Freeholder gone into administration, is the flat sellable?

pizzarelli7348

My husband and I were thinking of selling our place. It's a converted victorian 2 bed flat. We set up the right to manage a few years ago because the mainteinance company was asking too much every year. The problem is the freeholder went into administration last year and now we don't know what is happening to it.
We tried to buy the freehold but the other leaseholders were not interested in buying their share.
If we decided to put the flat on the market now, would buyers be put off by the issue with the freeholder? Would it be a problem to get a mortgage?
Thank you

Fire_Fox

Why not purchase the freehold without the other leaseholders? Should not be too expensive as it is not of great value to anyone outside the block: you may also find the administrators just want shot of the freehold. Our building was sold to our caretaker along with the service charge arrears of two flats - in fact the caretaker was PAID to take it off the freeholders hands! :cool:

You should then be able to extend your own lease and free your flat from ground rent without any more than legal fees, and would also be able to charge any other flats that might wish to similarly extend their lease. Having no freeholder will indeed cause problems with raising a mortgage, lenders will be want to have assurances of how the property is being insured and maintained.

AFAIK you can either get the other leaseholders to nominate you or simply agree a price privately and wait for the administrators to serve notice on all the other leaseholders. I suspect the former will be quicker. I am no expert, but these guys are
http://www.lease-advice.org/publications/documents/document.asp?item=11

Richard_Webster

Why not purchase the freehold without the other leaseholders? Should not be too expensive as it is not of great value to anyone outside the block: you may also find the administrators just want shot of the freehold. Our building was sold to our caretaker along with the service charge arrears of two flats - in fact the caretaker was PAID to take it off the freeholders hands!

You should then be able to extend your own lease and free your flat from ground rent without any more than legal fees, and would also be able to charge any other flats that might wish to similarly extend their lease. Having no freeholder will indeed cause problems with raising a mortgage, lenders will be want to have assurances of how the property is being insured and maintained.

AFAIK you can either get the other leaseholders to nominate you or simply agree a price privately and wait for the administrators to serve notice on all the other leaseholders. I suspect the former will be quicker. I am no expert, but these guys are
http://www.lease-advice.org/publicat...nt.asp?item=11

We tried to buy the freehold but the other leaseholders were not interested in buying their share.

This what OP said and is the normal position - people are apathetic about this kind of thing until they actually try to sell the flat themselves.

The flat may be mortgageable but the buyers would have to apply for a mortgage and then their solicitors would have to ask the lender whether it was concerned about the insolvency of the freeholder. Some are not prepared to proceed - others will accept indemnity policies. This is the kind of technical point that will thoroughly confuse someone in a lender's branch office or a mortgage broker and therefore it may be only after a few weeks of dealing with a buyer that an answer to the point will emerge.

pizzarelli7348

thank you for your replies guys.

I have tracked down the administrators today and I will try to get in touch with them.
Just another bit of advice: if I manage to agree a reasonable price with the administrators do you think I should proceed and buy the freehold myself or reask the other leaseholders and see if they want to chip in? ( I know for sure one of the other leaseholders is not interested at all, so it would have to be 4 out of 5 , in which case does it mean the freehold is split among 4 flats and what about the other one?)
One last thing: if I buy the whole freehold of the building,and sell my flat, do i have to sell the freehold at the same time?

Fire_Fox

pizzarelli7348 wrote: »

thank you for your replies guys.

I have tracked down the administrators today and I will try to get in touch with them.
Just another bit of advice: if I manage to agree a reasonable price with the administrators do you think I should proceed and buy the freehold myself or reask the other leaseholders and see if they want to chip in? ( I know for sure one of the other leaseholders is not interested at all, so it would have to be 4 out of 5 , in which case does it mean the freehold is split among 4 flats and what about the other one?)

One last thing: if I buy the whole freehold of the building,and sell my flat, do i have to sell the freehold at the same time?

AFAIK (Richard Webster will confirm) whenever the freehold is sold, notice has to be served on all the leaseholders to give them the opportunity to exercise their right to collective enfranchisement. The other leaseholders might be willing to chip in once they have a definitive price that you have negotiated. If only four leaseholders chip in then four flats will be share of freehold, one will remain leasehold and be at your mercy as regards repairs and maintenance - they won't get a vote.

You do not have to sell the freehold at the same time as selling the long lease on your flat, but often it is more hassle than it is worth to keep it: you will be legally responsible for organising all repairs and maintenance, collecting the money and making sure everything is legal. If you are no longer resident that could be time for no obvious benefit, although of course you could simply employ a managing agent. However if some of the leases are getting short-ish (80 years or less) it could be worth hanging onto the freehold as you could collect the lease extension money.

The LEASE website I linked to earlier really is brilliant; if you cannot get a definitive answer from that or here then they have a free telephone advice line. If you are serious about being a freeholder it is worth getting your head round what you are and are not allowed to claim for in the service charges, what constitutes major works and what the consultation process involves.