Absent Freeholder/Purchasing Freehold

lend_us_a_fiver?

Where do I start?


10 years ago (ish) I brought my first flat for £107000 (first floor flat of an old converted house split into 3 flats)! At the time it had 78 years left on the lease and it got flagged up but I still managed to get a good mortgage deal and buy the flat! The previous owners showed me payments made to the management company up until about a year before they sold. They had an issue and couldn’t get any answer back from the freeholder so just stopped paying the ground rent.


I lived in it 8 years, never once heard from the freeholder, we had to get a new roof (paid for by me and the flat below me) and have made several repairs and general maintenance over the years all of which is paid for by 2 of us flats (the other flat is a mess and she has no intention of paying for anything and her place is rotten to the ground)


About 3 years ago I met my wife and we quickly became pregnant so I moved out the flat and rented it out and moved in with her. After we had our little boy and got married (all in the same year) we decided to buy our first home together (made it an even busier year) but because of the flat we had to pay a higher stamp duty! Went from roughly £1400 to £9000 plus our £22000 deposit for the house it wipe us out! No saving left but we have a beautiful family home that we love. If we can sell the flat within 3 years we get the difference back from the stamp duty money!


Problem is we can’t extended the lease on the flat (68 years now) because of the absent freeholder! So….downstairs flat had a cash buyer come in and buy their flat 2 years ago and the solicitor they had for the purchase said he can start work on purchasing the freehold! Great, we met them, we all get along great and decided to purchase the freehold! Things now get complicated!


So a year and half ago we started the process! We contacted the Crown and was told by the crown solicitors they don’t have the freehold. The management company for the flats had dissolved and all their holdings we’re in the Isle of Man! So we had to pay for a solicitors from the Isle of Man to do all the research and then release it back to the UK and the Crown! I should mention that both parties were keen to know how much we’d roughly have to pay and we got quoted between £3-5K for the purchase of the freehold plus fees and surveyor’s fee etc and our solicitor said all in all we’d be looking at roughly £11K split between us! We had this in writing from the Crowns solicitors’ £3000 ish for fees and to instruct a surveyor (some top London based bloke, no knowledge of the local area) and they stated in the letter the cost to purchase would be 15X ground rent or £5K whatever is more! So we had to pay roughly £2000 each for all the work done up to this point, we then get an email from our solicitor who’s been going back and forth with the surveyor and Crowns solicitors and tells us that they value the freehold at £24000!!! So as it stands we’ve paid all this money to date and done all the hard work for them by getting it back to them, they don’t manage the freehold and it has no value to them but they now want £24K instead of £5K, needless to say us and downstairs can’t afford that!


Since then we’ve wrote to our local MP and he’s speaking to our solicitor soon to see if he can help in anyway shape or form, I’m not sure what power he has or what he can do but our solicitors suggested it so makes me think he could do something?


We need to sell the flat by Oct 2019 to get our stamp duty money back, we been told that they could sell the freehold at auction (does this mean we could buy it cheaper?)


Been thinking of putting the flat on the market to see if I get lucky with a cash buyer but not getting my hopes up!


What can I do? Any help? If you need any more info then let me know! We feel like we’re at a dead end!

eddddy

lend_us_a_fiver? wrote: »

Problem is we can’t extended the lease on the flat (68 years now) because of the absent freeholder!

Yes you can.

See: https://www.lease-advice.org/faq/i-am-a-leaseholder-and-i-want-to-extend-my-lease-but-my-landlord-is-missing-what-should-i-do/

But check the lease extension calculators - you might find that it's not much cheaper than half the freehold:
See: https://www.moneysavingexpert.com/mortgages/extend-your-lease#calculator

Who told you originally that the freehold would only cost £3k to 5k?

If your solicitor has said you can't do a lease extension, perhaps change to another solicitor who specialises in this area.

lend_us_a_fiver?

Yeah I did look into this but I think we have to pay another £1500 for another surveyor to quote the extension and all this is getting costly! then it'll be around the £8000 mark to extended but with a freeholder its still a tricky job trying to sell the flat, we was hoping to purchase the freehold, extending mine and downstairs lease (for free) and then if/when I sell my flat, sell with share of freehold or transfer it over to downstairs so they have complete control and can manage the building properly!


as for the quote, the crowns solicitors (burgess salmon) stated those figures in the original letter nearly 2 years back! they we're careful tho, "usually" the cost to purchase the freehold would be 15x ground rent or £5k, whichever is greater. but then that makes me ask the question, what makes our case unusual then?


we've not heard from our solicitor in a while now and his communication has been poor to say the least and we've asked him lots of questions of late but with no reply! my big concern is this is still going to take some time but we only have 2 years to sell really!


Thanks for your reply tho.


this has be causing major headaches/depression/all sorts over the last 2 years! just want rid of it now!

eddddy

lend_us_a_fiver? wrote: »

as for the quote, the crowns solicitors (burgess salmon) stated those figures in the original letter nearly 2 years back! they we're careful tho, "usually" the cost to purchase the freehold would be 15x ground rent or £5k, whichever is greater. but then that makes me ask the question, what makes our case unusual then?

If your lease had over 80 years remaining, that quote might have been accurate.

The extra £20k is probably a result of "marriage value", which kicks in when the lease drops below 80 years. (Did their letter not mention "80 years"?)

lend_us_a_fiver?

No mention (that I can remember) of any years remaining in their letter! but I think they would of known when our solicitor contacted them about it! we have 68 years to run now.


if we had a freeholder I'd be happy just to pay the price for the extension but this is just going on and on and on without getting anywhere!


what would you do eddddy?
let them auction off the freehold?
try and raise the funds to buy it off the crown?
challenge the price?
sell the flat at auction with a reserve for our lowest price we can take?
stick it on the market?
anything else?
give up? (not a option no more, to much time and money invested)


thanks again

eddddy

Extending the lease or buying the freehold should make you more profit overall (because of marriage value).

But obviously, you need the cash to do that.

lend_us_a_fiver? wrote: »

let them auction off the freehold?

It's a gamble - it may sell for less than £24k or more than £24k.

lend_us_a_fiver? wrote: »

try and raise the funds to buy it off the crown?

As I say, doing that should make you a profit.

lend_us_a_fiver? wrote: »

challenge the price?

Have you had a valuation from a valuer? If so, is it less than £24k?

Take advice from your valuer on this. If your valuer is convinced that £24k is over the top, you can go to tribunal (but that will incur legal fees).

lend_us_a_fiver? wrote: »

sell the flat at auction with a reserve for our lowest price we can take?

If you like. That will get rid of it quickly with minimum hassle - but at a low price.

lend_us_a_fiver? wrote: »

stick it on the market?

Again - that might get rid of it with minimum hassle, but you might be losing out on some profit.

Tom99

[FONT=Verdana, sans-serif]Could you sell the flat but with an offer to serve a lease extension notice with the purchaser taking that forward, or is a 68 yr lease un-mortgageable?[/FONT]

lend_us_a_fiver?

Hi Tom99, pretty sure you can't get a mortgage on 68 years now! cash buyer is our only option with selling it I think!


thanks

lend_us_a_fiver?

Eddddy - the crown used a valuer from top London firm and he mentioned that marriage value was added but he also mentioned about something to do with housing act 1993 but we've found out that they can't add this because the crown is exempt from this?!? it seems that without paying even more money we've come to a halt but we're unsure of the next steps to take! so stressful! thanks for all your help tho!

eddddy

lend_us_a_fiver? wrote: »

Eddddy - the crown used a valuer from top London firm and he mentioned that marriage value was added but he also mentioned about something to do with housing act 1993 but we've found out that they can't add this because the crown is exempt from this?!? it seems that without paying even more money we've come to a halt but we're unsure of the next steps to take! so stressful! thanks for all your help tho!

That valuer is working for the Crown (i.e. your opponent), not you.

I'm surprised that your solicitor didn't advise you to get a valuation at the outset.

On the basis that the Crown operates like other freeholders... it's a bit like buying a used car...

• The leaseholder instructs a valuer. Their task is to value the freehold as low as reasonably possible.

• The freeholder instructs a valuer. Their task is to value the freehold as high as reasonably possible.

• Then you negotiate.

As an example...

• The leaseholder's valuer says "I calculate this freehold is worth £14k"

• The freeholder's valuer says "I calculate this freehold is worth £24k"

• The valuers negotiate/argue with each other (for which you probably pay them £250 per hour)

• You end up agreeing to pay, say, £18k

lend_us_a_fiver?

after the figure of £24k had been giving, our solicitor emailed us the conversation between himself, the crown solicitors and the surveyor who done the valuing! in that email chain our solicitors kept asking if they could use another surveyor local to the area who was cheaper and more knowledgeable of the area. they declined and said they could only use said surveyor. so we'd have to get it independently valued again (at a cost and hope its considerably cheaper) but I don't think they're going to budge on this price!


I've even looked into trying to find a "white knight" who would see it as an investment if we help with some of the costs to extend our lease!


my gut feeling is this is going to end in tears!


feel a bit hard done by really, we've maintained the building for 10 years and replaced the whole roof (about 10k that cost) and all we want to do is manage and extend our lease! we've had various water leaks over the years but due to no building insurance (we can't as we don't own the building) we've all had to pay for repairs out our own pockets! all this gives me headaches!