Buying the freehold to 4 flats - only 1 flat wants to buy

divadee

Hi

The freeholder of the building (4 flats in a Victorian conversion) wants to sell the freehold. (The freeholder used to own the flat we have just bought).

None of the other flats wants to buy the freehold as they say they cant afford to, but we are very interested. They have offered a price of 18k for the whole freehold. Obviously we would have legal fees on top of this.

We are keen as we don't want a management company to buy it and rack up the service charges etc.... The ground rent is only £50 a year per flat so that's not a lot but the length of the leases on the other flats are making it more interesting to us. One is 69 years, one is 63 years and one is 61 years. Ours has 99 years left on and if we bought the freehold we would probably extend this to 999 as the solicitors costs seem to be negligible for doing this at the same time.

Are we being stupid for even thinking about this? Should we just walk away? It's all new to us as both of us have only ever lived in freehold properties before or rented.

bouicca21

Are you willing to take on the management of the building, or to supervise an agent who will do it for you?

Personally I'd not think twice, I'd just do it.

Mgman1965

Id snap it up as you can then set the service charge, the other flats will have to pay you to extend their leases (likely if they want to sell with them years left as would be a mortgage condition most likely)

Also increases the value of your flat if you want to sell owning the entire freehold. Bit of a no-brainer really.

Hoploz

Yes sounds great if you can finance it. With those short leases you'll get your money back and possibly double it, plus the uplift in value of yours.

melanzana

And as a freeholder you can do anything you like to your own flat (within planning guidelines of course), and you can decide what can and cannot be done within the other flats.

That's just one thing.

No brainer, jump at it quick!

knightstyle

Think carefully about your future buyers who may not want to buy the whole freehold. Best IMO to set up a separate company to purchase the freehold and deal with the maintenance, collect money etc.

divadee

At the moment they have a management company that the freeholders (they set up a company for the purpose of owing the freehold seperate to the flat) use who are very reasonable and do things quickly. I assume as we would be the freeholders we could carry on this arrangement also.

It seems a no brainer to us given the short length of the leases on the other flats.

agrinnall

Your neighbours are going to love you when you hit them with huge management fees and big bills for extending their leases so you can recover your outlay and make a profit on it. They would probably have had to pay similar amounts anyway but now they know exactly who is making money out of them. Are you prepared to deal with that?

divadee

agrinnall wrote: »

Your neighbours are going to love you when you hit them with huge management fees and big bills for extending their leases so you can recover your outlay and make a profit on it. They would probably have had to pay similar amounts anyway but now they know exactly who is making money out of them. Are you prepared to deal with that?

We had thought of that. But only 1 of the flats other than us is owner occupied. The other 2 are rented so we don't actually know the people who would be requesting the lease extension. Phew!

Hoploz

divadee wrote: »

At the moment they have a management company that the freeholders (they set up a company for the purpose of owing the freehold seperate to the flat) use who are very reasonable and do things quickly. I assume as we would be the freeholders we could carry on this arrangement also.

It seems a no brainer to us given the short length of the leases on the other flats.

Do you mean that an independent management company runs things? Or do you mean that the current freeholder just started a company to do so? If the former then you can just keep using their services as you are happy with them. It's a good idea to have it managed by a separate company in some respects as then it isn't so much like you're breathing down your neighbours' necks. Presumably they haven't been charging an arm and a leg for their services. (Management fees are split between all leaseholders of course) If they have then you can manage it yourself

divadee

Hoploz wrote: »

Do you mean that an independent management company runs things? Or do you mean that the current freeholder just started a company to do so? If the former then you can just keep using their services as you are happy with them. It's a good idea to have it managed by a separate company in some respects as then it isn't so much like you're breathing down your neighbours' necks. Presumably they haven't been charging an arm and a leg for their services. (Management fees are split between all leaseholders of course) If they have then you can manage it yourself

Sorry yes an independent management company run the day to day running of the block. So they collect ground rent and service charge and arrange the insurance and fire and asbestos checks etc....

The current freeholders set up a separate business in their names to purchase the freehold so Mr and Mrs smith Ltd. On all the correspondence from the management company it states on behalf of Mr and Mrs Smith Ltd etc...

Does that make sense?