Freehold Purchase

lesley2363

Hi I’m new to this so here goes, on our development there are 3 blocks of 6 flats and we have been offered the freehold, so block 2 all’s well and they are in agreement and proceeding, block 3 who are being lead by a lady lets call her miss x are keeping things close to their chest but are also proceeding so far all’s great. Block 1 of which I own a flat initially  all in favour so again all’s good suddenly 4 of the 6 decided they did not want to proceed as miss x has advised them there’s no need to insure the cost as nothing will change if they don't go ahead therefore has we did not have the required 50% we cannot purchase the freehold. We have now discovered that miss x has accepted the offer on behalf of the 4 but myself and the 6th flat owner have not been included in this offer or even consulted surely this must be illegal something very sinister seems to be going on here sorry for the long post most of you have probably binned this by now as it’s long winded I’ve spoken to citizens advice and a solicitor but neither have ever come across this before the solicitor is looking into it but the costs will soon mount up please can anyone help 

canaldumidi

Speak to

https://www.lease-advice.org/

eddddy

So to summarise - there are 6 leasehold flats in your building.

4 of the leaseholders are clubbing together to buy the freehold of the building, and purposely excluding the other 2 leaseholders (including you).  And you think the 4 leaseholders have been encouraged to do this by Miss x, who owns a flat in another building.

Is the freehold being offered under the 'Right of First Refusal'?


Unfortunately, the law doesn't prevent the 4 leaseholders doing that. There's talk of reforming the law to prevent it, but that's likely to be years away.

Do you know what their motives might be? For example

• Is there any money to be made by the freehold owners - for example from lease extensions, development (e.g. building new flats on the roof.)

• Or is it perhaps just spite - perhaps by Miss x?

Maybe the best approach is simply to talk to your 4 neighbours and say you'd like to be included. 

Then your neighbours will have to decide whether to

• keep you happy by including you - but making Miss x unhappy, or...
• keep Miss x happy by excluding you - but making you unhappy

You could use the argument that it would be much easier if all 6 of you owned the freehold, because you could all cooperate as Joint Freeholders. There might be a lot more administration and hassle and expense (including Section 20 consultations, bookkeeping, serving of legal notices etc) if they have to maintain a formal freeholder/leaseholder relationship with you, and the other person.

NameUnavailable

I don't see how 'miss X' can accept anything on behalf of anyone else. I would get in touch with whoever is selling the freehold asap and ask them. Also speak to your other neighbours.

It's important that they understand the implications if they don't buy the freehold (unknown new freeholder, potential increased management costs etc.).

The 50% requirement is to force a sale of the freehold, if the freeholder is offering it then potentially you could buy the freehold for the whole building if you wanted to (maybe that's what Miss X is doing!!).

lesley2363

Canaldumidi I have a telepho consultation booked but not until Friday

lesley2363

Type your comments The Leaseholder has by law had to offer the lease for sale to all qualifying tenants and all 6 tenants 100% want to take up this offer, the law must protect everyone rights and surely 4 out of the 6  cannot just decide not to include the other 2 and deny them the right to buy the freehold

eddddy

lesley2363 said:

The Leaseholder Freeholder has by law had to offer the lease freehold for sale to all qualifying tenants and all 6 tenants 100% want to take up this offer, the law must protect everyone rights and surely 4 out of the 6  cannot just decide not to include the other 2 and deny them the right to buy the freehold

You're getting your terminology muddled - I've changed it in the quote above.

You still haven't explained why the freeholder is, by law, having to offer the freehold for sale to the qualifying tenants. Is it a 'Right of First Refusal' or some other reason?


Assuming it is 'Right of First Refusal' - the law allows the 'group of 4' to do what they're doing.

Any group of 50% or more of the tenants can accept the offer.  So in your case any group of 4 or more tenants can club together to buy the freehold, and shut out the remaining tenants.


It seems unfair - but unfortunately, that's what the law says.

(Parliament knows it's unfair, and is planning to change it when they reform leasehold law. But that won't help you now.)



FWIW - there's no point in talking to the freeholder. The freeholder cannot change the law.

All you can do is try to persuade the 'group of 4' to include you, and make it a 'group of 5' or 'group of 6'.

NameUnavailable

lesley2363 said:

Type your comments The Leaseholder has by law had to offer the lease for sale to all qualifying tenants and all 6 tenants 100% want to take up this offer, the law must protect everyone rights and surely 4 out of the 6  cannot just decide not to include the other 2 and deny them the right to buy the freehold

But you said that your neighbours decided not to take up the offer. Did you refuse it also? If you refused there's nothing to stop anyone else from buying it.

That's why I would get onto the current freeholder first thing tomorrow to explain that you do indeed want to buy the freehold (the only thing you need other willing neighbours for is to share to cost - if say only 4 out of 6 want to buy you will have to pay the same but will then own the freehold and the other 2 neighbours will have to pay you ground rent (if applicable) and also pay you for maintenance, lease extensions etc.

eddddy

NameUnavailable said:

lesley2363 said:

Type your comments The Leaseholder has by law had to offer the lease for sale to all qualifying tenants and all 6 tenants 100% want to take up this offer, the law must protect everyone rights and surely 4 out of the 6  cannot just decide not to include the other 2 and deny them the right to buy the freehold

But you said that your neighbours decided not to take up the offer. Did you refuse it also? If you refused there's nothing to stop anyone else from buying it.

That's why I would get onto the current freeholder first thing tomorrow to explain that you do indeed want to buy the freehold (the only thing you need other willing neighbours for is to share to cost - if say only 4 out of 6 want to buy you will have to pay the same but will then own the freehold and the other 2 neighbours will have to pay you ground rent (if applicable) and also pay you for maintenance, lease extensions etc.

This sounds very much like a 'Right of First Refusal' - the OP needs to confirm that,

If it is, then it's a statutory process. The freeholder has to serve a statutory  section 5 notice, and the leaseholders have to formally respond to the notice.

If the leaseholders have responded with a statutory notice, the OP and/or Freeholder  can't derail a statutory process by contacting each other and trying to make a different plan.

NameUnavailable

eddddy said:

NameUnavailable said:

lesley2363 said:

Type your comments The Leaseholder has by law had to offer the lease for sale to all qualifying tenants and all 6 tenants 100% want to take up this offer, the law must protect everyone rights and surely 4 out of the 6  cannot just decide not to include the other 2 and deny them the right to buy the freehold

But you said that your neighbours decided not to take up the offer. Did you refuse it also? If you refused there's nothing to stop anyone else from buying it.

That's why I would get onto the current freeholder first thing tomorrow to explain that you do indeed want to buy the freehold (the only thing you need other willing neighbours for is to share to cost - if say only 4 out of 6 want to buy you will have to pay the same but will then own the freehold and the other 2 neighbours will have to pay you ground rent (if applicable) and also pay you for maintenance, lease extensions etc.

This sounds very much like a 'Right of First Refusal' - the OP needs to confirm that,

If it is, then it's a statutory process. The freeholder has to serve a statutory  section 5 notice, and the leaseholders have to formally respond to the notice.

If the leaseholders have responded with a statutory notice, the OP and/or Freeholder  can't derail a statutory process by contacting each other and trying to make a different plan.

Yes almost certainly right of first refusal, which is why I'm confused about the role of Miss X as she isn't a leaseholder of the block in question.

I think the OP needs to speak to their neighbours urgently to find out exactly what they are doing/want to do because so many people don't understand even what their lease means, knowing what they are doing here is crucial.

lesley2363

It iwasa right to first refusal section 5 notice that we have all received the 4 told me they did not want to buy so the other 2 couldn’t proceed without 50% but they have in fact responded to the letter to accept leaving us out on finding this out we have informed the company’s solicitor that we also want to by our freehold and be included in the group but don’t know if they have to include us by law or can they refuse