Flats- is Head Lease worth owning? Responsibilities?

[WhiteCliffs_07]

I have been involved with the management of an HMO owned by a landlord i have known for many years. The landlord has decided to sell the block but has only recived an offer for the flats he owns and not the head lease. The landlord obviously doesn't want the hassle of collecting service charges, buildings ins. etc, so he has asked me if i want the head lease gratis. It has over 100 years remaining before it reverts to the freeholder and there appears scope for reasonable profit created by the difference in ground rent (£50 to free holder, £300 from flat owners) and management charges included within the service charge. I am however cautious to the head lease holders liabilities. If i own the head lease but not any flats, am i liable for compensation claims for accidents in the communal areas, or for any of the upkeep/major works or will any/all of these costs be levied upon the flat owners? Any comments would be greatly appreciated.

[MrShed]

I would guess you would be liable to repairs to the communal areas, as this is at least in part, I would have thought, what the maintenance charge is for. I would also guess that you are liable for accidents in the communal areas, IF it was caused by your negligence in maintaining the area. In this respect the two questions go hand in hand, as long as you keep the communal areas well maintained then you shouldnt leave yourself open to liability for injury.

That said, if there is obvious reasonable profit, you have to ask yourself why the landlord is going to give the lease away. You say he doesnt want the hassle, but with the figures youve stated he could, I assume, hire someone to deal with this and still make some money, so I fail to see why if he doesnt see it as viable to run why you would.

[Poppy]

What exactly is being sold? Is it the freehold and/or some of the leases?

I am the freeholder or lessor of a block of flats that are subject to long leases. I am responsible for the repair, maintenance and renewal of the structure and common parts. I organise the buildings insurance. I decide on work to be done and collect the service charge. The ground rent is payable to me.

The main profit that I can see in owning the freehold of a block of flats is when my lessees ask to extend their leases. This may occur next month or in the next ten years or whenever.

If you don’t want the freehold, I may be interested. Where is the building? How many flats in the block? Is it purpose-built or converted?