Buying the freehold on my block of flats

textbook

An offer has come up for leaseholders on my blocks of flats to buy the freehold. 4 blocks of five flats total 20 flats. If we don't a landlord who is a notorious bad guy. He owns flat below me and is always causing trouble, he currently owns two flats out of the four blocks. Could he wreck havoc putting up fees if he buys the freehold? We need 11 people to put up £6000. Is it a good idea?



my flat is psid off but i dont have £6000 in the bank, will bank loan me it?

Brie

I would think it would add value to your flat (but I may be wrong) in which case i'd look at increasing your mortgage to cover the costs.  Is it just £6k or will their be solicitor's fees as well. (likely I would have thought.)

BonaDea

How much is it worth to you not to have Mr Nasty as your landlord?  On what you've said, I'd be inclined to go for it.  I've no idea how you'd fund it - perhaps you could add to your mortgage?  Might be worth asking on the mortgage board.  

textbook

Brie said:

I would think it would add value to your flat (but I may be wrong) in which case i'd look at increasing your mortgage to cover the costs.  Is it just £6k or will their be solicitor's fees as well. (likely I would have thought.)

My flat was a cash buy worth possibly £150,000 but I have no savings of £6000.  My salary isn't great either.  Can I still get a bank loan?

textbook

BonaDea said:

How much is it worth to you not to have Mr Nasty as your landlord?  On what you've said, I'd be inclined to go for it.  I've no idea how you'd fund it - perhaps you could add to your mortgage?  Might be worth asking on the mortgage board.  

I was a cash buyer so own flat outright.  But only have £1000 cash savings.  Will bank lend me the £6000?

BonaDea

textbook said:

BonaDea said:

How much is it worth to you not to have Mr Nasty as your landlord?  On what you've said, I'd be inclined to go for it.  I've no idea how you'd fund it - perhaps you could add to your mortgage?  Might be worth asking on the mortgage board.  

I was a cash buyer so own flat outright.  But only have £1000 cash savings.  Will bank lend me the £6000?

I don't know I'm afraid.  Ask them.  I'd have thought if you have a generally good credit record that you'd find a reputable lender for a personal loan for this if you search around.  You could look into credit unions as well.

eddddy

There are a few complexities and subtleties that you need to consider... For example:

1. Is £61,600 a reasonable price for the freehold? How much is the freehold likely to cost using 'Collective Enfranchisement'? (See next point.) Have you asked a valuer?


2. The leaseholders can club together to 'compulsorily purchase' the freehold at any time - it's called 'Collective Enfranchisement'.  Maybe you should find out what this might cost.

So if the 'bad guy' downstairs buys the freehold and becomes difficult, the rest of you can 'compulsorily purchase' it from him.

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


3. Or the leaseholders can club together and take over the 'Right To Manage' at any time. So then the leaseholders don't own the freehold, but they manage the building - and arrange all the maintenance, repairs, etc.

Again, that might be useful if 'bad guy' downstairs buys the freehold and becomes difficult.

More info: https://www.lease-advice.org/article/the-right-to-manage-a-brief-overview/


4. Is everyone's lease the same length? (How long?) Or have some people extended their leases?
And do all the flats pay the same ground rent?
And are all the flats worth roughly the same?

If any of those things vary between flats, there could be an argument that the amount each flat contributes to the freehold purchase should vary.

i.e. Instead of everyone putting in £6k - some people put in more, some people put in less.

Brie

textbook said:

Brie said:

I would think it would add value to your flat (but I may be wrong) in which case i'd look at increasing your mortgage to cover the costs.  Is it just £6k or will there be solicitor's fees as well. (likely I would have thought.)

My flat was a cash buy worth possibly £150,000 but I have no savings of £6000.  My salary isn't great either.  Can I still get a bank loan?

edddddy has some great comments - sounds like the sort of advice you should follow through on.

Meanwhile - sounds like it's a case of can you get a loan of £5k.  Yes if your credit record is what the banks want to see.  The fact that you own the flat outright I think would count in your favour.  The fact that your salary isn't great doesn't really mean much.  Not great for a investment banker or not great for someone working in a corner shop.  Only a bank can tell you if it's great enough - so enough to support paying back the loan over X years as well as all your regular expenses, contents insurance, phone contract, bills.....

textbook

We're a bit confused about it as a letter was only sent out to a few flats and not everyone receiving bit just doesn’t make sense to one of the directors. When he spoke to their office he was told by a woman it was just fir a few flats. He thinks - everyone should have got it as they all have a lease just less years etc, also other director says we have a head lease which is true. Shouldn't we still get a solicitor to check it all out?

eddddy

textbook said:

We're a bit confused about it as a letter was only sent out to a few flats and not everyone receiving bit just doesn’t make sense to one of the directors. When he spoke to their office he was told by a woman it was just fir a few flats. He thinks - everyone should have got it as they all have a lease just less years etc, also other director says we have a head lease which is true. Shouldn't we still get a solicitor to check it all out?

You say...

textbook said:

4 blocks of five flats total 20 flats. 

So just to be clear...

The section 5 notice should apply to a single building (or part of a building) - so it sounds like that's a single building containing 5 flats.

So the £61,600 should relate to 5 flats in one building. Why do you think that's not the case? 

£61,600 divided by 5 is £12,320 per flat - but if the leases are unequal lengths, those people with longer leases should be paying less than that, and those people with short leases should be paying more than that.

How long is each lease?



You mention a headlease. So what is the structure of ownership - i.e.

• What does the freehold consist of?
• What does/do the headlease(s) consist of?
• What sub-leases 'belong' to each headlease?

Is it the freehold of the building that is being offered to you, or a headlease?


Edit to add...

(If you're looking at the numbers - whether £61,600 is good value, how much each flat should contribute etc - you probably need a valuer, rather than a solicitor.)

textbook

eddddy said:

There are a few complexities and subtleties that you need to consider... For example:

1. Is £61,600 a reasonable price for the freehold? How much is the freehold likely to cost using 'Collective Enfranchisement'? (See next point.) Have you asked a valuer?


2. The leaseholders can club together to 'compulsorily purchase' the freehold at any time - it's called 'Collective Enfranchisement'.  Maybe you should find out what this might cost.

So if the 'bad guy' downstairs buys the freehold and becomes difficult, the rest of you can 'compulsorily purchase' it from him.

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


3. Or the leaseholders can club together and take over the 'Right To Manage' at any time. So then the leaseholders don't own the freehold, but they manage the building - and arrange all the maintenance, repairs, etc.

Again, that might be useful if 'bad guy' downstairs buys the freehold and becomes difficult.

More info: https://www.lease-advice.org/article/the-right-to-manage-a-brief-overview/


4. Is everyone's lease the same length? (How long?) Or have some people extended their leases?
And do all the flats pay the same ground rent?
And are all the flats worth roughly the same?

If any of those things vary between flats, there could be an argument that the amount each flat contributes to the freehold purchase should vary.

i.e. Instead of everyone putting in £6k - some people put in more, some people put in less.

Some people have extended their leases to 125 years many haven't.   Mines on 117 years now.

I believe it's the freehold being offered to us not the headlease.  

I've just sent a question to the solicitor representing the seller whether he's offering to sell all four blocks (actually 22 flats) or just one block of 5.   I know any lease holder can purchase