Offered freehold by landlord.

[Deleted User]

Hi all,

I live in a block of 4 flats that the freehold has just been offered to us from the Landlord as I know he has to by law.

Now I've done alot of research on this and have most of the info.

We all have new leases of 124 years left.
Service charges of £1300 a year.(each)
Ground rent £200 a year.(each)

I've looked at the calculator and I think a fair price is £14000.
He is asking £15250.
I'll make an offer if I decide to.
I realise at least 50% of the occupants have to be involved.Now the benefits are I guess peppercorn rent and we manage the property ourselves.

I can see the benefits but with such long leases I don't think its that attractive to other landlords?

What I don't understand is why I can't just by the freehold myself and then charge ground rent etc to the other tenants?

If we don't buy it I suggest it will go to auction possibly.

Also I don't want some rogue landlord buying it.

My finances are OK as I own the flat outright but would be a real push to buy this.

Any advice is appreciated.

Chris

stator

Deleted_User wrote: »

Hi all,
What I don't understand is why I can't just by the freehold myself and then charge ground rent etc to the other tenants?

If the LL is willing to sell I don't see why you couldn't buy the entire freehold. You'd obviously have to pay more, I guess 4x the cost of just buying you're own share but he's allowed to sell it to anyone he wants.
But do you want the hassle? It would mean a lot of paperwork to make sure you do everything legally and charge the other leaseholders fairly.

[Deleted User]

stator wrote: »

If the LL is willing to sell I don't see why you couldn't buy the entire freehold. You'd obviously have to pay more, I guess 4x the cost of just buying you're own share but he's allowed to sell it to anyone he wants.
But do you want the hassle? It would mean a lot of paperwork to make sure you do everything legally and charge the other leaseholders fairly.

The whole cost for all 4 flats is £15250.

The offer states that at least 50% of the flats must be willing to participate/buy.(i.e. 2 out of 4)

AdrianC

If none of the other three are willing to buy, you could ask one of them to purchase half, and then immediately resell to you.

However many of you purchase it, there's going to be a lot of paperwork in your near future, and all the fun and expense of maintaining the fabric of the property.

You currently pay £200/year each ground rent. £800 for the four flats. That's 5% return on your investment, in return for a lot of work... Not a great deal, imho.

Oh, and as far as why two of you can, but you can't on your tod? Because that's the way the right-to-buy law works...
http://www.moneysavingexpert.com/mortgages/buy-freehold-right-to-manage#step

paddyrg

I'd rather own the whole freehold given the option - perhaps him you're interested in taking 100% for £15k/whatever - make it simpler for him than messing about with auctions and auction fees etc.

[Deleted User]

AdrianC wrote: »

If none of the other three are willing to buy, you could ask one of them to purchase half, and then immediately resell to you.

However many of you purchase it, there's going to be a lot of paperwork in your near future, and all the fun and expense of maintaining the fabric of the property.

You currently pay £200/year each ground rent. £800 for the four flats. That's 5% return on your investment, in return for a lot of work... Not a great deal, imho.

Oh, and as far as why two of you can, but you can't on your tod? Because that's the way the right-to-buy law works...
http://www.moneysavingexpert.com/mortgages/buy-freehold-right-to-manage#step

I've got you know thanks.

So the scenario is the 2 months go by and then the right to buy the freehold is gone.
Say it goes to auction.(I know of the developer hes an in and out quickly guy)
I go to auction and buy for the bidding price say £10k for arguments sake.
Presumably I can then go alone now?

stator

If you are using right to buy, you'd need 50%.
If the landlord is willing to sell anyway, you don't need 50%. Has the landlord said he will auction the freehold?

[Deleted User]

stator wrote: »

If you are using right to buy, you'd need 50%.
If the landlord is willing to sell anyway, you don't need 50%. Has the landlord said he will auction the freehold?

He hasn't said that directly but I get that impression as I know one of the guys that works for him.The guy said he's sending an offer for the freehold to us tomorrow(I didn't ask he just told me)
He's just sold the last flat(no 4) a week ago so he obviously wants out as I just got the letter yesterday.

AdrianC

Deleted_User wrote: »

Say it goes to auction.(I know of the developer hes an in and out quickly guy)
I go to auction and buy for the bidding price say £10k for arguments sake.
Presumably I can then go alone now?

Yep, absolutely.

And two of the other flats can then say to you "We have the right to buy the freehold from you, mate..."

[Deleted User]

AdrianC wrote: »

And two of the other flats can then say to you "We have the right to buy the freehold from you, mate..."

I don't see why this is the case as the other residents have been offered and have 2 months to decide.This elapses and I go to auction and buy the freehold obviously in lay-mans terms.

eddddy

Hi Deleted_User

Don't forget to read all the leases before proceeding, to find out what responsibilities (covenants) you would have.

And the management fee paid by the leaseholders covers your time and effort (doing paperwork etc).

In fact, some people become 'professional freeholders' - buying lots of freeholds and living off the management fees they produce. They are likely to be the people bidding against you at auction.

Also remember your liabilities and risks...

e.g. If you arrange the 'wrong' buildings insurance policy; the building burns down; the insurers refuse to pay... the leaseholders can sue you for negligence, to recover the value of their flats. (In reality, you and they would probably end up bankrupt.)