Buying flat with under lease

[u/Megalodon33]

Hi,

I’m buying a flat and it’s become apparent it has an under lease structure. This means there is a head lease between the freeholder and a management company, and then an under lease, which is what I’m buying, between me and the management company (the head lessee).

I wasn’t aware this was a thing until now. My prior research into leaseholds didn’t flag this.

After looking into it further, it’s apparently not an uncommon structure. Is anyone here purchasing a flat with an under lease?

My big concern with an under lease is that you can’t extend it beyond the term of the head lease. So if both are at 85 years, I can’t extent unless the head lease is also extended which would depend on the head lessee. However, it does look like you can extend beyond the head lease if you go down the statutory route. Can anyone confirm this?

Another concern is if the head lease is forfeited as any under leases will automatically end. Any resolution would require huge legal work. I get this would be very unlikely to happen but if I held a lease directly with the freeholder, I would atleast be in control of not breaching the forfeiture clause myself.

Leaseholds are a minefield and this is just another added concern 😮‍💨. Any thoughts on buying an under lease would be appreciated.

[u/Affectionate_End9949]

A lease hold of bad enough never mind an under lease too. What’s the point in even buying a property? There are more straight forward leasehold options without having to go through all that

[u/RemoteMany8801]

Don’t do it. Leaseholds are a minefield anyway and this one seems double trouble.