Purchasing the Freehold to a flat

LeighBrown23

Hi,

I need some advice..

We purchased a leasehold flat in July last year, the building is a house split into two flats (we have the ground floor, the neighbours have 2 floors), the neighbours own the leasehold to their flat and the freehold of the whole building.

They do not live in the property and have been renting it out, they put the flat up for sale (without our knowledge) and have found a buyer and accepted their offer, the tenants have moved out. The freeholder sent me an email explaining that they are selling the property upstairs and included is the freehold.

They informed me that as a formality of the process their solicitor needs to serve us a notice regarding the freehold of the building. As they understand it that is purely a legal formality and that because their flat is a larger proportion of the house, it holds the right to the freehold.

We have received a letter from their solicitor in regards to the disposal of the freehold, enclosing a notice pursuant to Section 5A of the Landlord and Tenant Act 1987. I did some research and it appears that because we are qualifying tenants we should have the right to first refusal - a different situation to what the freeholder has portrayed.

I've also seen that our flat, in previous years, was being sold with the freehold - so I don't understand how they could claim ownership because they have a larger proportion of the building.

I visited a solicitor today, who looked at the paperwork and confirmed that we have the right of first refusal and that we have 2 months to answer the letter back, he also confirmed they are selling the freehold for £1 but that we would be subject to legal fees if we did pursue this.

Is it worth us pursuing a share of the freehold? And how should I approach this with the freeholders considering they have failed to mention the part about us being allowed to purchase the freehold (or some of).

Thanks!

AdrianC

Pros: You're in charge of maintenance for the entire building.
Cons: You're in charge of maintenance for the entire building.

csgohan4

Least you don't need to extend the lease at ridiculous prices or face stupid ground rent costs

eddddy

LeighBrown23 wrote: »

Is it worth us pursuing a share of the freehold? And how should I approach this with the freeholders considering they have failed to mention the part about us being allowed to purchase the freehold (or some of).

Which is it you want to buy - the freehold or a share of the freehold?

A "share of the freehold" is a slightly misleading description - what it means is that you and your neighbour jointly own the freehold.

• Do you want to own the freehold and have complete responsibility for insurance, repairs, maintenance - and having to abide by a huge pile of relevant legislation?

• Or do you want to jointly own the freehold and have shared responsibility for insurance, repairs, maintenance with your neighbour? (Bearing in mind that your neighbour might be difficult and/or disinterested and/or have different ideas about how to maintain the property from you.)

G_M

eddddy wrote: »

Which is it you want to buy - the freehold or a share of the freehold?

A "share of the freehold" is a slightly misleading description - what it means is that you and your neighbour jointly own the freehold.

• Do you want to own the freehold and have complete responsibility for insurance, repairs, maintenance - and having to abide by a huge pile of relevant legislation?

• Or do you want to jointly own the freehold and have shared responsibility for insurance, repairs, maintenance with your neighbour? (Bearing in mind that your neighbour might be difficult and/or disinterested and/or have different ideas about how to maintain the property from you.)

Owning it jointly with the upstairs owner adds ome benefits eg shared responsibility, though can lead to issues - if there's disagreement eg about a repair being needed, whose voice wins when ownership is 50/50?


Plus it requires the buyer of upstairs to agree to buy the freehold jointly with you which will complicate their purchase.


So I'd stick to either buyig in your sole name, or doing nothing and let the upstairs owner have the freehold and responsibility.


How long is your lease? If it will need extending that might be a significant factor in your decision.

Tom99

LeighBrown23 wrote: »

Hi,
We have received a letter from their solicitor in regards to the disposal of the freehold, enclosing a notice pursuant to Section 5A of the Landlord and Tenant Act 1987. I did some research and it appears that because we are qualifying tenants we should have the right to first refusal - a different situation to what the freeholder has portrayed.

Whilst you must be served with this notice giving you the right to express interest in 1st refusal, in order to exercise that option more than 50% of the qualifying tenants (counting 1 vote per flat not size) must accept the right to buy the freehold.
Since there are only 2 qualifying tenants, more than 50% means both must accept. Since the other leaseholder already owns the freehold they are hardly likely to accept the offer.
So the freeholder's solicitor is correct, it's a paper exercise.
You can still offer to buy the freehold though and if the freeholder thinks they can get more money selling to you rather than the purchaser of the other flat you offer may be accepted.

LeighBrown23

Thankyou that’s really helpful, that’s what we really wanted to know. In that case there wouldn’t be much point in us trying to buy a share of the freehold. As you say they are unlikely to accept, especially as they desperately want the sale to go through!

LeighBrown23

Our lease is 999 years so no issues on that front

starving_artist

Tom99 wrote: »

Whilst you must be served with this notice giving you the right to express interest in 1st refusal, in order to exercise that option more than 50% of the qualifying tenants (counting 1 vote per flat not size) must accept the right to buy the freehold.
Since there are only 2 qualifying tenants, more than 50% means both must accept. Since the other leaseholder already owns the freehold they are hardly likely to accept the offer.
So the freeholder's solicitor is correct, it's a paper exercise.
You can still offer to buy the freehold though and if the freeholder thinks they can get more money selling to you rather than the purchaser of the other flat you offer may be accepted.

Tom99 is correct. There is a chance your right to enfranchise may improve in the future whenever the government finally gets round to considering the Law Commission's proposals because this specific situation - where a house is split in to two flats and one of the flat's owns the entire freehold - was identified as one of the proposed reforms. See page 14
https://s3-eu-west-2.amazonaws.com/lawcom-prod-storage-11jsxou24uy7q/uploads/2018/07/Consultation-Paper-Summary.pdf