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Freehold ransom being demanded by 'absentee landlord'
RainbowsInTheSpray
Posts: 1,508 Forumite
I bought a leasehold property as a BTL some years ago.
At the time, the 'landlord' (a pension fund which owned the freeholds for the whole street) was not bothering to collect the £3p.a. ground rent as it wasn't worth the administrative costs. Nevertheless, I ensured that the vendor bought me an indemnity insurance to cover 'eventualities'.
The landlord's solicitors have now written to all the lessees, demanding a payment of over £2000 for purchase of the freehold 'or they reserve the right to sell it by auction'. People have two months to accept.
I'm checking my own situation but obviously I hope to be OK and covered by the indemnity. I am concerned about the plight of other lessees, many of whom will be facing a real financial hit here.
Does anyone have any advice which I could pass on, please?
At the time, the 'landlord' (a pension fund which owned the freeholds for the whole street) was not bothering to collect the £3p.a. ground rent as it wasn't worth the administrative costs. Nevertheless, I ensured that the vendor bought me an indemnity insurance to cover 'eventualities'.
The landlord's solicitors have now written to all the lessees, demanding a payment of over £2000 for purchase of the freehold 'or they reserve the right to sell it by auction'. People have two months to accept.
I'm checking my own situation but obviously I hope to be OK and covered by the indemnity. I am concerned about the plight of other lessees, many of whom will be facing a real financial hit here.
Does anyone have any advice which I could pass on, please?
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Comments
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By law the freeholder (unless they are a LA or housing association) has to offer the freehold to all the leaseholders first. Leaseadvice.org
Do a search on this site. Someone a while ago had a nice informative thread about setting up a management company for the flats in his block so they could buy the freehold.I'm not cynical I'm realistic
(If a link I give opens pop ups I won't know I don't use windows)0 -
I'm not sure you can expect your insurance to pay out. You are being offered a freehold, or share in a freehold for sale. If you don't want it they'll sell it to someone else. I'm not sure I see why an insurance policy would pay out to buy your freehold for you?0
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These people might be of some use http://www.leaseholdadvicecentre.co.uk0
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all they're doing is trying to sell it, and as stated by law they have to offer it to you first.
if you don't want to buy it, you DON'T HAVE to!0 -
I doubt whether they will get £2000 x (number of houses in street) at auction. These freeholds are usually only worth the rent roll unless there are some sneaky / useful clauses in the freehold agreement*. The only way you can make money out of an "ordinary" one is to sell the freehold at a significant amount which is exactly what is being tried here.
(* heard about a freehold where the freeholder had the right to organise the buildings insurance of the leaseholders which was a nice little earner as they say)A house isn't a home without a cat.
Those are my principles. If you don't like them, I have others.
I have writer's block - I can't begin to tell you about it.
You told me again you preferred handsome men but for me you would make an exception.
It's a recession when your neighbour loses his job; it's a depression when you lose yours.0 -
If people don't buy the freehold, there shouldn't be any hardship. They might just have to pay the £3pa ground rent though! Depending on the length of the leases, people should check whether it would be more financially viable to purchase the freehold or wait and extend their lease when it becomes an issue. If the leases are below 90 years, then I'd have a professional valuation undertaken.
Do note that the current freeholder cannot sell the freehold for any less money than they have offered it to you for; at auction that means that the reserve price must be £2000 or higher.Everything that is supposed to be in heaven is already here on earth.
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Not doubting you Doozer but there must be ways round that, time limits etc. Also who do you complain to if they do sell at a lower price, or are you allowed to step in and buy it at the lower price? Seems odd. Also, who is going to pay £2000 for something that pays a fixed £3 pa unless there is some other benefit?Doozergirl wrote: ».....Do note that the current freeholder cannot sell the freehold for any less money than they have offered it to you for; at auction that means that the reserve price must be £2000 or higher.A house isn't a home without a cat.
Those are my principles. If you don't like them, I have others.
I have writer's block - I can't begin to tell you about it.
You told me again you preferred handsome men but for me you would make an exception.
It's a recession when your neighbour loses his job; it's a depression when you lose yours.0 -
There are benefits other than the £3pa - the lease can be extended at a cost, the lease can be resold, and if the lease isn't extended, then when it expires the property has to be handed back to the freeholder.0
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Which, when you have 999 year leases like they do round here, is a long time to wait for the freehold to revert to the freeholder.rosysparkle wrote: »There are benefits other than the £3pa - the lease can be extended at a cost, the lease can be resold, and if the lease isn't extended, then when it expires the property has to be handed back to the freeholder.
A house isn't a home without a cat.
Those are my principles. If you don't like them, I have others.
I have writer's block - I can't begin to tell you about it.
You told me again you preferred handsome men but for me you would make an exception.
It's a recession when your neighbour loses his job; it's a depression when you lose yours.0 -
This one has intrigued me.
Are people saying that, irrespective of whoever buys the freehold, they can only charge the lessee the originally-stipulated £3 per year?0
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