Unfair fees for Deed of covenant after 18years of renting my flat

Reply to the comment left by "Jay James" at "20/05/2015 - 20:48":

Make all residential freeholds into commonholds. Remove the current constraints which make it neigh impossible to convert a large block of flats to commonhold.

I've just googled 'commonhold'and had a read (first two listed). Save for a couple of issues, it sounds like a better idea than leasehold.
- If only freeholders could be compelled to convert!

Freeholders can be compelled as they have to offer the freehold to the leaseholders first if they wish to sell. The problem I have encountered in a block of 100 flats is to get the interest of all the leaseholders.
An alternative is to set up a right to manage company which I believe now only requires a majority of leaseholders and take away all the management functions from the freeholder except possession. The process is complex but well worthwhile as it gives control to the leaseholders.

Reply to the comment left by "money manager" at "23/05/2015 - 10:05":

Will Astor, who is one of three listed directors of Homeground, is Samantha Cameron's step-brother. The "right to buy" proposals for Housing Association property will increase the demand on private renting, not that it would be of benefit to anyone that the Prime Minister knows.

I like to thank for everyone comments as it has helped me enormously so far. I wrote a letter to the Building Manager, who is the stooge for the Freeholders and said that I was not prepared to pay £150.00 per year for deed of covenant and I will not be complying with their demands of changing my expensive tilled bathroom floor to carpet tiles. I then told him that I will see them at a tribunal. He got very angry and told me I was the only person who was holding them back and they will be referring me to their company solicitors and I had to pay their legal costs, etc etc. However I have not heard back from him for 6-7 weeks after mentioning the tribunal cases setting precedents !!

I am not sure if he has managed to fleece the rest of the leaseholders who rent their properties or not. I would not put it pass them.

In the meantime, I contacted a solicitor, who told me, although my lease estates that if I rented the flat, the freeholders/ management company can ask for a Deed of Covenants and I have to pay their solicitors costs.However if the Deed of Covenant was sent to me by the Management Company ( which in this was) I did not have to pay it. Management Company could not just willy nilly send me an invoice for Deed of Covenant and ask for money He also told me that they could not ask me to change the bathroom tiles to carpet tiles, as my lease said the floors should be covered with carpets or other suitable material and the ceramic/porcelain tiles are a suitable material for the bathroom, kitchen etc.

I have not used my solicitors advice yet, as there has been no need for it so far. Just by standing up to the bullies and mentioning the tribunal cases, etc they have backed of for now and have left me alone!! Thank you everyone for valuable comments, much appreciate your expertise and knowledge.

It sounds as if the freehold was purchased by leaseholders (via a limited company?) a number of years ago.

The A shares would have been issued to those leaseholders who put up funds to purchase the freehold. The B shares are likely to have been created to allow other leaseholders to become part of the freehold company at a future date without being able to participate in future profits of the company.

I would expect all shareholders to be able to attend an AGM and decide collectively re the charging for the permission to let.

As a freehold shareholder you should be advised what this money is being used for - is it being held in the company or is it to be distributed to shareholders as a dividend?

It is also possible that A shareholders will be able to extend their leases without payment of a premium in return for putting up the money that was used to purchase a freehold - there should be documentation for this.

I would expect the freehold share to be transferred on each sale of the property to the new owner.

Thanks S.E. Landlord for your comments. What you say sounds about right.
I have about 96 years lease left. I asked the building Manager a while back, if I could increase my lease. His reply was that they would not allow it, until leases are run down to around 80 years and then we will all apply at the same time to increase our lease as a group. Is this correct? or can I increase my lease on my own now?
Any reply would be much appreciated.

With over 90 years left on the lease and owning a share in the freehold company I would not be concerned about extending the lease at this stage.

The basis of extending the lease and the new term should be set out in agreements signed by everybody with an A share. If you do not have your own copy the freehold company solicitors should have a copy. It may be that this agreement will say that you can extend the term to 999 years (or another term) at a peppercorn rent and at no cost - other than legal fees. I suggest you obtain a copy of this before taking any further action. This agreement should say if there are any restrictions on when you can extend your lease and on what terms.

In addition to the above, if you wanted to, you could extend your lease by 90 years via the statutory route and I would expect the estimated cost of this to take account of the freehold share certificate and the money for the purchase of the A share, although I would expect the individual legal fees to be higher than the collective extension.

It may be that it will collectively be decided that the lease needs to be updated and a new lease will be drafted for everybody to agree to. The cost of the drafting of the new lease being shared by all freehold shareholders.

You could suggest to the building manager that there is merit in doing this sooner rather than later as the same lease could be offered to non shareholders, whereas if these use the statutory route they would remain on the old lease. It is preferable for everybody to be on the same lease / terms.-

You would need to ensure that there are no adverse clauses re letting in a new lease.

What is likely to happen is as leases fall into the 80-90 year period prospective purchasers of the flats will ask for the lease to be extended before they complete on the purchase and demand for lease extensions will be received from both shareholders and non shareholders.

It is likely that this would be discussed at AGMs as would any major maintenance worked planned for the flats.

Thank you very much for your advice.
I will get a copy of the agreement signed by all 'A' Shareholders from the Freeholders Solicitors or should I say from the Management Company's solicitors?

Estate agents go on and on about the merits of owning a share of the freehold. I was
under the impression having an 'A' share means, when extending my lease, I will only be paying for the legal costs and not any premium to extend my lease. Am I wrong here?

Yes I understand the merits of extending the lease earlier and keeping everyone to the same terms and I will mention this to the building manager and take it from there.

Yes I will ensure that there is no adverse clauses re letting in a new lease.
Thanks again for all your advice and comments.

Can I be cheeky and ask if you have legal background?

You are correct it should be possible to extend your lease without the payment of a premium and only needing to pay legal fees - this should be confirmed in the agreement referred to earlier.

I do not have a legal background. I have been a landlord for 20 years or so and I have a property in a block of flats where we bought the freehold in the way described above. We have gone through the process of drawing up a new lease and extending leases on this basis.

The freehold company for the block of flats referred to operates on the basis of what is right for leaseholders.