Freehold Entrenchments

K51

I bought the leasehold of an ex-council flat in a block of 12 units, my lease term has 95 years remaining.
I and the other leaseholders have been approached by an investor/ developer to arrange to buy the freehold of the block from the council on behalf of the leaseholders, pay legal fees, cost of buying the freehold from the council and additional sweetener of approx £5K in exchange of Lesholders undertake to sell the freehold of the rooftop of the block to the developer to develop certain number of units and leaseholders to commit to support the planning application.

Given this is a new venture I made some enquiries, but developers refused to answer any of the common/ basic due diligence questions, such as background information on developers, financial capability, past experience, name of leaseholders agreed to the proposal, introduction to other projects that have been completed and meet its leaseholders to gain views of their past experience.
In view of the developers' insistence to provide the basic due diligence information, I refused to join the scheme. However, I understand they have the agreement of 5 leaseholders and can go ahead once they reach 6 i.e 50%.

I'm concern about any negative consequences of this scheme, or its trustworthiness.
would very much appreciate your views on the above and your views on the followings

Has anyone heard of such a scheme? Are they genuine?
Can the new company that will buy the freehold stop me from buying my share of the freehold without joining the scheme, i.e refusing to sell my share of the freehold of the rooftop to the developer.
What would be the best advice in these circumstances

Many Thanks

WillimS2020

Why don't you contact the relevant Council, I have never heard of any Council selling off its leasehold, don't forget they could reduce the length of the lease as short as 25 years or less, then you would have to keep renewing it, and you don't even know how much they would want to extend it, don't forget with each year less on the leasehold the property will devalue, I suggest even if it is genuine, don't touch it was a barge pole, regardless how much they offer for it. 

K51

Third Para, line 5 meant to read
In view of the developers' insistence NOT to provide the basic due diligence information

Mrs_Arcanum

Don't do it. - The difference between charges from private freeholders and council freeholders is extreme. 

K51

Thanks for your comment, Mrs Arcanum,
Agree its a valid point, but if this Greedy developer convinced 50% of the leaseholders, I have little choice. Also, they are offering to freeze service charges for the next 10 years. Another concern it's an off-shore company with unknown financial records, experience,... etc. They can go into liquidations or sell the company to another off-shore. 
Very worrying and unknown scheme with potentially unknown risks.
 

peter_the_piper

Maybe get together with the other tenants to see if it can be stopped in any way, Be interesting to know what "bribery" was used to convince those that caved in.

K51

Thanks, Peter,
Only me and another leaseholder who are actively opposing the scheme and trying to stop it.
The 4 Leaseholders, who we were told have signed an agreement with the Developer, are ignoring our calls and messages. We were told around £5K was paid as sweetener/incentive to sign an agreement.
Its frustrating situation, like you all, my legal advisor said don't touch it 

Mrs_Arcanum

K51 said:

Thanks for your comment, Mrs Arcanum,
Agree its a valid point, but if this Greedy developer convinced 50% of the leaseholders, I have little choice. Also, they are offering to freeze service charges for the next 10 years. Another concern it's an off-shore company with unknown financial records, experience,... etc. They can go into liquidations or sell the company to another off-shore. 
Very worrying and unknown scheme with potentially unknown risks.
 

There are companies you should advise all the others to steer well clear of - do a an internet search on the one who is trying to do the buy out. If they are offering these sorts of sweeteners they will get this back, never fear. - Sell now if you cannot persuade the others not to sign up.

Also worth pointing out, beneficiaries/leaseholders will still have to pay all the lease charges if the property is empty & there is no incentive for the Managing agents to assist with sales.

K51

Thanks, Mrs Arcanum, I am actively thinking of selling.  

bucksbloke

One of the reasons that people avoid leaseholds. 

eddddy

I guess you need to consider that the following could also happen, perhaps without you getting a 'sweetner' :

• Your current freeholder (the council) might decide to build on the rooftop
• Your current freeholder might sell the rights to someone else to build on the rooftop
• Your current freeholder might sell the freehold to someone else who decides to build on the rooftop

As you say, to do 'statutory enfranchisement', at least 50% of the leaseholders need to be involved. Strategies include:

• Buy the freehold, and then refuse to allow anyone to build on the rooftop
• Buy the freehold, and then employ surveyors, planning consultants etc to put together a plan for selling the rooftop rights at the best possible price (which is likely to make most profit for the leaseholders)
• Go along with the investment company's plan (The easy option - but you only get £5k each)

If the investment company's plan is that the leaseholders buy the freehold - and retain ownership of the freehold - and give consent to investment company to build on the rooftop, that is relatively low risk. Because, as freeholders, you are still in control.

But if the investment company want you to transfer the freehold to them, that's much riskier.

And... if you refuse to get involved, but over 50% of the leaseholders are happy to proceed with buying the freehold, you would be completely shut out.