A share of the freehold may not seem to be what my client thought he owned!
About 8.5 years ago, my client bought a flat on a then approx. 67 year lease together with a quarter share in the freehold management company, the lessees of the other 3 flats that make up the building owning the remaining 75% equally.
The freehold was acquired in 1989 via a management company set up by the then lessees for this purpose. In 2009 at around the time my client bought his flat, the other 3 lessees converted their leases to around 962 years for nil premium.
Past records of all transactions of the flat show that it was marketed and sold with a share of freehold and it was on this basis that my client bought the flat.
My client no longer needs the flat and a buyer has been found who would like the lease ‘normalised’ co-conterminous with the other 3 leases to around 954 years for nil premium. The other 3 co-owning freeholder lessees have agreed….. but only if my client pays now a substantial premium!
It does seem strange to me that:
a) for the past 8.5 years no demand has ever been made by the freehold company in which he owns a quarter stake for the annual ground rent reserved under the lease although it has charged annual insurance premiums etc
b) from a relativity point of view – if the other 3 lessees converted their then 67 year approx. unexpired leases to virtual freehold tenures for nil premium effectively equivalent to freehold value; how does this sit with 58 years now ‘collapsing’ to a needed 76% to 80% of freehold value? Are the relativity graphs to be redrawn showing a cliff edge just shy of 67 years!
It seems to me more a case of greedy neighbours attempting to unreasonably profit | destroy my clients sale – hardly conducive for a happy co-existence in the same building!
Hmmm!