Freehold flat

[teabagg]

DD is trying to buy her first place, and has seen a lovely flat - but it's freehold.

I understand they are harder to sell as most lenders won't give a mortgage on them, but this one seems to be at full value for the area, despite being on the market for a while and one sale to a cash buyer falling through.

How much would you expect the fact that it is freehold to affect the price, percentage wise? Or should we just give it a wide berth...?

Thanks

Avoid. The problem is that there is no means of making liabilities run automatically with freehold land – you are reliant upon your neighbours to maintain part of the structure such as the roof, walls or foundations and yet there will not necessarily be a clear legal obligation or agreement between you to force each other to carry out those repairs or spend the money on sharing the cost of those repairs - and even if there is an agreement at present it can be easy to break this agreement if one freehold flat is sold on without the new owner entering into the same agreement.

Besides, unless she doesn’t need a mortgage, then it won’t really matter how much of a percentage they’re willing to discount. Lenders won’t consider it a security.

Thank you!

Just checking you mean freehold flat and not a share of freehold flat? Easy to confuse and it makes the world of difference.

@Beviolinar yes, the agent said it was definitely freehold - I did wonder that myself though, because she said there was a management company?

That sounds like share of freehold. I owned one for years and was a director of the management company. We did occasionally have issues with one flat unwilling to contribute but we set up a sinking fund and it worked well.

I'd much rather have that than be at the mercy of a landlord who either doesn't look after the house or gets his mates to do spurious repairs.

And I didn't have any issue getting a mortgage, neither did my buyer (nor the buyers of two other flats which have changed hands since we moved out

Is it share of freehold or would she be the freeholder for the entire block? Those are 2 very separate things

I had no problem getting a mortgage on my freehold flat. It's 2 flats each sharing the freehold.

It's quite common actually. I'd much prefer that to leasehold.

Share of freehold is not quite the panacea that it is seen as because you still need to work with and reach agreements with your neighbours on a myriad of decisions not least annual building insurance and repairs and maintenance. You can appoint a third party management company to help.

Completely normal to be a "share of freehold".

There will likely still be a lease which sets out the covenants.

It's desirable in the sense that you won't have to extend the lease at any point. Worth seeing who the directors are as they will be the ones making the decisions on expenditure.