Buying the freehold

theshoefairy

Thank you all.
I have made another appointment with the Lease Advisory Service for Sunday so I m hoping they can help more.

A few things I am considering - 

1- get the freehold valued myself and hope that it is much lower and make an offer to the freeholder either informally by writing to them or issue a notice.

2 - go to auction but I am worried about this risk

3 - let it be sold at auction - get the name on the lease changed to mine (currently still in my mothers name) wait two years and either send them a notice to extend the lease or to buy it from them. Would this increase the price buying it this way?

It says on the lease advisory website that the freeholder is meant to send a formal notice of first right of refusal - I dont believe I have had that as I have had nothing from them. It also says that you are meant to be given 4 to 6 months notice which I haven't had.
On Landlordzone. a person was advised to write to the Auction house/and or the freeholder stating that you do not feel you have been given sufficient time and would like it withdrawn from auction. Should I do this? Worth a shot?

Sorry so many questions, I'm having a bit of a breakdown about this at the moment.

unkle

See what the advisory service suggests, But;

1. They can probably help with the valuation and advise, but it's unlikely to be a small amount based on the years left.
2. You could buy it at Auction, if you have the funds, but you are likely to come up against other's as with only 12 years left if the home was worth say £70k unencumbered investors will pay towards £40k I would expect, maybe more.
3. I'm no expert, but that is unlikely to save you any money compared to now, probably the opposite as by then it'll only have 10 years left and the cost to extend will continue to increase.

You also need to get the lease sorted if it is still in your mothers name from 2013 so you are going to need to employ a solicitor regardless. I assume you had the property transferred into your name with the Land Registry etc?
Either way, within the next 12 years you are going to need to do something and it will costs a considerable amount of money I expect. Do you have any idea as to the value of your home (excluding the lease issue) - i.e. have any neighbours with the same house sold in recent years? My guess is if they are asking £50k the houses aren't worth an awful lot more (maybe £60-£70k)

theshoefairy

I believe the house to be valued at around £130 online, but it's not in a great state of repair so I'm thinking less. Would a lower value on the house decrease the value of the freehold? I am thinking of getting some estate agents to value it for free if possible? Will they also then be able to value the freehold?

On the title for freehold, it says Central Town Properties -  are these the freeholders?

theshoefairy

I have just booked a free valuation on the house and possibly also the freehold for next week so hoping that will shed some light on it.

unkle

That makes the £50k not seem bad value if the property is worth £130k, even if only £100k value thats still pretty good.
How accurate this is I don't know http://lease-extensions.org.uk/calculator.html but if it was £130k with a full lease they quote in the region of £86k with only 12 years remaining. I was about right that a value unencumbered of £75k gets the £50k amount with only 12 years remaining.
You have to put yourself in the shoes of the freeholder, in 12 years they get a property worth £100k+ so it's going to cost a considerable sum. £50k or if you can negotiate that down a little seems a good deal on the face of it.

See where you are after Sunday and the valuations.

unkle

Might be this company;

https://beta.companieshouse.gov.uk/company/00660315/filing-history

princeofpounds

Shoefairy, sorry to hear about this - it did touch me personally actually. It's unfortunate that neither your mother or yourself realised the exact implications of the form of tenure that you have. It should have been explained to your mother back when she purchased but I guess that was years and years ago. Do make sure you check your title to see exactly how long the lease remaining really is, and also the freehold title to confirm the freeholder is who you think it is.

Don't panic about having the opportunity to buy the freehold, or whether it gets sold to a third party in the auction. If you have access to the financial resources, you will be able to reach a solution.

The issue is more about whether you can raise the money to either a) purchase the freehold or b) extend the lease. Either will effectively solve your problem. Extending the lease may be a bit cheaper, but the difference won't be that large given the lease is now so short. 

Then there is a question of tactics. Because your lease is so short, online calculators aren't going to be that helpful in valuing the property. So it may be helpful to pay for a surveyor with the relevant expertise for a valuation of the freehold under the statutory enfranchisement process, or a statutory lease extension. An estate agent can give you a sense of the house value but they will not be able to tell you about the freehold or lease extension.

If you get an idea of the costs of the two approaches, then you can decide the best way forward. If the lease extension looks best, go for that. If enfranchisement looks preferable, then you need to go through these steps:
- If the informal offer of the freehold looks like a good price, then negotiate directly to buy it.
- If it looks too expensive, offer to pay a value similar to the statutory valuation. No new freehold investor is going to pay more than this as they will lose money if you subsequently enfranchise from underneath them, so there is a high likelihood it will be accepted.
- If it ends up going to auction, if you can participate in the auction, and bid up to somewhere around the statutory valuation. You will probably win. Be aware of all the fees and the process involved in the auction, you need to account for those in your limit.
- If you lose or can't participate in the auction due to the timescales involved, then enfranchise at the earliest opportunity afterwards by either negotiating with the new freeholder, or by following the statutory enfranchisement process.
- You will need to get the title transferred into your name at some stage. Before you do this, it may be worth talking to your solicitor as it may start the two year clock before you are eligible to enfranchise again. I am not sure, but if you are executor of your mother's estate, you may be able to do the process in that capacity sooner.
- And yes, it's worth investigating the legal requirement about minimum notice, and possibly getting the freehold withdrawn from the auction for now. But this is not something that you need to worry about too much as whoever owns the freehold does not change your position much.

theshoefairy

Thank you.

This is what I do not understand. My mother wasn't a stupid woman, she was on the ball with finances so I cannot understand how she wouldn't have know the lease was so short or known what it would mean when the lease came to an end. She even said to me before she passed that the house was mine to do what I wanted with. She had a terrible time with my father when paying the mortgage, he was a compulsive gambler and we were almost evicted because of it. They cheered her when she made the final mortgage payment as they knew what she had been through. I don't understand how they couldn't have told her or that she didn't know. She was offered to buy the freehold also some years ago, I am sure it was in the region of £5k but she couldn't afford it. Again I am baffled that she could not have known the importance of this.

What sort of company would I contact for a true freehold valuation? As it says online on Zoopla, typically my house is worth £130k. I am wondering if I get the house valued, considering it's bad state of repair, that this would then also have an impact on the freehold price of the property?

I was wondering about the 2 year clock, as I inherited it, would it not be the case that I may be entitled to do something before the 2 years? As I have also lived here all my life.

I am wanting to put some ind of spanner in the works re the auction house and make them withdraw it. Would I be able to stipulate that any potential buyer needs to be away that I will either be serving them with extending the lease or buying it from them in 2 years? Would this information be included on the auction information? 

Am I allowed to contact the freeholder directly? Would doing this make it so I cannot take any further action should we not be able to reach an agreement?

Do they start bids on things like this way higher to be able to be knocked down?

Sorry I know it is a lot of questions.

theshoefairy

sorry, how would I get a statutory valuation?

Grumpy_chap

£50k will be the minimum at auction.