Purchasing share of freehold for flat. Increasing flat value?

sebtomato

Hi,

I have purchased a flat recently, and paying £250 a year for ground rent (leasehold). However, the residents have bought the freehold, and I am therefore offered to buy a share of freehold for £3,800 (and therefore saving on having to pay the £250 yearly).

Given that this is equivalent to a return on investment of 6.5% per year, it seems to be a reasonable investment and quite hard to beat.

However, does anybody know if this is also increasing the value of the flat, at least by the amount paid, and if there are other benefits or drawbacks?

Thanks,
Seb

TrickyDicky101

Other benefits will include (presumably) you and other resident freeholders having full control over the management of the flats and the service charges (ie everything will be transparent).

BitterAndTwisted

It may not necessarily increase the value of the property directly but it will make it much more attractive to a potential buyer. By owning a share of the freehold you should have much more control over issues like repairs and maintenance. I'd accept that offer quickly before the price goes up.

abankerbutnotafatcat

When recently looking to buy a flat I was willing to pay more for a flat with a share of the freehold (is it called commonhold?) rather than a leasehold flat. It's just that little bit extra certainty and control although I believe leaseholders are well protected as well in practice.