Freehold Sale

HenJ-T

Hi

We own one of two freehold shares of a block of four flats. Both of the freeholders are owner occupiers and have long leases, while the two leaseholders have very short (c.50 year) leases remaining. Neither seem to be willing or able to pay to purchase their leases, so we were considering selling the freehold of the block to an investment company to realise some of the value in the other two leases. We are considering selling our place in the medium term and feel it is unlikely any value of the lease renewals will be reflected in the sale price.

I am conscious that we would be obliged to offer freehold shares to the leaseholders as part of the process, but is there anything else that we should be aware of? Does anyone have any experience of dealing with firms such as these?

Any help greatly appreciated!

da_rule

This is somewhat confusing. If the leases held by the 2 people who also own the freehold are short they can just agree to extend them, why is there a lot of cost involved?

HenJ-T

Sorry - the two freeholders have long leases. There are two other flats that do not have shares of the freehold for some reason and these are the short leases.

eddddy

As you probably realise, you could just sell the leasehold of the flat, and retain your 50% share of the freehold, if you want. (Assuming that you haven't signed an agreement that prevents you from doing that.)

Then just wait a few more years for the lease extension 'windfall'.

Alternatively, I guess you and your joint freeholder could auction the freehold (with the statutory right of first refusal offered to the leaseholders).

You could set a reserve. With 'standard' properties, the auctioneer would give you an indication of what they expect it to achieve. I'm not sure if they do this with freeholds.

The downside is that auction fees can be quite steep, even on properties that fail to reach their reserve, so don't sell.

Presumably, your joint freeholder isn't interested in buying you out?