Does a freehold invalidate the terms of a leasehold?

Does a freehold invalidate the terms of a leasehold?

9:51 AM, 7th June 2024, About 6 months ago 43

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Hi, two years ago I bought a flat within an Victorian building with several apartments. At the time of my purchase, my flat was leasehold. The cost of building management including service charged was apportioned by percentage, i.e square footage apportionment and I am the smallest apartment.

For example, when I bought the flat the service charge breakdown for a year being £700 for my apartment and £1400 for the larger apartments.

Six months ago, the residents collectively purchased the freehold due to unresolved issues with the previous leaseholder. We are now freeholders under a registered company. However, the directors no longer wish to follow the square footage apportionment method.

My question is: According to the lease, costs are apportioned by square footage. Does transitioning from leasehold to freehold invalidate the lease terms? Are the lease terms no longer valid because 6 of the 9 directors have voted in favor of an equal split of costs, and they are considering this the final decision?

Any help would be appreciated,

Wilde


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NewYorkie

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10:32 AM, 12th June 2024, About 5 months ago

This person has zero understanding of tenure. You are all 'the Landlord' and as such, subject to the Act. In addition, you are all leaseholders under the same terms of your original lease.

The issue does come down to what's fair and reasonable, and I suspect a Tribunal would look at what was being paid before, for how long and without question, then wish to know why some of the freeholders decided to change the proportions to benefit those with properties twice the size, at the cost of those with smaller apartments.

Kizzie

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15:27 PM, 12th June 2024, About 5 months ago

They are all shareholders now and subject to the Memorandum & Articles and the Companies Act 2006 as the registered limited liability company each with £1 voting share,
and separately are Lessees or Tenants of the management co. as a separate covenant in the leases acting on behalf of the Lessor or Landlord. It is the Management co. acting on behalf of the LL which has obligations under the Lease
as well as in addition as a company operating under the companies act 2006 cannot enforce the terms of the lease. It is the Man Co acting on behalf of the LL which enforces the terms of the lease and also must comply with the Landlord & Tenant Act and Commonhold & Leasehold Reform Act 2002.

Simon Lever - Chartered Accountant helping clients get the best returns from their properties

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15:57 PM, 3rd July 2024, About 5 months ago

Hi Wilde
Apologies for the delay in getting back to you on your post.
From what you have said the freehold was sold from the original freeholder to a separate new company owned by all of the current tenants.
This company is a separate legal entity from the individual tenants and certainly does not mean that your lease no longer exists.
Think of the situation if the freeholder had sold the freehold of the building to a separate, not connected, different person or company. Your leases would still exist and both parties would have rights and obligations under the lease as written.
The situation does not change just because the shareholders of the new freehold company happen to be the current tenants in the building.
It would appear that your neighbour is mistaken or has been ill advised.
You have not agreed to surrender the lease, I presume, and therefore it still exists.
If your neighbour insists that the leases no longer exist then it would appear that you have no legal obligation to comply with any of the terms of the lease including paying any rental!
I suggest that you agree with your neighbour to take legal advice on the current situation that will clarify the exact situation. Maybe all tenants can agree to bear the cost - in whatever proportion the independent solicitor advises is the way for all costs to be shared.
On a separate note is there a shareholder agreement in the new company that when a flat is sold the shareholder has to transfer their share to the new owner. If not you could end up in a situation where the ownership of the company does not change and new flat owners do not have a share of the freehold.

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