My boyfriend and I are in the process of buying our first home. We found a flat on the top floor of a two-storey maisonette that we fell in love with, but now our solicitor has uncovered some serious concerns.
First, the property is held under a maisonette lease. This is where an imaginary horizontal line is drawn between the ceiling of the ground floor flat and the floor of the first floor flat.
The ground floor flat is responsible for upkeep of everything below that line and we would be responsible for everything above that line. It means we will be solely responsible for the roof, which could result in high costs in the future.
The second issue is the buildings insurance. The two flats share the freehold of the building, but instead of one insurance policy to cover the whole building, both have to insure their flats independently according to the lease.
What happens if the co-freeholder fails to insure their property – then it may not be possible to rebuild the entire building in the event of loss or damage?
Buyers’ remorse: Although our reader has fallen in love with the property, their lawyer has pointed out three issues that mean they’re now debating pulling out of the purchase
The final issue is that the other freeholder who lives on the ground floor is refusing to sign the TR1 transfer document. This must be signed by both freeholders, according to our lawyer.
The owner of the ground flat is refusing because he is accusing the top floor flat of breaching the lease by ripping up carpets and reverting to solid wood flooring. The seller has begun court proceedings against the fellow freeholder.
Because we wanted to wait until after these court proceedings to complete our purchase, the seller and their estate agent are now re-marketing the property.
They are trying to sell just the leasehold, and keep the freehold, to get round the issue.
Should we proceed given all of the issues uncovered?
Ed Magnus of This is Money replies: Buying a home is often thwarted by challenges like the ones you’ve experienced.
This is even more the case when buying a flat, many of which can come with outdated and impractical leases.
While buying share of freehold is often seen as preferable to leasehold, it can result in just as many issues.
While there is no third-party freeholder to answer to, and the service charge is often cheaper or non-existent, you are sharing the title and responsibility with your neighbours. This means there is arguably a greater chance of dispute.
Solicitors will always caution against anything they perceive to be a potential problem in future – but a good one should also be able to come up with solutions.
You are right to highlight the legal dispute and the refusal by the co-freeholder to sign the TR1 form as the biggest red flag.
The TR1 form is a legal document required to transfer entire ownership from one party to another. As the seller shares the freehold with the owner of the flat below, both need to sign this to officially transfer the property.
Through the roof: The buyers will become solely responsible for the roof of the building which their lawyer says could become very expensive
Legal concerns aside, you also have to think how this could impact your own enjoyment of the property and its future saleability.
The last thing you want is to be trapped with a home that nobody wants to buy.
That said, if the dispute with the co-freeholder can be sorted and the leases changed to allow one insurance policy for the whole building – as opposed to two – then there is no reason why you still can’t buy this property.
The seller’s decision to re-sell the flat as leasehold and retain the freehold is unlikely to work, as they will still be legally obliged to disclose the dispute with their fellow freeholder to any buyer.
For expert advice, we spoke to Chun Wong, head of dispute resolution at Hodge Jones & Allen, Mike Hansom, consultant for property litigation at BLB Solicitors and Paula Higgins, chief executive and founder of HomeOwners Alliance.
Is the roof liability a red flag?
Paula Higgins, chief executive and founder of HomeOwners Alliance
Paula Higgins replies: The roof liability issue presents a substantial financial risk.
Roof repairs and replacements can cost between £100 to £1395 per square metre as this depends on the type of roof.
If you do proceed, you should definitely commission a building survey to look at the condition of the roof.
What about the separate building insurance policies?
Mike Hansom replies: If the other flat owner fails to insure, you may not recover the value of your lost asset in the event of a claim.
Should they just buy the leasehold for now?
Chun Wong replies: Buying a leasehold without the freehold is also not ideal. In this situation, the…
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