Difficulty to sell leasehold flat due to court order with freeholder

[verylonglease]

If you simply grant an underlease you will continue to be liable for any ground rent and service charge due to the landlord. Your sublease may oblige your purchaser / tenant to reimburse you, but do you want that hassle? And that's not even getting started on the headache that could be caused if a sublessee breaches a covenant and it's you they come after.

The ground rent is peppercorn (i.e. zero) and there are no service charges. Only 1/4 of repairs and maintenance is payable on receipt of an invoice from the freeholder, which happens as and when. In 10 years, this happened twice. The building is a converted house into 2 flats with each having their own front door. There are no communal parts.

I prefer an arrangement where I can sell with an underlease rather than see buyers pulling out one after the other because they are concerned that they have no protection against the planning permission. I have such protection but only I have it, it is not transferrable under the existing arrangements.

[Tulula]

But what happens if in 5 years time the freeholder decides to replace the roof and your sublessee decides he doesn't have the money to pay for his 1/4?

It's up to you but you must understand that you will have continuing obligations and liabilities which you may have difficulty in enforcing against the sublessee. I also don't think this arrangement will be as attractive to buyers and their lenders as you think it will be. Sorry to say it but your problem is the terms of the consent order, and I can see no way to go back on that now.

[leaseholdanswers]

I agree with Tulula that it is less than perfect.

The risks of enforcement and time may be offset by the difference in the sale price and getting a buyer where there are none. If it is say £10k then that money you would put to one side in other investments so at least the property is sold ( rather than hard to sell or unsaleable at present) against the day there is a problem with the underlessee.

Of course the issue may only run as long as the planning consent is valid, and whether they might get permission in future.

You can offer to the freeholder to surrender the consent order, for a sum of money, to allow them to complete the works, if your flat, after completion of the extension, is saleable at a realistic re sale value.

[bbva]

I agree with Tulula that it is less than perfect.


You can offer to the freeholder to surrender the consent order, for a sum of money, to allow them to complete the works, if your flat, after completion of the extension, is saleable at a realistic re sale value.

However the freeholder will most likely guess that you are wanting to sell if you offer to surrender the consent order. He therefore can afford to wait until someone buys, so therefore would not be willing to pay you anything. His solution of a consent order was well thought out and unfortunately you did not take or receive good advice on the implications of signing it.

[leaseholdanswers]

But perhaps not. The court is unlikely to grant an order preventing the extension for a extended period and most likely did so on the basis of relief to the applicant, making it personal to them.

Given the ability as awkward as it might be to sell a long underlease of the flat ( with proper service charge contributions) the freeholder could find themselves timed out of ever doing the extension.

[verylonglease]

I have managed to get the buyer back and exchange contracts by offering a price reduction. So I didn't go down the underletting route. Contracts are now exchanged and completion is in 10 days time! As usual, problems can be resolved if you are flexible on the price.