Owning your own home

You should do it. The danger is he becomes the freeholder and then you are fucked.

I'm still not sure about this. I can't see why the guy upstairs wants to do it, he said its a good time as the valuation will be low atm due to covid and he also doesn't want to "remember to pay the ground rent/extend the lease" (his lease is 125 years). Does he want to do it so its easier to extend his flat or something? Or is it just to add value for sale?

Tbh, I don't really trust the guy (he has builders in building a huge "shed" built during lockdown in his garden, one for the bastard neighbours thread) so I feel there could be hassle in the future if we're both freeholders. If I extend my lease through the formal route, my ground rent will be peppercorn rent (zero) so having thought about it I actually don't see that much advantage to being a freeholder?

I'll try to explain it a bit. There are three options here really.

The first is that you pass on it, and he can't afford to buy on his own. Fine. But if that freehold is up for sale, there's a decent chance that whoever owns it will just put it up for sale on the open market or at auction. And no-one who buys freeholds at auction has your best interests at heart. They will employ a managing agent, they will charge you for ground rent collection, they will enforce the covenants for the building, and you will pay a service charge over which you have no control unless you're prepared to learn a lot about the tribunal system. If you don't think this happens, google some of the companies which do it - Eagerstates, Assethold, Triplerose - and see what hapens to their house prices. That's your worst case.

The second best case is letting him buy on his own. In this situation, he becomes your freeholder - effectively your landlord, in law. If you want to make any alterations to the building, you need to ask his permission. If he elects to carry out major works, and your lease allows it, you need to pay him for them. If you don't, he can enact forfieture proceedings against you - you can be kicked out of your own flat. You also need to pay him for the privilege of extending your lease. And there's no standard formula for that. His lawyers will be able to demand more or less what they want, within certain limits. I had a short lease (65 years) which I extended last year; the total cost came to £31k including lawyers fees. I don't imagine he'll be able to charge you as much as that - I had to deal with marriage value which adds quite a bit on - but you're still talking significant money. And he'll certainly want to make at least some of the money he spent buying the freehold back from you or your subsequent tenants.

Now think about what happens if you go in with him. If you buy the freehold with him, you can both extend your lease for nothing - just the legal paperwork. He has the ability to do this too - you both win - because you're both co-owners. You both get equal votes in work to be done to the flat. You become co-inforcers of the lease (meaning that you can challenge the shed with the legal powers of the courts behind you!). You'll also add probably about 10% to the value of both flats, because those of us with aggressive or absent freeholders know how much of a nightmare that is. Look at 'share of freehold' flats on Zoopla and note how much nicer and more expensive they are. That's no coincidence.

If you don't trust this guy that's fine. You can insist on using your own lawyers - I'd recommend Mari Knowles or Amanda Gourlay, both excellent on these matters. But a freeholder is a position of strength. A leaseholder is a position of weakness.

To give an idea, I'm a joint freeholder (house with two flats).

I recently did a loft conversion, it required the agreement of the other flat but that was a ten minute conversation with him saying, sure go for it.

I've also replaced a load of windows which just required a quick heads up and extended my lease to 999 years which cost about £400 in legal fees.

All of those would require permission and possibly substantial fees if I didn't have the freehold.

I'm still not sure about this. I can't see why the guy upstairs wants to do it, he said its a good time as the valuation will be low atm due to covid and he also doesn't want to "remember to pay the ground rent/extend the lease" (his lease is 125 years). Does he want to do it so its easier to extend his flat or something? Or is it just to add value for sale?

If there's 2 leaseholders he needs your consent to make this a slam dunk.

Low value is a dumb argument, the value of it is determined by the ground rent annually which isn't varying due to whatever the market is doing short term.

He'll still have to pay building insurance annually, you'll still need to perform the role of the freeholder... you'll still have leases even, just for 999 years, if written anew.

And that's why to do it if it's all quiet and cheap... to redefine the terms of the lease, usually extending it... but also "updating it".

I would check that... what is vague in the lease? What does he want to clarify in his favour? Might he want to make major adjustments and this is him laying the groundwork so that there are fewer parties to object and fewer fees down the road?

It is worth doing, share of freehold does improve value and saleability... but it doesn't liberate either of you from a freeholder, it just makes you joint responsible for performing the role of the freeholder.