The sale and purchase of freehold property can be quite a daunting business – here are a few tips that you may find helpful.
Lease Extension by Executors
The legislation makes it possible for the executors or personal representatives of a deceased flat owner to extend his lease provided he had owned the flat for not less than two years before his death. Even so, an Initial Notice needs to be served within two years of the grant of probate.
Lease Extensions where Flat Owners are also the Landlord
If the freehold is owned by the flat owners of the same property then it is common for the leaseholders to extend their leases up to 999 years and reduce their ground rent to zero.Commonly there is no premium payable as the leaseholders don’t want to charge themselves! This may well be something that is agreed before beginning the process of freehold purchase.
The Cost of the Tribunal
With both the lease extension process and freehold purchase, there is no fee payable to the Tribunal for making an application or later withdrawing the same. Furthermore, each party is responsible for their own legal fees and costs at this stage of the matter and these are not recoverable. However, in some circumstances where a court application is required, the costs situation is very different.
Missing Freeholder
Don’t be prevented from extending your lease ormaking an attempt to purchase your freehold if you have an absent freeholder. The premium you pay commonly works outmore affordable! The process for both is similar and involves making an application to Court for a vesting order for the lease extension or freehold. Its usually best to start the process early as the matter can take up to a year to complete.
What happens to our lease after we purchase the Freehold?
In brief, your leases remainidentical – they do not disappear. The leasehold and freehold titles are two different interests and therefore you will be both tenant and landlord concurrently. You can nonetheless, vary or extend your leases up to 999 years and reduce your ground rent.
Insolvent Landlord or Bankrupt Freeholder
It is quite possible to obtain a Lease Extension or Buy Your Freehold if the freeholder is bankrupt. The process can be a bit longer than normal as the Official Receiver and a Trustee in Bankruptcy will require to be involved and one or two preliminary enquiries about the freeholder’s bankruptcy will need to be made.
Forming a company to Buy Freehold
If there are four of more flats involved in buying their freehold, it is advisable to form a company to act as a vehicle for buying the freehold. All the participants will be shareholders in the company and some (or sometimes all) can be directors. From an administrative point of view, forming a company makes the entire process much easier when selling your flat and even extending your leases.