Leasehold Property Associate Niki Adkins looks at whether co-freeholders can modernise or update their leases. Niki discusses the benefits of lease modernisation and the steps involved in doing so.
Owning a share of the freehold in your block of flats usually means that you and your neighbours have more control and say over how your building is managed.
However, as we explained in previous articles, it doesn’t mean that the flat-owners, can do whatever they feel like.
Usually, the flat’s lease still remains in place; therefore, the flat-owners are bound by its provisions; both as individual leaseholders and collectively as owners of the freehold.
See our related articles below, if relevant to you:
Can I alter or improve my flat if I own a share of the freehold?
Do I need to extend my lease if I own a share of the freehold?
What are the benefits of modernising my lease?
My team and I have dealt with numerous blocks of flats where the flat-owners collectively wanted to both extend their leases and to modernise them at the same time.
Both extending and modernising a lease would improve the flats’ sale-ability and mortgage-ability for the future.
As leases are usually originally granted for 99 or 125 years, a lot can change during those 99 or 125 years.
Certainly, mortgage lender criteria changes on an almost daily basis, so what was acceptable back in the 1970s or 1980s may be outdated today. Modernising leases is therefore a sensible ‘house-keeping’ task.
How to make a start on collectively modernising leases
The first thing to do is gauge how many flats are interested. If you’re just extending the length of the leases (and officially reducing ground rents to zero), it doesn’t really matter if only a handful of flats extend their leases to begin with. The others can simply do it later on.
What are the benefits of collective lease modernisation?
However, if the leases are to be modernised, updated or changed in certain ways, it may be best if all leases are updated at the same time; which will likely be impossible if some flats don’t own a share in the freehold.
The reason for this is to avoid contradictions between the leases in the building.
For example, you don’t want to vary service charge percentages or service charge estimate/collection mechanisms without everyone doing it at the same time, as that could cause endless headaches from a management point of view.
Furthermore, some leases include a covenant (a legal promise) requiring the freeholder to ensure that all leases are in similar/the same format in the building. As a result, the freehold-owners could face enforcement action if they allow the leases to be in different formats.
Therefore, our advice is for the freehold-owners to discuss the proposals between them and establish whether 100% agreement is possible.
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