UK Property Law
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Does your lease still have 120 years of the term of the lease to run?
Essentially you would be buying security. If you own the freehold of the property this would mean that you would be free to vary the terms of your original lease. You could extend the remaining term of the Lease, or otherwise vary any of the terms contained in it (though you would certainly need your mortgagee's consent as well, but they will be very unlikely to raise an objection and would just require a deed of substituted security in all likelihood).
Of course, if you were to buy it with the other occupant then you would both have to consent to whatever your were trying to vary.
It would make the property a little more marketable when you come to sell it as well.
We do have 120 years still to run and own the leasehold outright having paid off the mortgage. Does that make a difference?
Also if we were sole freeholder would we have to pay for all the maintenance of shared areas and external decoration or could we request the other leaseholder to share the costs?
People typically seek to extend the term of their lease in order to remortgage, lenders will only generally lend if the lease has 70 years or over to run. In your case this obviously does not apply.
Another advantage that you should consider is if the other leasehold interest came on to the market. Were you to buy it from the owner (and either owned the freehold solely, or jointly with him) then you could propose to purchase his lease (and f/h interest if you own jointly) as well. You would then in effect be the owner of the freehold and both the leasehold interests. You could then consider surrendering both leases and you would be the sole freehold owner of the entire building which you could then sell on (though you would have to consider how you would finance this). You could also negotiate the sale privately with the owner so that he would not have to pay estate agents fees, this would allow you to bargain for a slightly lower price.
As to maintenance of the common areas, you should check the terms of your lease. The other flat should be on the same terms and may contain a covenant to contribute to the shared areas.
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