Flat owner selling 999year lease but not "SoF"

Badegg

Just wanted some advice - there's a 4 floor purpose built block were looking at. Previously 1 freehold owner but then he sold the freehold and it's now owned by a management company in which the 4 flat owners have a 25% stake / directorship. One of the owners wants to sell a flat with 999 year lease on it but wants to keep the company ownership/directorship.

Currently service charge very reasonable at around 600 vs some 1500-1700 I've seen for equally priced leasehold flats with 150 yr leases.

Should I push for the sale to include the share of ownership in management company? If so how much extra should that cost for a flat under 500k?

Is there any reason why the flat owner would want to keep the % ownership in management company since presumably it will be non profit and the flat has long lease.

Many thanks

edit: apologies think i posted this in wrong sub forum (not House buying) since i was on mobile but i guess this could also be a question from a "do you want to get a mortgage in such a scenario" kind of thing too

TrickyDicky101

What's the Ground Rent (not Service Charge)?

Retaining the freehold is unusual unless there is significant land held by the company directly.

Badegg

Ground rent is 90 a year. If I was to estimate the total land area on which the building stands I'd guess around 110-120sqm (ie building itself and small amount of 1-2m around it)

Just seems weird. Could they want to do something in future?

TrickyDicky101

Badegg wrote: »

Ground rent is 90 a year. If I was to estimate the total land area on which the building stands I'd guess around 110-120sqm (ie building itself and small amount of 1-2m around it)

Just seems weird. Could they want to do something in future?

That could be a possibility if there is scope to extend upwards for example.

EDIT: I wouldn't accept this by the way - I would insist the share in the company is transferred to you or I would walk. Except for future development potential, I can't see much value in £90py GR (unless there are significant escalation clauses).

Have you asked the vendor why they want to retain?

AnotherJoe

Looks like a vendor wanting to have their cake and eat it. Like TD I’d walk unless it was included, who knows what devious plan the vendor has for that freehold share - (and if they don’t have any plan, why do they want to keep it).

Badegg

TrickyDicky101 wrote: »

That could be a possibility if there is scope to extend upwards for example.

EDIT: I wouldn't accept this by the way - I would insist the share in the company is transferred to you or I would walk. Except for future development potential, I can't see much value in £90py GR (unless there are significant escalation clauses).

Have you asked the vendor why they want to retain?

AnotherJoe wrote: »

Looks like a vendor wanting to have their cake and eat it. Like TD I’d walk unless it was included, who knows what devious plan the vendor has for that freehold share - (and if they don’t have any plan, why do they want to keep it).

Yes if i do buy i will insist on it. The property was reduced 10-15% and the EA says the owner wants to get a few K over the "£xxx offers & over" price...but tbh whilst it is competitively priced if we calculate the value of a £100 annuity for e.g. 50 years it will still only cost 2-3k (which is roughly half of "amount over the asking price" that the seller wants).

i am waiting to hear the reply from EA if the owner would consider including it in sale.

Could it be possible owners hoping for a scenario where e.g in 15-20 years when London will have e.g. 50m people or something and some development company would offer 10m or so for the freehold to build a skyscrapper and owner can cash in on that?

kingstreet

I would have posted this in HBR&S as you'll get more views over there. There's nothing mortgage-related in the thread.

Badegg

kingstreet wrote: »

I would have posted this in HBR&S as you'll get more views over there. There's nothing mortgage-related in the thread.

yes i actually edited my first post to reflect that. i typed forum link via mobile on my phone and it took me to this subforum instead of the HB&S one by accident & i didnt check when posting. i will probably cross post but at this point whats done is done.

kingstreet

If you can, I'd stick it on there.

Although some spend equal time on both, others from over there don't seem to stray much over here and there is genuinely more knowledge about this stuff over there than there is here...

I see you've done it!

AnotherJoe

Badegg wrote: »

Yes if i do buy i will insist on it. The property was reduced 10-15% and the EA says the owner wants to get a few K over the "£xxx offers & over" price...but tbh whilst it is competitively priced if we calculate the value of a £100 annuity for e.g. 50 years it will still only cost 2-3k (which is roughly half of "amount over the asking price" that the seller wants).

i am waiting to hear the reply from EA if the owner would consider including it in sale.

I would suggest phrasing it differently, much more positiivelt. I’ll buy it if the freehold is included otherwise it’s no deal.

Could it be possible owners hoping for a scenario where e.g in 15-20 years when London will have e.g. 50m people or something and some development company would offer 10m or so for the freehold to build a skyscrapper and owner can cash in on that?

Maybe, who knows but why lock yourself out from those sort of gains, either directly if you stay there that long, or indirectly if you sell in a few years (and now there’s this confusing mix of freeholders for your prospective purchaser)

There’s also, more pragmatically and immediately the issue that arises if (when) maintenance is needed. This person may not be too worried about maintenance, will want to pay the cheapest amount for it, won’t be as incented as the other freeholders to get things fixed quickly, might be a pain to contact and respond, and you won’t have any imput over what gets done.

The more you consider it the worse it gets.

Tom99

Does the lease/freehold share allow the sale of the lease without also selling the 25% freehold share?

Is the 999 yr lease to be sold the existing lease or a new one the seller is drawing up?