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

Kynthia

I think it's usually better to have someone living in the property as a freeholder as they have reason to ensure the place is well maintained, while keeping the costs affordable and good value. Even better that the lease extensions are a set formula so your neighbours won't think your profiteering from them.

The only issue is will anyone buy it from you in the future when you move away? How will you feel if no one buys it and are there alternatives should this be the case?

bouicca21

Presumably if he buys the company that owns the freehold, when he wants to sell he can offer any potential buyer a choice of packages, lease plus freehold or just the lease.

Freecall

divadee wrote: »

Sorry to sound dumb! This is all very very new to us but can I ask what you mean by articles of association?

And is it common to purchase the shares in the existing freehold company and then the sellers resign and we take the business over?

The Articles of Association of a company are essentially a description of what the company is. Without them it would not exist.

They describe what the company is allowed to do, how it is run, how the officers (directors) are appointed, how much capital it has along with a hundred other things. It is a bit like the constitution of a country.

In practice many of these things are generic descriptions which give wide latitude on how the afairs of the company might be operated on a day to day basis but sometimes, in the case of companies set up to own freeholds, there are restrictions on who can own the shares or be members. This might be a requirement that a member of the company is also a leaseholder for example and that is why I said you should check. It is rarely a problem though and in your case even less likely as you have said that the existing owner is not a leaseholder.

As far as your second question goes, it is very common. Your solicitor needs to tie it all together to ensure that the transition works smoothly but it should be straightforward.

Freecall

G_M wrote: »

I don't understand this "Beware alienating the neighbours" line of thought.

* the neighbours have been offered a share and declined.
* they currently pay a freeholder (via company) for their services etc
* if OP buys, the neighbours will continue to pay a (new) freeholder (via company) for those same services

Provided the OP acts fairly (responds to reasonable repairing requests; doesn't rip them off over pricing) why should the neighbours be alienated?

divadee - I totally agree with G_M on this. I really don't understand what the issue is.

If the neighbours are switched on they will see that they are exchanging an owner who has little interest in the building for one who lives there as a leaseholder. Surely that must be a good thing for the long term management of the building.

On the other hand, if they are not particularly switched on, they will not even notice. After all, at the end of the day, the same company will own the freehold.

I would jump at it.

Irratus_Rusticus

Hi OP. Sounds familiar to thread on LandlordZone?

Previous leaseholder formed a limited company whilst a lessee to hold the freehold, then sold leasehold to yourselves so they are now the freehold company, but not lessees? Now offering you the freehold company?

Not really sure the legal position is as explained because the freehold company Mr & Mrs Smith Ltd only exists to hold the single freehold - what else does it trade under its Mems?. Not quite the same as a company being sold that just happens to also hold a freehold as one of its assets? So maybe they have to offer first refusal to the other flats and let the deadline pass to cover your backs?

Maybe your solicitor is correct that the single freehold company can be sold over the heads of the other flats, or maybe not? I'm not sure of your ground. But what is certain is all this nonsense about effectively milking a nice little earner over the other flats (apart from lease extensions) is doomed to strife as you will be bound by hefty laws not to unreasonably charge and must bide by their leases. I sometimes read MSE posts as if some folks think leasehold is feudal tenure.

If it goes to your head being a freeholder over others you might find yourself up before an FTT who decides you have been unreasonable and suddenly you cannot charge your costs or legal costs.

Leases are tricky little suckers.

I'd take a second opinion from a reputable experienced leasehold lawyer - not from an MSE thread. Just my opinion... Good luck.