Bad lease terms in a share of freehold flat?

[ldnflatbuyer2021]

What are the benefits of a share of freehold and how much is it worth it compared to a normal flat? (with a 3rd party freeholder)

I am just buying a flat that is in a block that is relatively big (90 flats in about 10 buildings with some shared gardens/parking that is maintained).
There is an external management company and to all flats own a share of the freehold company ( it). Flat is in London Zone 3, close to zone 2.

I can see the following restrictions in the lease (which seems standard):

• animals can only be kept if they don't cause a nuissance (ie. no one complains about them) so you can probably keep a cat, not a dog that barks sometimes
• you can't have lodgers
• you can only have one family living in there (so can't rent out to sharers or so)
• you can't do airbnb
• you need to redecorate the exterior of the block/property every 4 years (I guess the management company can get 10% supervision fees easily with this)

Am I right in thinking share of freehold flats should have slightly better terms where the owners get a bit more control of their assets?

Or what is really the advantage of a share of freehold flats?
I guess that you can extend the lease for free (except owners solicitor costs).
You also get a bit more of a say on what will be spent in the block,
but this was a bit disappointing to see with regards to restrictions.

Really the leasehold flats in the block without a share of the freehold seem to be in a similar position as they won't face higher charges due to weird repairs (residents controlled) - and the main difference is that they need to pay the lease extension premium. Well even then they could perhaps avoid paying it for a while if the marriage value is removed as government announced...

I think you would see restrictions along those lines whether it was a third party freeholder or shared. Why are they disappointing? They seem sensible to me for mutual benefit.

The terms will have been decided by the owners, or the directors of the owners company, depending on the set up.

The biggest benefit to my mind of owning a shared freehold is that you shouldn't be subjected to irrational rent hikes for the profit of a third party. You would assume any charges levied are effectively at cost to maintain the property.

As you've seen and IME when I was viewing there isn't a value placed on this in terms of property pricing, but it would make one place more attractive over another and gives peace of mind.

You need to think with 2 different heads.

You are a leaseholder. You are a freeholder. They are separate entities. As a freeholder you have the legal responsibility to make sure the lease conditions are kept and to make sure the building is kept habitable.

The leases restrictions you have listed seem very standard lease conditions to me. They all seem very sensible.

Your argument of the lease extension being free may not be correct, depends on what the other freeholders want. They may want to charge you and then they all split it. They may do this for every flat. Or they may all say we all need to extend leases at some point so we won't charge but will just charge for our legal fees. You won't know until you ask them.

You would think that if you own share of freehold then you don't pay for a lease extension.
It doesn't necessarily work that way. You need to check the length of your lease compared to the others in the block as some may have previously paid to increase their lease and others not. Those who already paid for lease extension will not agree to others doing it for free.

I’d be wary of a lease that prevents lodgers or letting to sharers in London. It’s quite unrealistic and not a standard term.

Lease terms seem fairly standard (independent of SoF or third party freeholder)

I’ve had two share of freehold flats. One was in a similar set up to the one you describe. The 4 year external redecorations was adhered to, there were committees etc. Usually with cheapest quote.

The second is in a Victorian conversion with 6 flats and don’t usually do it every 4 years per lease. Mostly at AGM all 6 people agree to defer a year and it ends up being closer to 6 or 7 and at same time make an improvement to the building.

Sorry I meant to say lease terms seem fairly standard except lodger. I have never seen that. I don’t see an issue with it when the lodger is part of your household.

I own a share of freehold London flat in a conversion with just 3 flats. We all extended our leases for free to 999 years so we never have to worry about that again. That's a big benefit as far as I'm concerned as lease extensions can be expensive otherwise.

The clauses you mention are standard on almost any lease.

We have quite an informal set up as there's only 3 of us, so it feels like we have more control when it comes to getting any work done for example some roof repairs that have been done. I can imagine it would be a pain if the other freeholders wanted to be difficult about things, or if there is a larger number of them as it could then be more difficult to come to an agreement.

I doubt the clauses are going to cause you a problem OP unless you wanted to keep a dog. Does it actually say no lodgers or houseshares, or is it worded as 'you can only have one family living there'. If the latter then the clause is probably intended more to prevent the flats being very overcrowded. I doubt you would be prevented from having a lodger so long as your flat wasn't causing a nuisance in some way. There can be all sorts of nuisances involved in living in flats, barking dogs, people hiring sound systems for large parties, we even had a brothel upstairs. If the flats are well managed which it sounds like they are then that is very much to your advantage.

No that's fairly normal in my experience. They don't want an HMO, they don't want Airbnb, and animals are always contentious. As long as you can sublet it I don't think those restrictions are unreasonable.

Thank you everyone for feedback.

Really the biggest issue I have is with the restrictions on (sub)letting to sharers and having lodgers.

I've read a bit on the issues that people on landlordzone forum had with such worded leases (basically freeholders coming after them as a form of payback - which really according to the lease, the freeholders can do...).

@ldnflatbuyer2021

Thank you everyone for feedback.

Really the biggest issue I have is with the restrictions on (sub)letting to sharers and having lodgers.

I've read a bit on the issues that people on landlordzone forum had with such worded leases (basically freeholders coming after them as a form of payback - which really according to the lease, the freeholders can do...).

If you want to sublet or have lodgers then this isn't the flat for you. Plenty of other flats around.

Its not the freeholders coming after payback, they have a duty to uphold the terms of the lease as they stand. If you did sublet then you could (depending on the terms of the lease) be liable for the freeholders legal fees as well as your own, so if this is a massive deal for you then just find somewhere else.