Harringay, Haringey - So Good they Spelt it Twice!
Loft Conversion - Share of the Freehold
Hi HoL!
We are the top floor flat on the ladder and are interested in getting a loft conversion. The catch is we share the freehold of the loft space with our other two freeholders who privatly rent the stuido and downstairs flat.
We wonder if anyone has been through a similar situation and if so how did you approach the negotiations with the other parties?
Any advice would be greatly received!
Best
Quackers
Tags for Forum Posts: loft conversion
Replies to This Discussion
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Permalink Reply by Antoinette on
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Well I have in a way. My mother used to own the freehold of the house where she lives in one of the 6 flats in the building. The top floor flat wanted to extend into the loft space and the main areas of argument were around the division of maintenance charges going forward for the fabric of house and in particular in roof which had new velux windows etc. Send me a PM and I'll see if I can help.
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Permalink Reply by Justin Guest on
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Two things. First if you are in a flat you will need planning permission and you may not get it. Take sketches to the planning officers who hold an open 'run it by me first' surgeries. It may save you a lot of trouble. Flats do not have the same permitted delopement rights as houses.
Second. We lived in a flat where we held the lease hold to the top floor flat we lived in. The two freeholders lived below. We apparently had sole responsibility for the roof. We assumed therefore we had rights to the loft space but this was not clear. Eventually we had had enough having to deal with muppet freeholders (who lived in the building) and gave up as it was far too complicated. We moved to the Ladder instead.... Hopefully your fellow freeholders will be a bit more willing to accommodate. Bear in mind a loft conversion could be quite intrusive for your other neighbours for about 2 months.
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We approached our freeholder with our plan and they said yes – but at a price, because we were taking over its sole use. I'm pretty sure the terms of your freehold will also mean you'll have to recompense the other two parties for them losing their share of the loft space, as it seems to be standard. To work out the sum, you'll personally have to pay for a surveyor to value the property.
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We were on the other side of this in our previous place (a developer bought the top flat in a house of 6 and wanted to extend into the roof). At the time he offered a portion of the uplift in value to each of the freeholders as compensation, and to pay the legal fees for changes.
We discussed the offer with the other freeholders at the time, and the two who were landlords seemed fairly indifferent between the compensation and keeping the freehold. The disruption point is really worth bearing in mind tho, and ended up as the reason we didn't go through with the deal.
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Permalink Reply by Rob B on
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I deal with issues like this often - but normally after they have gone horribly wrong! (I am a property litigation lawyer). Justin is correct in the first instance you should try to get some indication as to whether you would get planning permission. If you would then you will have to negotiate how this will work with the other freeholders. The technicalities will be slightly different depending on whether the freehold is held by a company and you are all shareholders/directors of that company, or if you own it in your own names, but the issues will be the same.
The best first approach is just to ask. They may have no issue with you doing this (especially as they will have no access to the roof space) and perhaps in return say you would be willing to support them if they ever (for example) wanted to do an extension. These kind of negotiations often are successful if you deal with the likely issues they may have early - likely to be noise, dust, complaints from their tenants while the works are going on. Show that you have thought about all of those and you are more likely to get them to do a deal.
Should they take a more "commercial" approach you may have to pay them. The normal calculation of the amount payable is you take the uplift of value to your flat once the works are complete - subtract the cost of the works, and then split the profit 50/50 between the freeholder and you. As you are also part freeholder this would mean some of the profit would be coming back to you, so to do a worked example:
Uplift of value to flat once loft converted - £100k
Cost of works - £40k
Profit - (100-40) = £60k
Profit split 50/50 between leaseholder and freeholder - £30k each, therefore £30k payable to freeholder to do works
As you own 1/3 of the freehold £10k of that £30k would be due back to you, therefore price payable to other leaseholders for consent to do the works = £20k
There are a number of legal issues to deal with as well - your lease will either have to be varied to include the loft space, or a new "co-terminus lease" (i.e. expiring on the same date as your own) may need to be granted of the loft space only. The variation option sounds simpler until you realise that when you vary a lease's extent (i.e. make the area being leased physically bigger or smaller) that is considered in law to be a surrender of your old lease and a brand new lease being granted. You will require your lender's consent before you even consider surrendering and re-granting your lease. Some people consider that if all the leases are silent on the roof space then simply adding the words "to include the roof space" is not a surrender and re-grant but just clarifying what was always the intention/position. If the roof space is specifically excluded from your lease then that's more of an issue.
Expect to pay everyone's legal fees on top of everything else. My firm can of course help with all of this (once you have reached agreement with your co-freeholders), but we are in the West End so will be more expensive than local firms.
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Permalink Reply by Rainbow_carnage on
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How is the uplift value calculated? Is it based on the work you're actually planning to do, or what could potentially be done with the space? Say I'm planning to do a loft conversion. I could do a basic velux conversion, or I could do a double dormer with an en suite. Obviously, the latter would increase the value of the flat significantly more. But, as far as the freeholder is concerned, it's the same space.
Similarly, is it the actual cost of the works? Obviously, that can vary dramatically depending on whom you hire to do the conversion, the standard of the finish you require, etc.
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The work that is actually planned. Otherwise you are into more nebulous territory like "development value".
P.S. I'm a lawyer, not a valuer, but lots of my work involves valuers so I have picked up a few things on the way!
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Permalink Reply by Paul Harvey on
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Is a good suggestion to take your plans to the council to discuss first and get a feel for what they will approve. We did this with the plans we had drawn up to convert the loft in our old flat on the ladder - and the helpful chap at the council said that they looked fine and he would approve them if they appeared on his desk. We duly submitted them and they were rejected unfortunately... we were told that the room would be too big and we'd have to bring the dormer back from the edge of the building by 1 meter, and also in from the party wall. All in all - their conditions significantly compromised the loft space we'd hoped for. We ended up moving in the end so didn't bother going through with it.
Main point here is that the council look at loft conversions in flats differently to that in whole houses where you can get away with bigger extensions, so do consider if it's worth it before going ahead - particularly given the other costs outlined here.
Good luck
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Excellent advice there from both Perry and Paul. As a starting point it's a good idea just to walk up and down your road and see what other loft conversions you can spot which also sub-divided houses. You can then look at the planning applications online to see the types of schemes that have been approved.
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Permalink Reply by Alison Stone on
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Hi, Firstly you will need to know whether the loft space is actually demised with your flat otherwise you will own it jointly with the other freeholders and need to purchase it from them. Along the lines of the calculation mentioned by Percy. If you own it then there may or may not be anything to pay to other freeholders depending upon the terms of your lease.
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The post already stated "we share the freehold of the loft space"
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You can share the freehold and have the demise also in your lease, which would mean owning it.
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