One building, three leaseholds – what to do?
Judy asks:
<blockquote>I own all three flats in a converted house. Two of the flats have 99-year leases, the other has 60 years. Should I negotiate to extend the 60 to 99 years in line with the other flats or try to buy the freehold of the whole building?</blockquote>
If you’re lucky enough to have all the leaseholds in a building of flats, it’s natural and sensible to want to consolidate your ownership in whatever way is available to you.
If you can afford it and the freeholder’s willing to sell, then by far the best means of securing your possession is to take over the freehold on the property outright. (The legal term for this process is enfranchisement.)
That way, the house and the land are yours to do what you want with (subject to council permission, conservation listings and any restrictive covenants – you’ll need to check all of these out if you’re planning to make any major changes). Owning the freehold will give you complete control as to how the property is managed. You won’t have to pay ground rent or service charges, but you will have sole responsibility for maintenance.
Of course, whether you can afford it will depend very much on where the building is located – and how good a negotiator you are!
The first thing to do is to find out who owns the freehold. Check the details of your leases or visit the land registry website: http://www.landregistry.gov.uk
If the freeholder doesn’t want to sell outright for whatever reason, it may well be worth extending the shorter lease so that it’s synchronised with the other two. This is partly because of the basic principle that the longer the lease has to run, the more saleable the property is. But if you should ever want to sell all three leaseholds to one person, the package will be that much more attractive to the buyer if all three leases have the same length of time to run – and deprive them of an obvious handle to try to negotiate a cheaper price.
Your best course of action also depends on your plans for the future. You may be planning to let or sell one or more of the flats, or you may want to keep the property to live in or as an investment. The answer above is merely a broad description of the benefits of freehold versus leasehold. Your own particular circumstances will determine what’s “best” for you.
