In lawyer speak obvs...)

 

[AnnO'Neemus]

also worth bearing in mind that freeholder will have certain responsibilities for maintenance / repairs to anything that's the whole building.

Although commercial leases often/usually have repairing clauses, so the commercial leaseholder is responsible for repairs and maintenance to the shop unit.

 

[AnnO'Neemus]

I organised the four flats in our converted house collectively buying our freehold... back in the 90s... It was complicated because it was an absentee freeholder. I did set up a limited company with four shares - one for each flat. However, there is no reason why you'd need to do that if it's just you owning it.

There are formulas to work out the value - but at the same time, it's worth what you'll pay for it, as who else would possibly want it? And what if you don't buy it - what difference to you?

I had assistance from a solicitor who had experience of freehold negotiations - and naturally I would recommend you find someone similar. Good luck

I don't know what the score is with a mixed used building, but where residential leasehold property is concerned a freeholder has a legal obligation to offer to sell the freehold to leaseholders in the first instance. And if they don't want to buy, the freeholder can sell the freehold to whoever they want. There are companies that buy up freeholds and then use them as a licence to print money, putting up charges, rinsing the leaseholders, and while there are legal obligations to show proof of income and expenditure, ie the costs incurred, to make sure they're reasonable and that the freeholder has actually eg carried out repairs and how much they cost and so on, in reality, it's like the wild west, it's almost impossible to hold them accountable if they refuse to 'open the books' and provide proof.

It's therefore, generally speaking, always advisable to buy the freehold if possible, to prevent it getting into the hands of some unscrupulous individual/company.

 

[zahir]

Although commercial leases often/usually have repairing clauses, so the commercial leaseholder is responsible for repairs and maintenance to the shop unit.

I think in this case as the tenant is only renting a part of the building the landlord would be responsible for repairs to the exterior and structure with the right to charge a proportion of the cost to the tenant.

 

[mx wcfc]

I'd definitely think it was worth £2/300 for some advice from a solicitor.

I have recent experience of helping an elderly relative with a property related matter.

Solicitors, it seems, no longer give advice. They explain the rules, and your options. They do not advise you.

(sorry, slightly pissed off at really unhelpful lawyers atm)

 

[A380]

I have recent experience of helping an elderly relative with a property related matter.

Solicitors, it seems, no longer give advice. They explain the rules, and your options. They do not advise you.

(sorry, slightly pissed off at really unhelpful lawyers atm)

Mine gave me loads of advice. I imagine different firms used different policy. When I started the whole four year process I used a conveyancing mill. They were adequate and didn't give advice. Then I swapped to a small local company (and had one lawyer who did all my work) who were excellent and provided great advice.

 

[mx wcfc]

Mine gave me loads of advice. I imagine different firms used different policy. When I started the whole four year process I used a conveyancing mill. They were adequate and didn't give advice. Then I swapped to a small local company (and had one lawyer who did all my work) who were excellent and provided great advice.

genuinely pleased to hear that.

 

[Mrs Miggins]

I have recent experience of helping an elderly relative with a property related matter.

Solicitors, it seems, no longer give advice. They explain the rules, and your options. They do not advise you.

(sorry, slightly pissed off at really unhelpful lawyers atm)

This is also my experience of solicitors. Maybe I’ll shop around a bit more next time I need one given what A380 says.

A couple of years ago I had to either extend the lease on my flat or buy a share of the freehold. What I wanted was for someone to explain the pros and cons of each option to me and help me work out the costs. What they gave me was numerous ways to antagonise the freeholders solicitors. It was shit and expensive.

 

[bellaozzydog]

This is also my experience of solicitors. Maybe I’ll shop around a bit more next time I need one given what A380 says.

A couple of years ago I had to either extend the lease on my flat or buy a share of the freehold. What I wanted was for someone to explain the pros and cons of each option to me and help me work out the costs. What they gave me was numerous ways to antagonise the freeholders solicitors. It was shit and expensive.

Solicitors doing their thing

Mine charge me best part of 2000 quid to tell me I had protected access to my flat via an alleyway….despite the fact they, theoretically should have known this/looked at this when I was buying the place!

I’ve pinged them a message, no doubt get some response before the end of the week

 

[Epona]

Solicitors doing their thing

Mine charge me best part of 2000 quid to tell me I had protected access to my flat via an alleyway….despite the fact they, theoretically should have known this/looked at this when I was buying the place!

I’ve pinged them a message, no doubt get some response before the end of the week

Good luck!
Solicitors in my limited experience are often slow to respond to a query, yet lightning fast when it comes to sending a bill or reminder for whatever service they've drawn out and dithered over.