Freeholder of the leasehold flat

[Knownoone]

Hello All,

Need your advise, I am planning to buy a maisonette. The building has 2 maisonettes. Until now both the maisonettes were leasehold. The seller now has applied to take over the freehold of this building which will be passed on to us. Hence we would be the freeholder of this building whereas our house would be leasehold. My mortgage agent says they can't give mortgage on this type of property since it would be too complicated.

The mortgage broker has given the following response,

As it is a complete freehold, this will stop us from proceeding”.

Buying just the leasehold is fine, but both are going to cause you problems. The lender's concern is the other properties under lease as part of the freehold".

The property broker says it is beneficial we would own the freehold. I am completely confused. Anyone has experience in it and advise way forward. Should I tell the seller we don't want freehold status, hope this won't be an issue later and we are loosing a good opportunity.

Get a new mortgage broker, he is talking rubbish. Share if freehold is very common and of greater value to a mortgage provider, not less

@Delphigirl The issue is it is not share of freehold. We would be the only the freeholder of the entire building and the 2 maisonettes, one ours and the upstairs one would be leasehold. Is that even possible. I only knew about leasehold, freehold and share of freehold. How can we own 100 percent of share of the freehold. The broker sound as completely confused.

Ah ok. Anyone can own the freehold. It would be great to own the freehold of your building. It is an entirely separate property right to the lease you would own on your flat. There would be a separate price to pay for it though.One key thing the mortgage co will be keen to ensure is that at the time you buy the freehold on the property as a whole and the leasehold title of the flat, you do so in such a way that it doesn’t cause a merger of those two titles. That would make the leasehold title (and therefore the mortgage co’s secured asset) to cease to exist. But subject to that (you need a solicitor not a conveyancer) there is no issue.

If you have cash to buy the freehold then you could buy the leasehold with the benefit of a mortgage and the mortgage provider would assess that like any other leasehold purchase. If eg it is concerned that your lease is too short it could offer the mortgage conditional on you as freeholder granting yourself a new extended lease. As the freeholder you could grant yourself any lease you want - eg a 999 year lease with no ground rent - and any mortgage provider would be happy to lend on that.

if you don’t have the cash to pay the price of the freehold (ie you want to get a mortgage and part of the funds will be spent on buying the freehold) then that probably is a little more specialist but a decent mortgage broker should be able to get some interest.

I think legally the seller has to offer a share of the freehold to the owners of the other maisonette. If they take them up on the offer then you would have a leasehold with share of freehold which presumably would be easier to get a mortgage on as that’s fairly standard. Either way it sounds like your mortgage broker is a bit out of their depth!