Offer to buy the Leasehold

mh93

Good afternoon,
Apologies if this has been asked before but I cant get my head around leasehold/ground rents etc.
My mums, who's 84 and lives in a flat, received a letter recently from the landlords solicitor offering to sell the Leasehold.
There's 23 flats in total and the cost is £62500 ( I think this is the total cost, not per flat)
My mum has 65 years left on her lease and back in 2017 we enquired about an extension, the landlord quoted £25k for a 125 year lease, we didn't appeal or go any further as we didn't have the money at the time.
I've briefly spoken to a solicitor who said that out of the 23 flats, only 5 hadn't extended their lease since 2010. Based on the limited knowledge, he suggested looking into the lease extension again, this time asking a surveyor to put a price on it.
Apologies if there's not much information to go but we only got the letter on Monday. Meantime, a lady in the block sounds like she's taking control and will come back to my mum with her suggestion when she's spoken to the other flats.
Can anyone shed any light on this or do we need more facts?
Thanks

greatcrested

I'm gessing she was offered the freehold.

If she lives in the flat she already owns the leasehold.

Unless she's a tenant, in which, does she want to own the flat by buying the leasehold?

OK- for more help, read

https://www.lease-advice.org/advice/find-the-right-information-for-you/?step-option=61

mh93

Apologies for not being clear. My mum owns the flat and has done for about 7 years

McKneff

She owns the ,easehold. 
I doubt she owns the flat (freehold) if they are offering to sell it to her !!  

eddddy

It's quite a complex situation. To some extent the options depend on how knowledgeable and fair the other leaseholders in the block are.  (and/or whether they take professional advice).

But assuming the facts you gave are accurate, and the leaseholders are all knowledgeable and 'fair', options include:

• The leaseholders club together to buy the freehold for £62.5k, and extend all the leases to 999 years.  The 5 leaseholders with the 65 year leases (including your mother) would have to pay a much higher percentage of the £62.5k than the other 18 leaseholders with extended leases.  (A specialist valuer should be able to calculate the percentages)

• The leaseholders club together to buy the freehold for £62.5k, but no leases are extended.  All 23 leaseholders pay the same percentage of the £62.5k. Later, your mother will have to pay to get her lease extended.

• Or your mother could decide not to participate in the freehold purchase. As long as over 50% of the leaseholders participated, they could still buy the freehold. Then your mother would have new freeholders, but she could still pay to have her lease extended in the usual ways.

But if the leaseholders are not 'fair'

• A group of the leaseholders could gang-up and leave your mother out of the freehold purchase (as long as there's over 50% of them in the group). Then your mother would have new freeholders, but she could still pay to have her lease extended in the usual ways.

So maybe it's worth getting a valuation for a lease extension - to see which options are cost-effective.


To add to the complexity...
Remember that the price of the freehold is fixed at £62.5k

• So if 23 leaseholders participate in the purchase, the average price each leaseholder has to pay is £2.7k
• But if, say, only 12 leaseholders participate in the purchase, the average price each leaseholder has to pay is £5.2k

mh93

Thanks for the detailed reply. 
So the service charge has nothing to do with the leasehold costs?

eddddy

mh93 said:

Thanks for the detailed reply. 
So the service charge has nothing to do with the leasehold costs?

No.

The service charge is your mother's share of the yearly insurance, maintenance, repair and admin costs. (If the leaseholders buy the freehold and take over management of the building, they might be able to do that stuff more cheaply, so the service charge might go down - or it might not.)

But the amount of the Ground Rents will affect the price of the freehold. The higher the ground rents, the more expensive the freehold will be.



(Just a reminder on terminology - as others have said, you mean that your mother and the other leasholders are considering buying the freehold for £62.5k. They are not considering buying the leasehold.)

mh93

Taken from the letter " The landlord proposes to sell the freehold of the property"

eddddy

mh93 said:

Taken from the letter " The landlord proposes to sell the freehold of the property"

Yep - exactly.

So the title of this thread is wrong. and your first post is wrong. 
The title of the thread shouldn't be "Offer to buy the leasehold" - it should be "Offer to buy the Freehold"

And when you said:

mh93 said:

My mums, who's 84 and lives in a flat, received a letter recently from the landlords solicitor offering to sell the Leasehold.

You meant "offering to sell the Freehold".

But I knew what you meant!!!

Norman_Castle

Is the freehold being offered because of the proposed leasehold reforms, if so would waiting be a better option?

eddddy

Norman_Castle said:

Is the freehold being offered because of the proposed leasehold reforms, if so would waiting be a better option?

Possibly. But it might take a couple years for the reforms to happen - and there's no guarantee that they'll significantly reduce the premium for a lease extension, or the cost of a freehold.

And with a 65 year lease, the cost of the lease extension or freehold could be increasing by hundreds or maybe thousands of pounds each year (under the current rules), so any savings brought about by the reforms might be lost because of the shorter lease.

But who knows?