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To not understand Freehold/Leasehold

(33 Posts)
Mitmoo Tue 13-Sep-11 13:31:28

I'd appreciate advice on this one before I pay out for solicitors. It has been run before but got turned into a bunfight to MN pulled it. I need some proper advice so hopefully I'll get some of the knowledgeable posters recontributing again.

Mum's home is downstairs maisonette owned by her. She owns the land to the back and the front, the upstairs maisonette owner (landlord and one of the rudest vilest men I've ever come across) though is being perfectly charming right now because he wants something.

She is the freeholder, upstairs landlord/owner say they are also freeholders of the land the property stands on (not the front/back garden which is mum's). He wants mum to convert to a leasehold and is trying to say that the propery will be worth more if it converts.

I thought being a freeholder meant that you owned the land forever, not for a fixed term as with a leasehold so am I being thick and therefore unreasonable, in thinking there is no benefit and not being able to work out what possible benefit there could be?

RedHelenB Tue 13-Sep-11 13:33:04

Who would have the lease?

cheekeymonkey Tue 13-Sep-11 13:33:21

I believe you are right and when/if you come to sell leasehold is less favourable

slightlymad72 Tue 13-Sep-11 13:37:15

After watching a few episodes of Homes under the Hammer, a leasehold is not the favourable option, leases run at 99 years, when you are selling your property the buyers like to have the full or nearly full 99 years of the lease left, it tends to affect the price if it does not have a high lease left, negotiations then take place between leaseholder and seller or leaseholder and buyer with the leaseholder (if they desire) charging a hell of a lot of money for the lease to be extended.

IMO it sounds like upstairs is trying to pull one over on your mother.

Scholes34 Tue 13-Sep-11 13:38:08

Leaseholders need to have permission of the freeholder to carry out any major works to the property.

CogitoErgoSometimes Tue 13-Sep-11 13:40:18

My parents' home is leasehold and on a 99 year lease which is normal for their part of the country. When/if they sell, the new owner would also get a 99 year lease. Their leasehold comes with certain conditions from the original developer, plus they have to pay a nominal Ground Rent. The conditions aren't all that restrictive but they are more restrictive than my property which is a freehold.

I would suggest your mum gets hold of the deeds to her property so that she can see who owns what exactly. I would be very suspicious of any neighbour (because that's all this man really is) that is putting pressure on another neighbour to change the terms of their deeds and is making claims on their land.

lookbutdonttouch Tue 13-Sep-11 13:41:13

Freehold means you own the land outright. A leasehold title would be granted out of the freehold title and would be for a set period of years. If she owns the freehold then she should stick to it.

You can find out very easily who owns what at the Land Registry website by getting copies of the title.

It is highly unlikely that both your mother and the person upstairs both have freeholds to flats...

PM me if you want.

Mitmoo Tue 13-Sep-11 13:42:06

Slightlymade the man is completely untrustworthy, not as far as I could chuck him. He has offered to send a couple of estate agents another word for his mates in the business around to value the property with and without the leasehold to prove it would add £20k ish to the price of the property.

I smell a rat but don't want to waste my money seeing solicitors to get independent advice to tell me what I suspect already.

Red not sure they'd both hold leases on the other maybe?

Mitmoo Tue 13-Sep-11 13:44:31

Thanks look I have copies from the Land Registry of Mum's property and she's definately the Freeholder. I haven't seen copies of the upstairs Land Registry documents, that may well be my next step.

Thanks for the PM offer I'll get the deeds and stuff out and go over the main bits again.

MooncupGoddess Tue 13-Sep-11 13:46:33

Do your mother and the horrible guy upstairs share the freehold? It's impossible to split the freehold for flats because they're both built on the same plot of land. So they can't own it separately, but they could share it, or one of them holds the freehold and the other is mistaken.

You should be able to confirm who holds the freehold from the Land Registry. You're quite right that it has a value and a leasehold flat with freehold of the whole building (or share of freehold) is more valuable than one without.

slightlymad72 Tue 13-Sep-11 13:49:40

The copies that you have does it show that ALL the land the property stands on is owned by your mum?
I think you need to take them to a solicitor for them to look over to make sure that everything is as it seems with who owns what and that nasty neighbour can't do anything, there are solicitors that do free 1/2 hour consultations.

lookbutdonttouch Tue 13-Sep-11 13:50:01

you need to check the plan too (if you have one and if not, get one) and the freehold title and plan and check whether the man upstairs really is the freeholder for the land underneath the building, unsure whether it would be split that way.

It would be more usual for one of the property owners - by the sounds of it your mother - to own the freehold for the whole property / land and the freehold to the building and then a long lease to be granted out of this for the apartment upstairs.

Alternatively the freehold is owned by them jointly in one title and then they both have separate leases for the apartments. It varies.

snice Tue 13-Sep-11 13:52:31

there is such a thing as a 'flying freehold' where a first floor property can be freehold (for example where a building extends over an alleyway owned by someone else) but they are relatively rare so I think it is v.unlikely that the owners of the upstairs property are freeholders. Perhaps they have a 999yr lease so are virtual freeholders?

azazello Tue 13-Sep-11 13:54:31

Freehold is owning the land outright. Leasehold means for a term of years. At the end of lease, the land reverts back to the owner of the freehold.

I would be surprised if there was a maisonette owning the freehold of a building and a piece of land with a seperate freehold title on top. It is possible however, that there is a share of freehold arrangement which was quite common - both flat owners own their own property and share ownership of the communal areas. There is usually a lease as well to control upkeep of the communal areas and garden etc.

Could this be what is going on?

KarenHL Tue 13-Sep-11 13:56:01

Freehold usually means that you own the land and building(s) on it.
Leasehold usually means you own it for a set period of time.
If your mum has a Landlord, it is unlikely that she is the Freeholder. Or do you think she is the freeholder of the downstairs flat, and the 'landlord' freeholder of the upstairs? If the latter, this is unusual (Freeholders usually prefer to continue to own the whole, then lease out individual bits) and if I were her, I would seek legal advice. Some solicitors do a free initial 30 mins. I cannot see any advange in selling her freehold to become a leaseholder (unless someone is willing to give her x amount of money). It also depends on what she might want to do in future. Leases commonly run for 99 years and can usually be extended when they get near the end of that time (at a cost).

It is worth completing Form OC1 (otherwise known as 'Office Copy Entries') from HM Land Registry (google them to get the website, then forms, forms/publications). You will need to know the local authority (whoever you pay council tax to) and the local HMLR office. Don't worry if you don't know the title number, so long as you have the full address they'll find you.

If you get OCE for your mum's property, and for upstairs (if it is a different address, eg flat a, or 36b). OCE will tell you exactly who owns the freehold (and which bits), and if there is any existing leasehold on the property. OCE are currently £8 each, so not expensive - anyone can apply for them, you don't have to be the owner. The owner is not notified that OCE have been requested, so he can't be awkward about it. If the property does not have a specific street address, or street number, or is new, it helps HMLR if you can attach a map with the land outlined in red.

PM me if you have problems filling it in.

Magrathea Tue 13-Sep-11 13:56:05

Agree with Look

I am struggling to see what he means by "converting to leasehold". If your mother owns the freehold she owns the estate in land outright - there is no other landowner therefore you cant be a leaseholder on your own freehold property. The only thing I can think of, if that there might be a ground rent to pay. This is usually a nominal fee (one I once paid was 50p per year)to keep an interest in land from a property holder from wayback (you find a lot of previously church land has a nominal ground rent attached). However, it's again difficult to see how this could turn into a leasehold for the maisonette as most ground rent recipients have no interest in being a landlord.

I would add as an opinion that it is almost never in a freeholder's interest to go anywhere near anything leasehold - just do what your mother used to advise you to do and not talk to the creepy man smile

Most solicitors worth their salt will give an initial half hours free advice.

grovel Tue 13-Sep-11 13:57:51

Get an estate agent round for a (free) valuation of your Mum's property. Ask him/her your questions.

Mitmoo Tue 13-Sep-11 14:00:55

A google has showed both properties as Tenure: Freehold. That's just from a postcode search on the Land Registry Site. I know from the deeds Mum's owns back and front groundfloor gardens so perhaps the Freehold is just the land where the properties are, there are just the two, ground floor and the first floor maisonettes.

So why would upstairs want mum's to change unless he wants to hold her leasehold. I don't get it if he's already a freeholder albeit joint it seems.

slightlymad72 Tue 13-Sep-11 14:00:55

Is the neighbours lease (assuming he is a lease holder not freeholder) too short to make it appealing to potential buyers? or is he hoping your mother hasn't noticed that the lease maybe up for renewal and he's trying to get around with not paying for it to be extended?

Just ideas that have popped into my head, they might not be relevant.

If your mum ownes the freehold then there's no such thing as "converting" to leasehold. If you are a leaseholder you are entitled by law to buy the freehold of your property, but if you already own the freehold, hold onto it!!

Mitmoo Tue 13-Sep-11 14:03:42

Thanks to everyone so far, I am printing this off and will re read again. Really helpful stuff.

Thanks.

nocake Tue 13-Sep-11 14:04:28

I think your Mum needs to take advice from a solicitor specialising in property. She needs to find out if she owns the freehold for the entire land. If she does then the upstairs flat is leasehold and she will be significantly disadvantaged by any change to this arrangement.

He may try and claim that he has a right to a share of the freehold but this is not the case. A law was introduced a number of years ago allowing owners of leasehold flats to apply for a share of the freehold. However, the rules state that they can only do this if at least 2/3 of the flats are owned by leaseholders. As there are only two flats and one of them is owned by the freeholder he can't apply for a share of the freehold.

He is definately trying to pull a fast one and your mum should not sign any documents or agree to anything without having it checked by a solicitor.

SoupDragon Tue 13-Sep-11 14:05:08

I have seen that kind of thing on those property programmes on TV. I can't remember the exact details, and am no expert, but there were cases where it made financial (and ease of selling) sense to make the flat leasehold but retain the freehold separately, rather than the flat being purely freehold. Or split the freehold so the flats ame with a share of the freehold..

As I said, i can't remember the details.

HeadfirstForHalos Tue 13-Sep-11 14:09:00

KarenHL Mitmoos mum owns her maisonette, the guy who owns the flat is landlord of the flat not her mums landlord.

He is trying to pull a fast one Mitmoo, freehold is better than leasehold when selling, make sure your mum doesn't fall for his scamming.

nocake Tue 13-Sep-11 14:11:51

slightlymad makes a good point. If his property is leasehold and your mum owns the freehold then there should be a lease covering his property. That means he should be paying ground rent to your mum, although it may be peanuts. It may be that his lease needs to be renewed (normally if there's 80 years or less to run on it). Your mum should find a copy of the lease and get a solicitor to check it. If it needs to be renewed then he will have to pay your mum for renewing it plus all the legal costs.

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