Selling share of freehold

lmdp

I am waiting for probate to be granted, and when it is I will own the freehold of the building I live in, along with two flats. The other two are owned by leaseholders. 

I want to sell share of freehold, so 25% to each of them (if they are interested) as honestly all owning the freehold is giving me is stress.

I'm waiting for my solicitor to reply but I'm getting confusing and varied answers when working out what the freehold is worth, if anything

Obviously I need to let the leaseholders know what I'm looking for and wondered if anyone can advise a website or where I could find out.

DullGreyGuy

If there are three units why are you offering them 25% each rather than 33%?

What ground rent do each of you have to pay? How long is each lease left for?

lmdp

Because there are 4 flats?

I own two, so want to sell the share of freehold for the two I don't own as they are leasehold.

Ground rent for one is 150 p/y with about 94 years remaining. other is a peppercorn rent with 999 remaining. 

eddddy

lmdp said:

I'm waiting for my solicitor to reply but I'm getting confusing and varied answers when working out what the freehold is worth, if anything

As above, the value of the freehold is based on ground rent, lease length, and value of the flat.  (Most solicitors won't know about valuing a freehold. If you want professional advice, you'd probably need to ask a specialist RICS valuer.)

lmdp said:

I want to sell share of freehold, so 25% to each of them (if they are interested) as honestly all owning the freehold is giving me is stress.

If your plan is to become a joint freeholder with 2 other (possibly 'difficult') people, that might become even more stressful.

At the moment, you can make decisions about the freehold yourself. But if you're a joint freeholder - the 3 of you have to agree (or argue) about everything.

What kind of things are currently giving you stress?

lmdp

Well the biggest thing is being the freeholder I'm responsible for all the main work on the exterior and roof which means that financially is stressful whereas surely if we shared freehold it would cost me less. 

I don't really get any financial benefit from owning the freehold. 

eddddy

lmdp said:

Well the biggest thing is being the freeholder I'm responsible for all the main work on the exterior and roof which means that financially is stressful whereas surely if we shared freehold it would cost me less. 

As the freeholder, you are responsible for arranging the work - but you don't pay for it all yourself. The cost will be shared by all 3 leaseholders.

So the cost to you would be the same, whether you own the freehold yourself - or jointly own it with others.

lmdp said:

I don't really get any financial benefit from owning the freehold. 

Probably not - but it means you are in control of things.  But it also means you have greater responsibilities.

lmdp

Thank you.

Sorry I am really struggling all of this.

This is all very new to me, my solicitor isn't responding and my mother died suddenly so she dealt with all of this before.

When the floor top floor was recently sold, the buyer's surveyor notes a list of issues in the roof that they marked as the freeholders responsibility.

Would these come out of service charges or would this be something extra the leaseholders have to pay towards?

I am filling out an LPE1 form so assume I would list them in section 8.

Gosh I feel like I want to bury my head in the sand!

eddddy

I'm really sorry about your situation. It sounds like you've been thrown in at the deep end with a request for an LPE1.

So presumably somebody wants an LPE1 because they're selling their flat

As a starting point...

• Have you agreed a fixed fee with your solicitor for advising you on this?

• Have you told the the person selling the flat that they will have to pay your solicitors fee?

• Has the person selling their flat paid the fee in advance?

• Has your solicitor explained to the seller's solicitor that the freeholder recently died suddenly, so the information that can be provided on the LPE1 might be limited, and it might take longer than usual to provide it?

• You could also add something like "I recognise that the current situation is not ideal, and I am investigating options to address this - such as instructing a management company to manage the property or selling the freehold to the leaseholders to create a shared freehold."

... Assuming your solicitor is happy with all that.



(Just as background information - you won't be breaking any laws if you don't answer all the questions on the LPE1, or you take a long time to answer, or even if you don't provide an LPE1 at all. But the seller might get annoyed with you about it.)

If your solicitor takes a long time to give you advice, it just means the LPE1 will take longer to complete - try not to get stressed about it.

lmdp said:

When the floor top floor was recently sold, the buyer's surveyor notes a list of issues in the roof that they marked as the freeholders responsibility.

So your response would be "The buyer's surveyor's comments have been noted. The points raised will be investigated and dealt with as required in due course."

lmdp said:

Would these come out of service charges or would this be something extra the leaseholders have to pay towards?

If there's enough money in the service charge fund to cover them, that can probably be used. If not you'd send the leaseholders a bill for more.

BUT... a section 20 consultation might be required first.

To be honest, if I were you, I wouldn't do any of this yet. I would hire a management company, and let them deal with this.

lmdp said:

I am filling out an LPE1 form so assume I would list them in section 8.

No - as I said above, say they will be investigated in due course. And if you hire a management company, let them deal with it.



Having read your comments - maybe you should either instruct a management company, or sell the freehold - to free yourself of all the hassle.

lmdp

Would it be me, the freeholder who would pay the management company to do this, or split between the leaseholders and myself?

Jonboy_1984

They would add an administration charge to the annual service charge budget for their recurring costs.

They would typically also add a percentage (typically around 12.5%) to all costs of any one off/occasional major works, to cover their costs incurred in the administration such as the section 20 and arranging and paying the contractors.

This is all recovered from all leaseholder per the lease terms (which may be an equal split, or set by some other measure such as floor space).

lmdp

Thank you - that is good to know and something I may discuss with all parties.