Selling freehold

giogiu1974

I was told that the freeholder company of our building block composed of a number of flats, wants to sell their freehold. As leaseholders we have been offered 'first refusal' to purchase the freehold before it is sold on the open market.

Is this convenient to do at this time? I am aware of the ongoing leasehold reform so it seems to me that they want to sell it before the government makes it a bad deal for them. What do you think?

GDB2222

You don't often get offered the freehold on a plate, so to speak, so it's worth looking at carefully. It adds to your flat value if the leaseholders collectively own the freehold.

You may want to get professional advice. Anyone advising you will need details of the ground rents and lease terms. 

eddddy

Maybe compare the price you are being offered the freehold for, with what the price might be for "collective enfranchisement".

"Collective Enfranchisement" is a process leaseholders can follow at any time to "compulsorily purchase" the freehold. (But there are rules like: at least 50% of the leaseholders must be involved.)


In theory, this route should be cheaper than doing a "collective enfranchisement".


See: https://www.lease-advice.org/advice-guide/ce-getting-started/

NameUnavailable

How many floors are there?

DullGreyGuy

It depends what you think the reforms will be and in what timescales they'll come in. Similarly your plans and how you think the property is currently run. 

Have known a few involved in a buyout with the hope of reducing annual fees... its worked with some but the highest service charge I've ever seen (£8k per year for a large 2 bed, penthouse was over £30k from what concierge said) was on a share of freehold. 

I struggle to see any party forcing the conversion to share of freehold nor simply scrapping ground rent... the later have been turned into investment instruments and some notable names have big investments based on them 

giogiu1974

NameUnavailable said:

How many floors are there?

4 buildings, 6 flats each, 2 floors per building

giogiu1974

DullGreyGuy said:

It depends what you think the reforms will be and in what timescales they'll come in. Similarly your plans and how you think the property is currently run. 

Have known a few involved in a buyout with the hope of reducing annual fees... its worked with some but the highest service charge I've ever seen (£8k per year for a large 2 bed, penthouse was over £30k from what concierge said) was on a share of freehold. 

I struggle to see any party forcing the conversion to share of freehold nor simply scrapping ground rent... the later have been turned into investment instruments and some notable names have big investments based on them 

I forgot to mention that our ground rent is peanuts, and service is very low, about £50/month.

eddddy

DullGreyGuy said:

It depends what you think the reforms will be and in what timescales they'll come in. Similarly your plans and how you think the property is currently run. 

Have known a few involved in a buyout with the hope of reducing annual fees... its worked with some but the highest service charge I've ever seen (£8k per year for a large 2 bed, penthouse was over £30k from what concierge said) was on a share of freehold. 

I struggle to see any party forcing the conversion to share of freehold nor simply scrapping ground rent... the later have been turned into investment instruments and some notable names have big investments based on them 

giogiu1974 said:

I forgot to mention that our ground rent is peanuts, and service is very low, about £50/month.

There's a few things to consider...

• According to the lease, is the freeholder responsible for maintaining the building? (And if so do the leaseholders want to buy the freehold and take over those responsibilities?)

• If it's a tripartite lease (between 3 parties) the freeholder won't be responsible. So management of the building won't change.

• But if the freeholder is responsible for maintenance, a new freeholder might dramatically ramp-up the service charge.

(This might be legitimate - the building has been unrepaired for 20 years by a disinterested freeholder, and it now needs thousands of pounds worth of remedial work.

Or it might be an excuse to get unnecessary, overpriced work done by the new freeholder's building company.)

•  But if the leaseholders don't want to buy the freehold, they can still take over the "Right to Manage" the building if they want

GDB2222

giogiu1974 said:

DullGreyGuy said:

It depends what you think the reforms will be and in what timescales they'll come in. Similarly your plans and how you think the property is currently run. 

Have known a few involved in a buyout with the hope of reducing annual fees... its worked with some but the highest service charge I've ever seen (£8k per year for a large 2 bed, penthouse was over £30k from what concierge said) was on a share of freehold. 

I struggle to see any party forcing the conversion to share of freehold nor simply scrapping ground rent... the later have been turned into investment instruments and some notable names have big investments based on them 

I forgot to mention that our ground rent is peanuts, and service is very low, about £50/month.

If the ground rent is low and the leases still have a long time to run, the freehold is not very valuable. How much are they asking?