Buying the Freehold

WiseInvestor_2

I purchased a Leasehold flat almost 18 months ago and currently pay my 'landlord' over £600pa for maintenance/service/buildings insurance etc.

There are 3 other flats in the property, the last of which has just recently been sold so the Freeholder no longer owns any. Am I correct in thinking that legislation recently introduced empowers Leaseholders to force the landlord to sell the Freehold?

Who sets the value? ie. can the landlord legally demand an extortionate price beyond the reach of the group?

With all 4 flats being different sizes, how should the cost of the Freehold be apportioned? Should we all pay the same or should we link it to rooms/bedrooms/market value? Would the 'biggest' Freeholder then have more 'say' than the 'smallest'?


This whole concept is very much in it's infancy for us and I've yet to delve into deep research. Hopefully someone here can offer some suggestions/advice to help speed up that process.

trafalgar_2

http://england.shelter.org.uk/advice/advice-190.cfm

the above will answer most of your questions:D

WiseInvestor_2

Having read through the above site there's still one major question in my mind:

"how should the cost of the Freehold be apportioned?"

It has been suggested to me that any or all of the following may have a bearing:

- years remaining on the lease (those with fewest years pay the most)
- market value of each property
- square footage of each property
- amount of ground rent paid under existing leasehold contracts

I'm very confused and could really use some advice.

Thanks

RiskAdverse100

I would look at https://www.lease-advice.org as well.

If you are clubbing together to buy the freehold the first thing you would normally do is pay for a professional valuation of the freehold to be carried out. The surveyor who does this will usually divide the final price between the flats so it is clear how much each should be paying.

Often the sums involved are too large for anyone (or enough of you) to want to take it further.

All the various elements that you list will be used both the value the freehold in the first place and to divide the price between the flats.

If a freehold purchase does go ahead then, assuming all three flat owners were involved, you would usually each have a 1/3 share regardless of what you had contributed. No ground rent would be collected any more and you would no doubt extend all the leases for no payment, either immediately or the next time anyone wanted to sell. This would mean that the freehold isn't going to produce any more income and the share you contributed towards the purchase price would be irrelevant.

It would get a little more complicated if only two of you ended up buying the freehold. If you simply shared the third flat's contribution then you would have a 1/2 share each and if the third flat ever wanted to join in you would share whatever they paid so that you all ended up with a 1/3 each. However, if one paid all the third flat's contribution or you divided this between you, but not equally, then it may be necessary for you to have unequal shares in the freehold. If the third flat subsquently wanted to buy a share then the price paid would be divided between you in accordance with your respective shares of the freehold.

For three or four flats it is probably easier to own it in your individual names. For five or more, setting up a company might be a good idea. Where there are lots of owners it can get messy dealing with the transfer of the freehold each time a flat changes hands, particularly as you can only have four names on the deeds. Choose a company that is limited by guarantee and which does not have a share capital. Having to transfer share certificates (which will involve Stamp Duty of £5) are a real pain as certificates invariably get lost.

RiskAdverse100

sooz

RiskAdverse100 wrote:

I would look at https://www.lease-advice.org as well.

If you are clubbing together to buy the freehold the first thing you would normally do is pay for a professional valuation of the freehold to be carried out. The surveyor who does this will usually divide the final price between the flats so it is clear how much each should be paying.

RiskAdverse100 wrote:

https://www.lease-advise.org has lots and lots of info, including some general sums you could use to try to see how much you should pay, although they recommend using a surveyor.

do check the info on valuing the properties before they were extended/updated - so that you do not pay for work that you have done, twice, eg added an extension etc....our surveyor did not know this