Cost of buying freehold?

pigeonpie

There are 10 flats here in a neo-Georgian conversion in a conservation area (leafy SE London). We have 120 yrs left on our leases. We want to buy the freehold and hope the others are all in agreement as understand the qualification requirements and don't really want to pay for others either.

The building next door is bigger (14 flats), a conversion and has recently bought its freehold. It was valued by the independent surveyor at £55k. The freeholder's representatives (he's disappeared!) appealed and the court doubled it to £110k. They only have 80 years left on their leases, which I understand means that they would in any event pay more than if they'd had a longer lease.

However the *nice gentleman* who bought this freehold did so in 2005 and paid only £20k for it.
My question is: does anyone know if the amount that he paid is taken into consideration when assessing the current valuation of the freehold? Obviously we really hope so.

Doozergirl

The fact that next door only had 80 years left on their leases would make the freehold particualrly attractive as 80 years in the point at which freeholders start to take back a little of the value held in each flat. The previous freeholder knew this and took their opportunity to cash in without waiting for the requests for lease extensions to come in.

The fact that yours has 120 years left makes it of relatively little worth. It can't be compared to next door at all. I shouldn't think it would be worth much more, if any more than £20,000. What he paid can't be taken into consideration; there are formulas used to assess value.

However, because of your length of lease, I'm not really sure why you want to buy the freehold at all at this point. It won't add any value to your flat and you don't appear to know about the leaseholders "Right to Manage". That takes the responsibility of managing the building and it's associated costs away from the freeholder and hands it firmly back to the flat owners. In that way, you get virtually all of the benefits associated with owning the freehold, but at a tiny cost. We paid a company to organise it for us and it costs £100 a flat.

Doozergirl

Here's the online version of the leasflet provided by the Leasehold Advisory Service which is a Government funded body.

http://www.lease-advice.org/rtmframe.htm

Right to Manage is exactly that; your legal right to manage your own building.

pigeonpie

Hmm, we need freeholders' permission for alterations etc which he never replies to - in the end we bought without them after waiting 4 months for even an acknowledgement. It's a bit iffy to just go ahead! He's a nightmare person hence our interest in s.o.f but others (with no alterations or any consents needed) may baulk at buying it. It is attractive according to EAs in this part of London to have s.o.f. and does add to the value of the flat. But I guess it will depends on what it costs.
Thanks for the link; a few of us are interested in sorting things out ourselves as there is no sinking fund and works are needed. Plus he's taking a nice little earner from the common areas insurance; looks like we may be able to 'persuade' him to accept a cheaper insurance?!

Reading it through, seems that the management co could give approval for alterations, pets etc. That's both helpful (faster) and potentially unhelpful (what if they disagree, whereas he couldn't care less). There are issues around rights to use a roof area for a balcony that he would be more neutral on than the other tenants -- as usual, not simple when 10 interests have to be taken into account.

We are trying to get the communal garden fixed up and already some owners are reluctant to contribute. Plus you always get some bulldozer type characters....can see this is a tough decision!