Share of freehold lease extension

With houses converted into flats on long leases, it is common for the flat owners to also have a share of the freehold. This is typically because the owner, when the property was a house, would have extracted most of the value of the property by converting into flats. Selling those and retaining the freehold only has residual value and comes with ongoing hassle.

Consequently, with many converted houses, the leaseholders own the freehold via a share of freehold, where the freehold title is owned by a limited company and buyers of the flats in future get a share in the limited company as well as being owners of the long leasehold for the flat.

There is 1 major advantage, when it comes to lease extensions, to have a shared freehold. Generally, this means that you should avoid paying the freeholder a premium to extend, which can be a number of thousand pounds, depending on the value of the flat and length of lease remaining. In short, there is little or no incentive for leaseholders to charge each other to extend, as all have common interest in keeping their flat leases long.

Difficulties can sometimes occur however. The most likely problem is where flat owners do not get on and 1 or more owner simply refuses to extend without charge or quickly out of animosity and spite. Clear provisions and processes in the freehold company articles of association or  shareholders agreement ought to cover and resolve this situation, but if this is not the case, ultimately, a court application and threat of costs order would be the way to proceed.

Extending the lease where there is a shared freehold will still not be 100% free. There will be legal documentation needed, usually a deed of surrender and re-grant of the lease and lender consent may be needed.

As with all types of lease extension, it’s better to extend as soon as possible if your lease has less than 90 years left. This will avoid the stress and delay of leaving things till you decide to sell and have a buyer in place because the buyer and his/her/their lender may well insist on the lease being extended and may even get cold feet.

We are very experienced in all aspects of lease extensions and offer a swift, efficient and fixed fee lease extension service.

We are also members of the Association of leasehold Enfranchisement Practitioners.

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