Freehold Purchase

Mikefaulkner

We are a block comprising of 9 flats.  Our lease has about 115 years left to run, we have zero ground rent (peppercorn). Last year we successfully negotiated a Right to Manage.  Our previous Management Company held the long lease on the property with a superior landlord holding the freehold.  The average price of each flat ranges from £60,000 to £90,000.  

We have been in touch with several solicitors who deal with freehold purchases and are being quoted between £50,000 and £70,000 for the freehold purchase (this would be all legal fees and the price of the freehold). This seems to differ quite a bit from what I am reading here and on other forums.

Is there something we are missing?

eddddy

Who quoted "between £50,000 and £70,000" - and in what circumstances?

For example...

• 1) Was it an informal offer by the freeholder?

• 2) Was it in a section 5 / 5A notice served by the freeholder (right of first refusal)?

• 3) Was it a valuation by a RICS valuer appointed by the leaseholders?

• 4) Or something else?

If it was an informal offer by the freeholder, they can ask for any price they like.

If the leaseholders haven't already done so, it's probably best to instruct a RICS valuer to do a valuation. And then use that as a basis for negotiation.

And if the negotiation doesn't go well, take the formal route of "collective enfranchisement" instead. (i.e. start the process to compulsorily purchase the freehold.)

Mikefaulkner

Our solicitor has advised that a figure of £5-£9k per flat is to be expected.  This would include all legal fees and an estimate of what the freeholder would want for the title.  Admittedly, the 9k is an upper limit, but even the 5k seems well in excess of what is discussed.  Removing everything but the legal fees would still be £2.5k per flat.

NameUnavailable

Given that you have zero ground rent and RTM, and the leases at 115 years aren't yet at the point where you'd want to think about extending, it seems the freehold is of little value to the freeholder.

Nothing is stopping you from making an offer. When you say a lower figure was discussed, what was it and who told you it was what to expect?

eddddy

Mikefaulkner said:

Our solicitor has advised that a figure of £5-£9k per flat is to be expected.  This would include all legal fees and an estimate of what the freeholder would want for the title.  Admittedly, the 9k is an upper limit, but even the 5k seems well in excess of what is discussed.  Removing everything but the legal fees would still be £2.5k per flat.

It's unusual for a solicitor to suggest valuations for a freehold.

Do you know how the solicitor arrived at that valuation? Did they use a valuation formula?

Typically, you'd use an RICS valuer to get a valuation, but maybe you've found a solicitor who has branched out into doing valuations as well.

Or maybe the solicitor is just quoting a number for illustration purposes