Buying the freehold on my block of flats

textbook

No response to email but verbally said its all 4 blocks 

textbook

Just called they're selling all 22 flats and four blocks 

RAS

so do you and the rest of the leaseholders want to get together and buy it?

textbook

RAS said:

so do you and the rest of the leaseholders want to get together and buy it?

We are interested yes.  Want to organise a meeting.

The solicitor selling told me over the phone it's all 22 flats and all 4 blocks.  Myself and this other director want to push forward with a meeting.  Another director who is unofficially the head director doesn't seem to be pushing forward or showing much interest.  He said he'd get his solicitor on it.  He often doesn't reply to texts.  Can we crack on without him and get our own solicitor?  He may be busy or not interested I'm not sure.

Can I be forced to resign as a director if there's conflict between him and myself?

-How should i write a letter to invite all the lease holders to the meeting?

- do we need a solicitor there? 

- what info off the solicitor do we need?

- what else?

-

eddddy

textbook said:

Just called they're selling all 22 flats and four blocks 

Just for clarification - you keep referring to '4 blocks'.  What do you mean by a 'block'? Is that the same a 4 separate buildings? 

Or is it one building which is somehow divided into '4 blocks'?

(This kind of stuff is important when you're dealing with legislation.)



If there are 4 buildings, I still suspect that there is some confusion here - the law is very clear.

You have been served notice under section 5 of the Landlord and Tenant Act 1987 - a Section 5D offer notice.

Section 5 of the Landlord and Tenant Act 1987 says:

(3)  Where a landlord proposes to effect a transaction involving the disposal of an estate or interest in more than one building (whether or not involving the same estate or interest), he shall, for the purpose of complying with this section, sever the transaction so as to deal with each building separately.

Link: https://www.legislation.gov.uk/ukpga/1987/31/section/5

In layman's terms - if there are 4 buildings on the estate, the freehold of each building has to be dealt with separately.

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.

Hi Eddy and thxs for all your wisdom.  I haven't answered everything you've  asked because tbh I don't know/understand it all.  For example I don't understand the headlease.

I dunno if we all pay the same ground rent.   The flats might vary in price by say £30,000 I guess (some are in better condition e.g. new bathrooms etc).  They're all the same size but have different lease lengths.

Should I check land registry that the freehold really is all 4 blocks and all 22 flats?

Shall I get quotes from solicitors on this?

I also heard there are cheaper people than solicitors who do this kind of thing ?


What are the risks if someone else buys the freehold to us?   This might be the biggest selling point in the meeting 

eddddy

textbook said:

Should I check land registry that the freehold really is all 4 blocks and all 22 flats?

No - that isn't really helpful at this stage.

You still haven't answered - What do you mean by 4 'blocks'?  Do you mean 4 buildings?

That information is vitally important. The law relates to buildings, it doesn't relate to blocks.

As a section 5D notice can only relate to one building.

textbook said:

For example I don't understand the headlease.

You mentioned a headlease - it's impossible to guess what the structure of the headlease is.

As a random example, it could be:

• Arthur owns the freehold of the whole estate
• Bill owns the headlease of Building 1
• Charlie owns the headlease of Building 2
• Doug owns the headlease of Building 3
• Ed owns the headlease of Building 4

• And you own the lease (or sublease) of one flat in Building 4

So one question would be... did Arthur send you the section 5D notice or did Ed send you the section 5D notice?

textbook said:

I dunno if we all pay the same ground rent.   The flats might vary in price by say £30,000 I guess (some are in better condition e.g. new bathrooms etc).  They're all the same size but have different lease lengths.

That doesn't impact the purchase process, but it might have a sever impact on "fairness".

As a random example...

• If one flat has a 70 year lease and pays £100 per year ground rent - maybe they should contribute £10k to the freehold purchase

• If another flat has done a statutory lease extension so has a 160 year lease and zero ground rent - maybe they should only contribute £500 to the leasehold purchase

A valuer would be able to calculate the breakdown. Or maybe you say nothing, and ask everyone to contribute the same - and hope that some people don't realise they're being treated unfairly.

(FWIW, new bathrooms etc should be ignored for that calculation.)

textbook said:

What are the risks if someone else buys the freehold to us?   This might be the biggest selling point in the meeting 

Are you really sure it's the 'freehold' that's being offered and not a 'headlease' - I can't see the word 'freehold' in the letter in your first post, but perhaps I missed it?

Your lease will tell you what the rights and responsibilities of the Freeholder or Head Leaseholder are.  The buyer will take over those rights and responsibilities.

Often, the freeholder's or Head Leaseholder's responsibilities include insuring, maintaining and repairing the building. So the new freeholder or Head Leaseholder will be responsible for that.



But the leaseholders can club together to 'compulsorily purchase' the freehold of their building at any time anyway.

(So you could see how things go with the new freeholder or new head leaseholder - and if it isn't working out, the leaseholders can 'compulsorily purchase' the freehold)

textbook

eddddy said:

textbook said:

Should I check land registry that the freehold really is all 4 blocks and all 22 flats?

No - that isn't really helpful at this stage.

You still haven't answered - What do you mean by 4 'blocks'?  Do you mean 4 buildings?

That information is vitally important. The law relates to buildings, it doesn't relate to blocks.

As a section 5D notice can only relate to one building.

textbook said:

For example I don't understand the headlease.

You mentioned a headlease - it's impossible to guess what the structure of the headlease is.

As a random example, it could be:

• Arthur owns the freehold of the whole estate
• Bill owns the headlease of Building 1
• Charlie owns the headlease of Building 2
• Doug owns the headlease of Building 3
• Ed owns the headlease of Building 4

• And you own the lease (or sublease) of one flat in Building 4

So one question would be... did Arthur send you the section 5D notice or did Ed send you the section 5D notice?

textbook said:

I dunno if we all pay the same ground rent.   The flats might vary in price by say £30,000 I guess (some are in better condition e.g. new bathrooms etc).  They're all the same size but have different lease lengths.

That doesn't impact the purchase process, but it might have a sever impact on "fairness".

As a random example...

• If one flat has a 70 year lease and pays £100 per year ground rent - maybe they should contribute £10k to the freehold purchase

• If another flat has done a statutory lease extension so has a 160 year lease and zero ground rent - maybe they should only contribute £500 to the leasehold purchase

A valuer would be able to calculate the breakdown. Or maybe you say nothing, and ask everyone to contribute the same - and hope that some people don't realise they're being treated unfairly.

(FWIW, new bathrooms etc should be ignored for that calculation.)

textbook said:

What are the risks if someone else buys the freehold to us?   This might be the biggest selling point in the meeting 

Are you really sure it's the 'freehold' that's being offered and not a 'headlease' - I can't see the word 'freehold' in the letter in your first post, but perhaps I missed it?

Your lease will tell you what the rights and responsibilities of the Freeholder or Head Leaseholder are.  The buyer will take over those rights and responsibilities.

Often, the freeholder's or Head Leaseholder's responsibilities include insuring, maintaining and repairing the building. So the new freeholder or Head Leaseholder will be responsible for that.



But the leaseholders can club together to 'compulsorily purchase' the freehold of their building at any time anyway.

(So you could see how things go with the new freeholder or new head leaseholder - and if it isn't working out, the leaseholders can 'compulsorily purchase' the freehold)

Yes, there are four separate buildings near each other on same land

textbook

Was going to hand this to everyone in person to get interest in a meeting-

eddddy

textbook said:

Yes, there are four separate buildings near each other on same land

So there is either a very big legal problem or a misunderstanding somewhere.

The law says that a section 5D notice can only relate to one building.

So either...

• The freeholder / head leaseholder has made a huge legal mistake and served an invalid section 5D notice (because they are referring to more than one building)

or...

• You have misunderstood, and the section 5D notice relates to just one building (and perhaps 4 different lots of section 5D notices have been served - one per building)