Lease extension with communal lease

[VikG]

We have a block of flats which has a seperate lease to the management company for the communal areas and then leases for each flat. In order to extend the lease for the flats we been advised we need to extend the communal lease.

Does the communal lease hold any value? It has nil ground rent and approx 75 years remaining.

Has anyone come across this situation before?

[jeffrey]

So which of these scenarios applies?:

1. L owns freehold reversion. That's subject to a Head Lease (of the entire property etc.) in favour of Mgt. Co. That's subject to all of the underleases, one per flat.

OR

2. L owns freehold reversion. That's subject to:
a. all of the leases, one per flat; and
b. another lease, of common parts only, to Mgt. Co.

[quarterday]

If the management lease is solely for the common areas (and perhaps roofs) then there is no obligation on the landlord to renew the common parts lease to the Management Company. Subject to perhaps retaining control of the airspace above the building for possible future development, and possibly some sort of modern ground rent, the landlord might well be pleased to extend the common parts lease so that he hasn't got the bother of managing it himself and collecting contribution from lessees.

[VikG]

Jeffery, the second scenario exists.


L owns freehold reversion. That's subject to:
a. all of the leases, one per flat; and
b. another lease, of common parts only, to Mgt. Co.

Thanks quarterday. Would there be any financial value in the communal parts?

[jeffrey]

Would there be any financial value in the communal parts?
No. The management company merely collects-in service charge funds and pays-out on service charge work bills.