mortgage query

[hash tag]

Is it a private sale? How did you find it? Details of lease must be out there, I would have thought.

 

[AnnO'Neemus]

No. Owning a share of the freehold is owning a bit of the land under or around the property.
totally separate is the legal document which is a lease. The lease sets out who pays for what, ground rent, service charges, contingency funds and the like.
Conversions should be leasehold but this is not guaranteed. Conversions may also be sold with or without a share of the freehold.

I would never ever buy a flat, purpose built or converted flat without a lease. I wouldn't worry if it has a share of the freehold or not.

I would make sure it was leasehold and with the benefit of a long lease before I started spending money on solicitors. This is a basic question to ask of the people selling or the agents. Why pay solicitors to do this, when you can. Leave the real technical stuff to the solicitors

Nope. That's incorrect. The freehold doesn't refer to just the land on which the building sits and the land around it, it's also, effectively, the outside shell of the building and any internal common parts.

So a leaseholder owns (or effectively has a very long term rental agreement) for the interior of their flat.

The freeholder is usually responsible for stuff like the repair and maintenance of stuff like window frames and the roof, plus lift if there is one and also if there's a security door/intercom system; also regrouting and/or repainting the exterior; landscaping/gardening the grounds; decorating and repairs to any internal common areas like hallway, stairwell and also cleaning those areas.

I'd steer clear of any high rise block with a lift, as lift repair and replacement costs can be very expensive.

I bought a flat in a low rise (with no lift) council/housing trust block under the Right to Buy, and my service charge (which is the money paid to the housing trust freeholder to do all the above bits of work) also includes the cost of buildings insurance (only the cost for buildings repair or rebuild, no contents insurance, if anyone wants contents insurance for their possessions they need to take that out separately), plus stuff like small, token amounts for pest control and electricity for the lights in the stairwell and external security lights.

In my case, the housing trust is the freeholder, and they get to decide what works get done and when. Luckily, there were major works on my estate around the time of stock transfer from the council to the housing trust, including bringing flats up to the Decent Homes standard, which was supposed to be a legal requirement by 2010, I think. We got a new roof a few years ago, and my neighbours got new windows (but I refused to let them install uPVC windows in my flat). That could have been expensive, but the good thing about living in an ex-council flat is that a lot of the housing staff are incompetent muppets and they failed to follow the proper legal procedures for giving leaseholders formal legal Notices of works to be carried out and failed to carry out consultations, so they weren't able to pass on all the costs, the costs were capped at £250, whereas the bill should've been £thousands.

Of course, being a freeholder, having a share in the freehold of a smaller property means you're responsible for the management of the property, and some leaseholders manage property themselves, while others subcontract that role to a property management company, but of course that incurs costs.

I'd say if a leasehold property seems very cheap, check out whether there are any major works in the pipeline.

While the service charge will generally cover day to day repairs and maintenance, if anything needs replacing like window frames, the roof, a lift, a security door/intercom system, then those works will incur additional costs and you could find yourself being asked to stump up £thousands towards a new roof, so I'd ask if any major works are in the pipeline. Or if you're in a conservation area and you need certain heritage windows rather than the cheapest uPVC ones, stuff like that can bump up costs considerably too.

 

[Casual Observer]

Haven't closely followed the thread but would agree with others that owning a leasehold flat with someone else owning the freehold, particularly in larger blocks of flats, can be a recipe for rip-off with exorbitant service charges, major works fees etc.. Having said that, the law does offer protection against overcharging and there's plenty you can do about it if you think it's happening to you - it needn't be expensive either as you can do it yourself without expensive legal representation.

 

[Leafster]

As AnnO'Neemus says the freeholder is usually responsible for repairs and maintenance to the fabric of the building but not all leases are the same. They should specify who's responsible for the maintenance and who has to pay for it (and in what proportion) but they aren't all the same and some are poorly drafted. For instance, in the original lease for my flat, the freeholder was responsible for the painting of the external window frames but was silent with respect to repair or replacement. After taking legal advice it was determined that the leaseholder was responsible for the repair or replacement of the windows in the flats but the freeholder was entirely responsible for any windows in communal areas.

So it's very important to get someone to look at the details of any lease agreement (and any subsidiary agreements) to make sure it's clear about who is responsible for what and who pays for it.

 

[sheothebudworths]

Right - I have a small bit of info for the one property I'd like most - it sounds a bit dodgy so I'm trying to compile a list of questions.

This is the shared freehold, terrace house, split into two flats (we'd have the ground floor if that makes a difference).
I can't afford the asking price but they may be negotiable (that's been agreed, as much as estate agents will ever spill their guts, but maybe that's cos it's a proper clanger, fuck knows) and it needs a lot of work, although some could be done over time.
It's the only one I could see myself staying in though - for location and also *what it could be* - so that's important.

The lease is 99 years, ground rent of £10 a year and the other share of the freehold is with the first floor flat, but there is no current maintenance agreement in place. Is that something to be worried about?
I can see from the listing that there's a chunk of a sill missing from one of their own windows (this may be irrelevant but it's all I have to go on - just whether it's going to indicate a general lack of repair).
The flat we would be buying was very obviously owned by an old dear and I suspect upstairs may be the same, although it may not (one question to ask, already).

Go for it!

 

[hash tag]

Shared freehold with 99 year lease is perfect. The lease is supposed to cover things like maintenance ("of common parts" ie roof, drains, foundations external decoration which will possibly cover window sills). Without a maintenance agreement, I would go for solicitors advice.

A it of a sill missing could be an indication of many other problems ie damp, rot Etc. Be warned, If the place is in need of a lot of upgrading, it maybe be that it's downvalued by the mortagagee valuer.

 

[Leafster]

sheothebudworths , you say the lease is 99 years, is this the amount remaining? New leases are often granted for 99 years so I'd be surprised if there's 99 years left. Although, I've seen leases granted for 125 years too!

I'd ask how previous maintenance costs have been dealt with. If you know a friendly builder, it might be worth taking them along for a second viewing. That's what I did when I bought my current place. It's no substitute for a survey but it does provide you with a little more knowledge of the state of a property.

There may be more information on the Land Registry website for the property so for (I think) three or six quid you may be able to find out more. The freehold and leasehold will be held as separate "titles" so you may need to pay for both. I'm not saying you will find much more info, but you never know.

But as hash tag says, it may be wise to approach a solicitor at this point for general advice on how maintenance is dealt with in these sort of situations.

 

[hash tag]

This is possibly going to be your biggest ever purchase, so don't be shy. but I am guessing it is empty anyway, so go around and try everything.make sure all the doors open and close properly, check all the taps for clean running water, does it drain ok, is the hot water hot Etc. Check all the cubpards to make sure the doors work ok, for signs of rot, hanging properly, signs of infestation. Also visit during the day, night at weekends to get an idea what the neighbours are like.

 

[Leafster]

This is possibly going to be your biggest ever purchase, so don't be shy. but I am guessing it is empty anyway, so go around and try everything.make sure all the doors open and close properly, check all the taps for clean running water, does it drain ok, is the hot water hot Etc. Check all the cubpards to make sure the doors work ok, for signs of rot, hanging properly, signs of infestation. Also visit during the day, night at weekends to get an idea what the neighbours are like.

Definitely do this ^^^

Of the two properties I put offers on including the one I finally bought, I loitered around outside for ages and got to talk to a couple of neighbours as well as checking out everything inside. It's surprising what you can find out. One of the properties I was interested in had a constant stream of potential buyers when the other one had very few.

Also, on a second viewing, don't be rushed by the Estate Agent, take your time.

 

[hash tag]

A previous place was in a respectable road and all appeared Ok. It was not until the first winter after we moved in that we found out that the best part of a funfair was stored on land at the bottom of the garden. We thought we were in for problems, but it turned out to be ok.

 

[Leafster]

A previous place was in a respectable road and all appeared Ok. It was not until the first winter after we moved in that we found out that the best part of a funfair was stored on land at the bottom of the garden. We thought we were in for problems, but it turned out to be ok.

When my brother and I were selling the site of my dad's former business we found out that all the surrounding land had specific clauses in their title deeds which prohibited the storage of funfair equipment!

 

[mauvais]

sheothebudworths , you say the lease is 99 years, is this the amount remaining? New leases are often granted for 99 years so I'd be surprised if there's 99 years left.

I imagine the seller has renewed it prior to sale.

 

[Leafster]

I imagine the seller has renewed it prior to sale.

Ah, that's a possibility.

 

[mauvais]

When my brother and I were selling the site of my dad's former business we found out that all the surrounding land had specific clauses in their title deeds which prohibited the storage of funfair equipment!

I'm not allowed to set up a lunatic asylum.

 

[hash tag]

I imagine the seller has renewed it prior to sale.

If as sheothebudworths says, it was previously occupied by an old dear, who has possibly passed, I doubt that the executors would bother with extending the lease, preferring to take a hit on the price. Something which can and should be checked without referral to solicitors, or making any expenditure come to that.

 

[sheothebudworths]

Shared freehold with 99 year lease is perfect. The lease is supposed to cover things like maintenance ("of common parts" ie roof, drains, foundations external decoration which will possibly cover window sills). Without a maintenance agreement, I would go for solicitors advice.

A it of a sill missing could be an indication of many other problems ie damp, rot Etc. Be warned, If the place is in need of a lot of upgrading, it maybe be that it's downvalued by the mortagagee valuer.

Yes, I'm worried about this.

sheothebudworths , you say the lease is 99 years, is this the amount remaining? New leases are often granted for 99 years so I'd be surprised if there's 99 years left. Although, I've seen leases granted for 125 years too!

I'd ask how previous maintenance costs have been dealt with. If you know a friendly builder, it might be worth taking them along for a second viewing. That's what I did when I bought my current place. It's no substitute for a survey but it does provide you with a little more knowledge of the state of a property.

There may be more information on the Land Registry website for the property so for (I think) three or six quid you may be able to find out more. The freehold and leasehold will be held as separate "titles" so you may need to pay for both. I'm not saying you will find much more info, but you never know.

But as hash tag says, it may be wise to approach a solicitor at this point for general advice on how maintenance is dealt with in these sort of situations.

The husband of one of my workmates is a builder and he'll come and do a free price up if needed (for *ideal* work along with *immediately necessary* work).

If as sheothebudworths says, it was previously occupied by an old dear, who has possibly passed, I doubt that the executors would bother with extending the lease, preferring to take a hit on the price. Something which can and should be checked without referral to solicitors, or making any expenditure come to that.

The leasehold flat I was looking at, which has had an offer on now, had 75-77 years left and the vendors were extremely keen to renew (obvs because of potential problems with buyers mortgages).
It was their mum's place and they didn't have the cash to renew it, so they were actively seeking a lower than asking price offer but had set up a new lease offer with the freeholder to be paid by the buyer.

It's seemed to me like most 'short lease' properties are either advertised as such, or for cash only, or are up for auction, so I'd assume this has been extended and that the work is doable - although you're quite right that I should check and not assume that the question 'how long is the lease?' will give me a real answer.

 

[hash tag]

You could go for a 75/77 year lease, but to satisfy the mortgagee it will have to be extended on completion. If the vendors are straight, they will tell you how much it'll cost to extend it. Then you can factor that in with the price.

 

[hash tag]

PS. Why not get said builder to look the place over, he/she might just spot things you've missed.

 

[sheothebudworths]

You could go for a 75/77 year lease, but to satisfy the mortgagee it will have to be extended on completion. If the vendors are straight, they will tell you how much it'll cost to extend it. Then you can factor that in with the price.

Sorry - that's a different flat - one that has gone!

It was just to illustrate the fact that they do seem to either mention short leases OR to adjust the method of sale around it.

 

[Boudicca]

But if you have share of freehold, surely the length of the lease is not an issue as you can extend it yourself?

 

[sheothebudworths]

And I defo WILL get the builder round after a first viewing (on Weds) and once the lease stuff is clearer (the agent dealing with it was out of the office so the info I have today is just what someone else pulled of the computer.
She did that annoying placid *soft voice* thing I remember science teachers doing when they taught sex education.

 

[hash tag]

Sorry, I got that about the lost flat and lease. Just trying to illustrate how it could work.

 

[sheothebudworths]

But if you have share of freehold, surely the length of the lease is not an issue as you can extent it yourself?

I don't know.
So much I don't know

 

[Boudicca]

I also think it's unlikely that there is no maintenance agreement - this is probably part of the lease paperwork.

Proceed with caution, let your solicitor do their job, don't believe a word the estate agent says, and knock on the door of the flat above once you are a bit further into the process.

 

[Puddy_Tat]

I also think it's unlikely that there is no maintenance agreement - this is probably part of the lease paperwork.

If the 'freeholder' consists just of the two flat leaseholders, it's possible that the maintenance agreement is 'we will sort anything out when it happens' rather than having a standing contract with a maintenance company.

maintenance charges in larger blocks can cover stuff like regular gardening / cleaning and so on of shared areas - this may not be an issue in a place with only two flats if it's clear who's responsible for (say) each bit of garden / driveway.

but the lease should make it clear who's responsible for what.

 

[komodo]

I had a flat where we and the other upstairs flat owner bought the freehold. We had no maintenance agreement in place. Luckily there were no major maintenance issues and we were able to agree who would paint exterior etc. But it could have been a nightmare if something major like the roof needed doing. As nothing in place to say how anything would be done, no money set aside etc. If one of the flat owners said they were skint and don’t want to pay for external repairs/maintenance and the other owner wants the place done up how does it get sorted?..

 

[hash tag]

Did you ask the "question" sheothebudworths, did you get a builder to look the place over, any news?

 

[friendofdorothy]

If the 'freeholder' consists just of the two flat leaseholders, it's possible that the maintenance agreement is 'we will sort anything out when it happens' rather than having a standing contract with a maintenance company.

maintenance charges in larger blocks can cover stuff like regular gardening / cleaning and so on of shared areas - this may not be an issue in a place with only two flats if it's clear who's responsible for (say) each bit of garden / driveway.

but the lease should make it clear who's responsible for what.

We're in this position of sharing freehold with 2 others. Leases clarify how costs are shared. We informally agree between the 3 flats when things need doing, it is usually when we can all afford them. Can be tricky when one party doesn't pay their share of a big bill like the building insurance, because they have spent all their cash on fancy dentistry and they neglect to tell you that they can't pay back the £450 they OWE you, til xmas eve ... then pay in drips and drabs (arggh) but I'm not bitter - even though my teeth are crooked and need crowns...

Usually it works out ok. Not sure how it is going to work as our co Leaseholders get posher and richer.

 

[not-bono-ever]

leases get messy under about 80 years remaining IIRC- the freeholder can ask for a marriage fee that reflects the change in value that would come with an extended lease - haven't looked at this for years but it can be tricky to get a mortgage for a short lease anyway, and then expensive to subsequently obtain the extension you need for comfort

 

[sheothebudworths]

I viewed the flat. It was tiny and dark and couldn't be extended out the back because it's built into a hill but we still could've moved it about to fit us over time. It was closest to where we are, I could still see *what it could be* and I'm not in any position to *love* a property. The vendor had refused an offer of 215 already so I offered 217 on the spot, which was as much as I could safely go to, discounting my deposit here but allowing for fees and extra rent for the duration of the sale - but with fuck all left to do any work.
The vendor refused the offer but the estate agent called back the next day and said he was trying to negotiate the price on the property the vendor was after, to reduce it enough to accept mine.
I know this all sounds like estate agent bollocks but it wasn't, tbf. There's fuck all available locally, even for leasehold properties, within my budget and there's barely anything else in the whole city (and NONE of those have a share of the freehold).
Anyway I was just really not fussed one way or another about either of those events, heh, but thought I better sort the money out. Left my son's where it is - having already got ONE thing right and cashing in our stocks and shares ISA's at exactly the right time (but only when I put them in at a fairly stupid time but where that was the right thing to do THEN - they're worth what they were six months ago, at least 0) but went to take my daughters out and OH YES OBVIOUSLY you can't take money out of a Junior ISA until the child is 18 (which is fair enough - but I'd actually moved ALL her savings in, money *I* have saved for her and some my mum put into childrens bonus bonds for them a few years back, along with transferring her gov. child trust fund, which was the ONLY thing at that point in time that couldn't still be cashed in ) so we were now £4500 down. Fucking hell.
I phoned the estate agents straight back and told them.
I can't be doing with pissing about and the vendor is an old man who wants to move to Littlehampton - I'm not going to hold him up.
I actually cried to the woman who answers the phone at the estate agents, who knows me well now (I like her cos she does the same lowered tone/quieter/calm *sex education voice* my teachers used to do at school when they're broaching a difficult subject, hehe).
I did tell her 'I'll just cry today and then think of the NEXT THING to do tomorrow' - and I did. I had a small amount of valuables to sell so I had some antiques bloke round on Monday who's like Keith Richards.
At THIS point I am already acknowledging that we have to cram three of us into a two bed place - and I STILL have the stuff my mum dragged along with her, which I couldn't stand to tip down the rubbish chute in her/our block when I had to clear her flat 2.5 years ago (when I tipped LOADS of *important* stuff down it already) so it was time to deal with THAT now and I'm not bothered that young Keef is undoubtedly looking for bargains himself cos it's just clearing more stuff out and it has to be DONE.
I have about a grand coming from the tat that was left and he's 'researching' some other stuff, that I haven't committed to sell.
I opened up Help to Buy ISA's for myself and my son two days ago and stuck the first payments in today so that we'll effectively get another £800 from that scheme within the next couple of months, judging it'd likely take that long and also that we can't find the extra £350 my landlord is now charging while he's also started up a JustGiving page to get him to a fucking ComicCon event (long story, but true).
Anyway, the vendor had another offer yesterday and he's going with it, which is fair enough but OMFG. *sigh*
Soz for the batshit, illegible post. I'm just still packing/sorting/chucking and I have more time now to ebay every, single thing that might earn extra while we're now paying more rent.
There is ONE property left I could offer on but it's an ex-lha leasehold flat and it's far enough away that we'd also have to pay an extra £75 in bus passes. That might be worth it - we'd still be paying loads less - but I'm REALLY nervous about the leasehold stuff, although maybe I shouldn't be.
I'm trying NOT TO RUSH and I'm not feeling that stressed - none of these things take me by surprise anymore and I am sorting through stuff I've gone through multiple times before and being really rigorous in what I keep and what I don't, which feels like a good thing, tbf - but all three of us are really unsettled while I hold off and I am really, really tired, too.
My mortgage offer also depends on the one, single lender not changing their rules to allow all my tax credits AND child benefit to be considered and my age (48) means the mortgage period gets shorter, too.
I'm really tired of dealing with CHANGE and having to do it so constantly and so much *on the hop* while I have to try and cram all the every day stuff in and deal with the fucking dire situation at work, too and not being able to feed any of that back on a daily, or even weekly, basis to anyone but my kids, who're both being fucking superb in their own, different ways.
Also, y'know - there are many, many ways we're lucky, ffs! I JUST want to step off for a bit.