Why be a freeholder?

CB1979_2

hi guys, right then I appreciate that if you live in the flat/building then it's obviously beneficial to be freeholde/joint freeholder.

But what's the point otherwise?

For instance my flat we pay £500 a year for insurance, etc, so our freeholder gets £8k a year, a LARGE portion of that is for insurance.

what's the real benefit of it, is it purely so that when the leases start going low they get income that way, when the leaseholders haev to extend?

is it also so that their "plot" increases in value (hopefully for them) so that they can then sell it on for more than they paid??

just wondering as i keep seeing freeholds for sale, but think what's the point if you get like £200 pa, etc????

cheers

pigeonpie

they often get money for jam. Here our one gets £1000 pa per flat and never does any work yet mysteriously there's no sinking fund, nothing ever gets fixed. Then when you want to apply for anything, the freeholder can charge you about £150 per permission.

I think there are new restrictions on huge profiteering from sale of freehold, but still waiting for someone to clarify eg this freeholder bought the freehold for £15k, how much can he charge each tenant if we all want to buy him out and make it s.o.f ?

Doozergirl

pigeonpie, the freeholder has to give you a 'fair' price for the freehold if you live there. You are entitled to obtain your own independent valuation and can take the freeholder to a place called the Leasehold Valuation Tribunal if you do not feel it is fair.

They cannot sell to anyone else at lower than the price they offered it to you for. eg. if they took the freehold to aution, they have to offer it to you at the reserve price first and prrove they did so.

OP, I don't really get it either and I'm a freeholder! Perhaps a little too honest The only way I can see is if you act as the managing agent and profit from the service charge. Enough flats and you can bring in more than a savings account would, I suppose. I'd love to hear the benefits of being a freeholder!

F_T_Buyer

Leasehold is just renting long term at a fixed rate.

Now watch the buy it now crowd come and say how renting is dead money.

Doozergirl

It's not a fixed rate though, is it FTB? Leasehold property increases in value just like freehold (depending on the length of the lease, of course).

F_T_Buyer

Doozergirl wrote:

It's not a fixed rate though, is it FTB? Leasehold property increases in value just like freehold (depending on the length of the lease, of course).

I was refering to the purchase price, or ineffect, the mortgage you need to buy it at the start. Although, I could argue it is not fixed as mortgage rates change.

The reality is leasehold property declines in value as the lease expires, effectively being worthless at the end of the lease.

So the 'dead money' arguments can be applied, "you have nothing to show for it at the end"...

I was half joking with my post, and agreeing with the OP!

Doozergirl

Yeah, I know. You'd have to be even more stupid than someone that rents if you let the lease run down though

Can I go and tell you off for being grumpy on another post now?

Ian_W

F_T_Buyer wrote:

Leasehold is just renting long term at a fixed rate.
Now watch the buy it now crowd come and say how renting is dead money.

Happy to agree with you F_T_B. Also very happy to be renting for £20pa though very, very worried that in 960yrs I'll have something worthless!;)
Still I can take small comfort that for about the next 900yrs I can sell at full market value. Pheww. :rolleyes:

F_T_Buyer

Ian_W wrote:

Happy to agree with you F_T_B. Also very happy to be renting for £20pa though very, very worried that in 960yrs I'll have something worthless!;)
Still I can take small comfort that for about the next 900yrs I can sell at full market value. Pheww. :rolleyes:

Lol. Yes, you're right. Just points out the absurdity of the 'dead money' saying.


I'll go to bed now Doozergirl, hopefully I will be less grumpy tomorrow.

CB1979_2

cheers everyone.

So Doozergirl you're a freeholder but you don't know why??? lol

anyone else know what the benefits are of being a freeholder, oh and i did my maths wrong, our freeholder get £4k (only 8 flates here! doh! lol) pa, so really can't see the benefit of it.

pigeonpie

Depends what you paid for the freehold. ie 15k getting you 10k a year is not half a bad return on your investment!

Buying leasehold without a long lease and a huge mortgage is pretty much the same as renting. But if you haven't got a huge mortgage, you'll at least get something back when you sell.
My grouse about freeholders is they often (not nice ones like doozergirl!) take the money and 'disappear', then reappear with huge maintenance bills for which you've got to cough up 9% with no vote on whether the work should be done or by whom.
I've heard it takes a few years from every flat being owner occupied to apply for the freehold - is that right? (most here still tenanted) I wonder if he paid 15, what 'reasonable' amount he'd want, given his current nice-little-earner return. Hope what he can ask for is not linked to price rises in the area :eek: