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Joshua, Lawyer
Category: Property Law
Satisfied Customers: 26070
Experience:  LL.B (Hons), Higher Prof. Dip. Law & Practice
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I need help understanding what's the best way to go on about

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Hello, I need help understanding what's the best way to go on about transfer of a share of freehold.
Let me give you a little background info.
I have owned a ground floor flat in London since 2013 with 50% of the freehold. The previous owners that sold us the flat kept the other 50% of the freehold to themselves. They have now decided to sell that remaining share to the owner of the upstairs flat, which so far only had a leasehold.
They asked me if I was interested in buying it and I said no, so they have offered to the upstairs owners and agreed on a figure (11k £). I now need to sign the contract stating that I am happy with this (which I am).
On the contract however there are two clauses that I don't feel comfortable with.
let me quote:
1) the transferee agree and declare that if either shall transfer the leasehold interest of either flat (top or bottom), the transferee shall simultaneously transfer without payment his share of the freehold title.
2) the transferee shall at the request of either of them extend the existing terms of the registered leases for a term of 125 years at a peppercorn rent and without my doubts:
1) by signing this i am agreeing to sell my share of the freehold when i sell my flat in the future. While i will probably want do this, why am i being asked now to sign for something that i will decide when the time comes? What interest do they have in what i do with my own share of the freehold? What if i decide that i want to keep that share and sell it later on, just like the previous owner is doing now? why is it any of their business what i do with my share?
2) by signing this i am agreeing of renewing the leasehold for free to the other party (and viceversa). While my leasehold was renewed when i purchased the flat to 125years (it now has 121), the other one has around 67 years left. Am I not entitled to the 50% of the premium paid to renew ssuch leasehold? according to some online calculators renewing the freehold to 125 years of that flat will cost 25-30k£, am I in the right in thinging that I'm owed half of that sum?
It's important to note that the freehold is owned as 'tenants in common', So the title would go from Mr A (myself) and Mr B (old owner) to Mr A (myself) and Mr C (new owners).I can provide trust deeds, titles and any other required documents.
many thanks!!
Damiano Migani

Hello and thank you for your question. I will be very pleased to assist you. I'm a practising lawyer in England with over 10 years experience.

  1. May I ask if you know what rent (if any) is payable under the top floor lease and whether in practice this is paid?
  2. Would you want to retain the freehold if you sold the flat?
Customer: replied 5 months ago.
Hello Joshua,thank you for your email.
to answer your questions, yes the rent of the top for lease is 25£ per annum on a peppercorn term (not collected). About retaining the freehold, no I probably would not want to retain it if i sold the flat, as it's fair to leave it with new owners of the flat. I just don't understand why they want me to decide now what i want to do with my share in the eventuality i sell. As i said, the previous owners decided to keep the share when they sold the flat and moved away, so technically i want to have the same freedom when the time comes. So in short, clause 1 I could live with, however my more immediate concern is about clause 2.
many thanks

Thank you. You do not have to agree to either condition. The transfer of freehold with the flat is a common condition and generally a sensible one. It is generally more beneficial to sell a freehold with a flat rather than retain it especially if the ground rent is very low because typically selling with freehold adds a small premium to the price of the flat at sale. It also means that the same condition would apply to the upstairs flat which could be sensible. But it is your choice.

The other condition about the lease extension would be very foolish to agree to econimically. You would be entitled to a significant premium or share of it) if they only have 67 years left as you would also be entitled to share in the percentage increase in value of the flat from the extension. You would likely be denying yourself thousands of pounds, potentially tens of thousands of pounds depending upon the value of the flats and location if you agreed to waive your right to a share of the premium. Again it is your choice but you would be being very charitable in deed to agree to such a condition.

Does the above answer all your questions? If it does, I should be very grateful if you would kindly take a moment to click a rating for my service to you today. Your feedback is important to me. If there is anything else I can help with please reply back to me though

Customer: replied 5 months ago.
Thank you Joshua.
In your opinion what are the implications of being tenants in common? As we are not joint tenants, I technically own half of the freehold of the entire building, so 25% is my good leasehold, and 25% is the 'bad' leasehold upstairs. Am i still entitled to that sum?
Also, why is the cost of renewing so high? apart from legal fees, who is the beneficiary of the renewal premium? I'm trying to understand, if i decided not to charge them for the renewal, would it be completely free for them to renew, or would they still have to pay the other half of the premium to someone (HM registry or otherwise who?)
Customer: replied 5 months ago.
i will leave feedback, thanks again

Tenants in common is definitely how you would wish to hold the title. To do otherwise (and hold as joint tenants) if either of you were to die that share would automatically pass to th surviving owner which clearly would not be intended here.

Freehold and leasehold titles are separate. So if there are two flats in the guilding you own 50% of the freehold from what you say and 100% of your leasehold title.

Renewals become much more expensive after a lease drops below 80 years. This is because the landlord is entitled to claim something called a marriage value on top of the normal premium. This is a share of the uplift in value to the flat with its new extended lease. You can make your own judgement about the fairness of course but that is what the law provides. Personally I do not consider it to be unfair in principle but I certainly know people that would disagree with me though of course my and others opinions are not relevant to the fact that the law is the law in this respect. In this case of course it will be to your benefit of course.

Many thanks for any feedback.

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