Buying Advice (FLAT) no lease or management company details

neilanthony

Just looking for some advice.

I made an offer on a flat (cash buyer) as the price originally looked like a real bargain. After viewing the flat, I was made aware it was built in 2008 and is a bank reposession.

I've just received a call from the estate agent advising they haven't yet sourced a copy of the lease and they believe there is no management company for the block and no details regarding ground rent etc..

The reason the estate agent called is that they believe my solicitor would not recommend a purchase due to this anomaly. I've not yet instructed a solicitor to act.

This does sound a little bit dodgy and do you have any advice on how I should proceed. What are the potential implications here?

kingstreet

I'd get advice from a solicitor.

The agent will simply try to sell the property. Their "advice" is worthless to you, they act for the vendor.

neilanthony

kingstreet wrote: »

I'd get advice from a solicitor.

The agent will simply try to sell the property. Their "advice" is worthless to you, they act for the vendor.

Thanks good point.

I think they were sort of trying to do me a favour so I could avoid solicitors costs. They said the solicitor would most likely not recommend the purchase.

I'm thinking if there is no management company, therefore no ground rent to pay then who looks after the maintenance for the building?

Well, they've just forwarded me a copy of the lease by email so at last that's something.

kingstreet

I know you don't need a mortgage, but with no management company and no accounts I don't think anyone would lend on it.

That has to affect your resale prospects if you decide to sell at some point. It may mean you end up having to keep it as an investment property, presuming of course that you do plan to live in it and it isn't a BTL from day one.

neilanthony

kingstreet wrote: »

I know you don't need a mortgage, but with no management company and no accounts I don't think anyone would lend on it.

That has to affect your resale prospects if you decide to sell at some point. It may mean you end up having to keep it as an investment property, presuming of course that you do plan to live in it and it isn't a BTL from day one.

Yes you're right. I never considered the implications of a resale since no mortgage lender would surely lend.

Lots to consider I guess. The property was initially to live in and then rent out at a potential date.

michaelkav36

neil, you are in a similar position i was in 3 years ago. we bought the property cash, and are just about to sell, am actually just about to post regarding this.

anyway, what i did was track the freeholder down, you will have a copy of the lease, but you can buy a copy of the freehold off the land registry website, this will say who owns the freehold, either a person or more likely a company. once you get the name google them, or look on the companies house website to track them down. my guy was a dodgy fella, but atleast i knew who he was. i phoned him direct and was told to send him money direct, to which i said no, invoice me, we never paid him a penny.

we have recently bought the freehold between us, as this guy went into liquidation. it is a risk, but it depends how much of a bargain you have. if you are a cash buyer and are renting out, this will not effect you. as someone has said, it will only effect if you try and sell. but as we did we waited it out and have eventually bought the freehold.

hope thius helps

neilanthony

Thanks, great post.

How did you go about buying the freehold? How much did it cost and how easy to organise?

Fire_Fox

You don't need a management company, you need to know who the freeholder is, they could be a one man band and are legally responsible. Loads of information here on everything leasehold/ freehold http://www.lease-advice.org/publications/
Be aware that to own or manage a block you need capital, you are responsible for maintenance even if the leaseholders do not pay.

Both the long lease and the freehold title can be downloaded from land registry. Are you sure the estate agent doesn't have an eye on this bargain for a mate?

michaelkav36

the guy offered it to us for about 12k when i called, we said no. we just paid 7k through the liquidators.

neilanthony

Thanks guys.

Very interesting. I guess this may not so much be a bad thing since I probably have a significant advantage when it comes to placing an offer as a cash buyer.

I might pop round and have a word with the neighbours.

propertyman

neilanthony wrote: »

Thanks, great post.

How did you go about buying the freehold? How much did it cost and how easy to organise?

Well let's assume that there is a freeholder that you can track down.

You can negotiate a price but if there are more than two flats on longleases in the building the freeholder must then offer it to all the leaseholders to buy at the price you have agreed, and if they decline then he can sell it to you.

If he is unwilling then there are statutory rights to acquire the freehold by a majority of leaseholders.

If the freeholder cannot be found the then the above rights can be exercised in his absence through the County Court and leasehold Valuation Tribunal.

If the freeholder is no longer, then the freehold will be controlled by the Treasury Solcitor BV, who will sell on terms set out above.

Now price is based on a yield on the total amount of annual ground rents due under the lease and varies from 15 to 30 times that total. The figure also reflects any other income such as garage rents, development potential, or if the leases are getting short, the right to sell lease extension.

As you can see it can be very easy or very hard and it just depends on the issues involved.
Start here http://www.lease-advice.org/wizard/?step=27

:money:It is cheap for a reason