what to ask when buying share of freehold

daniesto

I recently bought a flat, a leasehold, goes without saying, has 100 years left remaining. I dug into see if there was an option to buy a share of freehold, and there is. Excellent I said. There are about 70 flats of which 60 of them has a share of freehold. Furthermore, the owners of these flats decided to buy the freehold in 2004 via a company (TL) they formed. TL has given the management of these flats, i.e collecting services charges, ground rents, major works planning, gardening & cleaning contracts to keep the place tidy to a management company, (HE Management).

The current price of share of freehold is £4000. TL says these figures will go up dramatically from next year as the share of freehold price does not reflect the values of the flats.

Questions:
1. Is it truly worth buying share of freehold? (Buying will make me a member of TL, which will allow to me extend my lease free, with exception to solicitor fees. Also I will have saying on major works planning and handing out contracts to maintenance companies).
2. Once I become a member, should I decide to sell the flat, will I have a problem selling it or transfering share of freehold?
3. Could the rest of the members block the transfer of share of freehold? If they do what happens next?
4. TL have regular meetings to discuss any issues with the property and then pass on to the HE Managements to deal with it. If for whatever reason TL gets dissolved (is it even possible?) what happens to the share of freeholders? What would be my next step?

I looked into their funds, they have handsome amount of money in the sinking funds plus other funds. The service charge per flat here is £2000 (annually).

All answers are welcome.

Thank you!:beer::beer:

G_M

daniesto wrote: »

Questions:
1. Is it truly worth buying share of freehold? (Buying will make me a member of TL, which will allow to me extend my lease free, with exception to solicitor fees. Also I will have saying on major works planning and handing out contracts to maintenance companies).
Yes. No brainer.

2. Once I become a member, should I decide to sell the flat, will I have a problem selling it or transfering share of freehold?
No. (no more than now).

3. Could the rest of the members block the transfer of share of freehold? If they do what happens next?
I doubt it. Depends on the articles of TL company,

4. TL have regular meetings to discuss any issues with the property and then pass on to the HE Managements to deal with it. If for whatever reason TL gets dissolved (is it even possible?) what happens to the share of freeholders? What would be my next step?
Any company can go bankrupt. Even if the freehold was owned by a totally unrelated person /organisation, they/it could go bankrupt.

...............................................................

Tom99

What share of the company to you get for £4,000? 1/60th? Are you sure it will be free to extend the lease? Do you currently pay a ground rent and will this be reduced to a peppercorn again free. What sort of leases are the 10 flats who are not shareholders have? The TL's value will included the expectation of lease extension premiums maybe from these flats in the future. Why does the current £4,000 not reflect the value of the flats. If the 60 TL shareholder flats already have long leases at a peppercorn then the freeholders value of these 60 flats will be minimal therefore the only flats of value will be the remaining 10 whose leases may be shorter and ground rent payable. Why is TL offering you the bargain price of £4,000 when apparently it should be more?

G_M

Hmmmm... can I reserve my reply above till after Tom's questions have been answered?


:rotfl:

daniesto

What share of the company to you get for £4,000? 1/60th?

Yes

Are you sure it will be free to extend the lease?

Yes, it is in TL articles

Do you currently pay a ground rent and will this be reduced to a peppercorn again free

I pay £100 ground rent per year. Yes it will be reduced to peppercorn.

What sort of leases are the 10 flats who are not shareholders have?

I believe they all have longer than 100 years. I think about £125 years. I need to dig into this. One of their meeting documents indicated they have discussed to extend the lease to 999 years but only for share of freeholders.

Why does the current £4,000 not reflect the value of the flats

This is what the HE Management told me, perhaps I should ask why!

Why is TL offering you the bargain price of £4,000 when apparently it should be more?

According to HE Management it was done to pursuade remaining owners to get a share of freehold.

daniesto

Also looking into their documents, I found out other owners who bought share of freehold from 2004 up to 2017 only paid around £2500 and in 2018 it was increased to £4000. TL is planning to increase the fees by 70% over all.

daniesto

G_M wrote: »

Hmmmm... can I reserve my reply above till after Tom's questions have been answered?


:rotfl:

you can now

kuratowski

According to HE Management it was done to pursuade remaining owners to get a share of freehold.

Why are they so desperate to recruit more owners? Is there some big bill coming you would then have to share in? Or are they simply desperate to find volunteers to help with the management?

silvercar

kuratowski wrote: »

Why are they so desperate to recruit more owners? Is there some big bill coming you would then have to share in? Or are they simply desperate to find volunteers to help with the management?

Maybe the cost of the ground rent collection is prohibitive. Or they want all the flat owners to be on an equal footing.

G_M

daniesto wrote: »

you can now

Questions:
1. Is it truly worth buying share of freehold? (Buying will make me a member of TL, which will allow to me extend my lease free, with exception to solicitor fees. Also I will have saying on major works planning and handing out contracts to maintenance companies).
Yes. No brainer.

2. Once I become a member, should I decide to sell the flat, will I have a problem selling it or transfering share of freehold?
No. (no more than now).

3. Could the rest of the members block the transfer of share of freehold? If they do what happens next?
I doubt it. Depends on the articles of TL company,

4. TL have regular meetings to discuss any issues with the property and then pass on to the HE Managements to deal with it. If for whatever reason TL gets dissolved (is it even possible?) what happens to the share of freeholders? What would be my next step?
Any company can go bankrupt. Even if the freehold was owned by a totally unrelated person /organisation, they/it could go bankrupt.

daniesto

kuratowski wrote: »

Why are they so desperate to recruit more owners? Is there some big bill coming you would then have to share in? Or are they simply desperate to find volunteers to help with the management?

They had roof work done in spring/ summer. Their next project is interior decorating. This is what I gathered from their meeting documents.