Worth buying freehold?

patman99

Personally, I would suggest that setting-up a company in the name of the development which is equally owned by each property owner & only whilst they are in ownership of the property.

Use the ground rent to pay off the loan taken-out in the name of the company & then cancel the g/r once the loan is paid.
As the owners own the company that owns the freehold, it becomes what is known as commonhold.
As the properties sell, so the share of the company transfers to the new owner and so on.
This makes the properties easier to sell as there is no 'invisible man' owning the freehold who could then pop-up and increase the SC any time they like.

It does mean an addition to the lease to indicate that ownership of a property includes an equal share in ownership of the commonhold company, but this is a fairer way to go about things.

kmmr

Patman - I agree that is the best way, but the truth is it's nearly impossible to get everyone on board and agreeing to do that. Logic doesn't seem to come into for lots of people!

Plus a new company like that would struggle to get a loan approved. The alternative is £2500 per flat which can seem a lot of money for what looks like additional hassle. Getting every lease adjusted would take forever and add additional cost for each person.

So I think our proposals are broadly the same - except i'm saying set up the company with whoever is interested in doing so.

BubbleHunter

Boyley wrote: »

Many thanks for your advice BubbleHunter. I should have been a little clearer, the figure of £60k (+/-) is for the entire block freehold, not just the one flat. I have no intentions to sell the flat any time soon, I am building a portfolio.


patman99 - thank you also; we do already have residents management company and we have appointed a manager for the day-to-day running, we just don't own the freehold.

I understand the figure of £60k is for the block.
£60k / 24 Flats is £2.5k per unit which is 10 years worth of Ground Rent. There will be some legal and valuation fees to pay as well but it seems pretty obvious that you would be better off to buy the Freehold.
I'd buy this in off your Freeholder ASAP as the market would probably pay double the figure you've suggested.

Boyley

Following another meeting, I have yet more questionsregarding purchase of the freehold!

1. Out of the 24 apartments, 8 of these are a mixof shared ownership and ‘affordable rental’ managed by a 3rd partlocal authority. Whilst the tenants pay service charges, they don’t pay groundrent and I also believe they have a different lease. How do these 8 apartmentsfit into the freehold if us as the management company were to purchase it?


2. I have read that in order to purchase thefreehold from the developer, we would need at least 50% of the leaseholders toparticipate, that would mean 8 out of the 16 properties taking part. What ifonly, say 6, of us formed a consortium that the freeholder was prepared to sellto, would this be legal?

Once again, many thanks in advance.