I’ve found a property in the town centre which is ideal but?

I’ve found a property in the town centre which is ideal but?

15:36 PM, 15th March 2021, About 3 years ago 3

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I’m looking to buy a commercial property for my wife’s business in our local town, and I’ve found a property in the town centre which is ideal.

The commercial property is listed as freehold, however, there’s a flat above the shop which already has a leasehold in place, with someone else according to the seller. He has also informed me that the person with the leasehold apparently pays annual ground rent, along with 1/3 of the buildings insurance.

Does anyone know how this works?
Does it sound legitimate?
Would I be responsible for the whole building?

Any comments would be greatly appreciated.

I am new to this, and I’m just looking for an investment for the future.


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Ervin Breuer

9:31 AM, 16th March 2021, About 3 years ago

Hi Adie. I have a shop with offices above. I took a surveyor to measure up and give his opinion of how much each tenants percentage should be and was accepted by the tenants. I am also quite new to property and don't know what I am to say below is true. I heard that if a tenant's flat takes up a certain percentage of the shop area, then the tenant can become the freeholder. Ervin

Paul B

9:40 AM, 16th March 2021, About 3 years ago

It is perfectly legitimate and not uncommon. If you buy the freehold you do so subject to and with the benefit of the ground lease to the residential owner. You become his or her landlord and are entitled to receive the ground rent. You need to have the lease checked for repairing and insuring liabilities. Long leasehold flats over shops are
quite common.

Darren Peters

10:11 AM, 16th March 2021, About 3 years ago

If I've understood correctly it's a shop with flat above and the Freehold of the whole building is what is being offered to you for sale.

At some point a Lease was created for the flat above and it was sold off to somebody - perhaps for 99 or 125 years so it is not something you will gain the utility of in your lifetime. If you purchased the Freehold you would be effectively gaining the utility of the shop only. There may be some ground rent payable to you as Freeholder from the Leaseholder upstairs - or not. There would likely be some agreement on cost apportionment for certain repairs such as the roof. You would need to check and understand your rights and obligations as Freeholder.

It's not a scam, it's just not possible for an upstairs and downstairs to be split into separate Freeholds so a Lease is created for one part.

You are in a slightly better position as Freeholder as you get to decide what needs repairing and when. Plus the Leaseholder has to ask your permission for certain things - which will be set out in the Lease.

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