Freehold site on flat site being sold how does it affect the flat owner?

Sirlaughalot

My sister-in-law has been considering extending the leasehold on the flat she owns but has avoided taking action due to media speculation about a new law being proposed regarding 999-year lease agreements and changes to ground rent rules.
The current lease on her flat has 37 years to run. She received a letter from the freeholder's solicitors about a week ago saying they are going to sell the freehold. 
Does anyone know how this will affect my sister-in-law and what rights she may have as the owner of the flat and what action she needs to take regarding replying to the solicitor's letter?

Below are some of the contents of the solicitor's letter which may make things  clearer

'We are instructed to act on behalf of your landlord who is proposing to sell the freehold site of the building and land on which your flat sits.

In compliance with the requirements of Section 5 of the Landlord and Tenant Act 1987 please find attached notice pursuant to Section 5 and 5A of the Act.

Please note that there will be no change in respect of the lease and the rights and obligations contained in your lease will not be affected by the sale of the freehold.

Thanks in advance

loubel

Do you mean they are selling the freehold? Are they offering her the right of first refusal - the right to (along with other leaseholders) purchase the freehold instead of it being sold to a third party?

With her lease being so short, the value of the freehold will likely be fairly high and the cost of extending her lease will also be quite expensive. It may not be any cheaper to extend the lease even if she owns the freehold as a result. Does she know whether the other flats are also on short leases?

EssexHebridean

Some clarity is needed here around whether the sister is the freeholder or the leaseholder, I think. 

Sirlaughalot

Apologies for the confusion i have updated the header which may make things a little clearer .

Below are some of the contents of the solicitor's letter which may make things  clearer

'We are instructed to act on behalf of your landlord who is proposing to sell the freehold site of the building and land on which your flat sits.

In compliance with the requirements of Section 5 of the Landlord and Tenant Act 1987 please find attached notice pursuant to Section 5 and 5A of the Act.

Please note that there will be no change in respect of the lease and the rights and obligations contained in your lease will not be affected by the sale of the freehold.

user1977

The notice itself should explain things fairly well - has she read it?

(the Chinese whispers here don't help!)

RAS

How do you or your SIL think this might be related to the fact that she has only 37 years left on the lease?

How many years did the lease have when she bought it?

Sirlaughalot

user1977 said:

The notice itself should explain things fairly well - has she read it?

(the Chinese whispers here don't help!)

I don`t think so she is in her 80s now and since my brother passed away  I deal with these matters if I can. I think the 5A notice alarmed her

user1977

Sirlaughalot said:

user1977 said:

The notice itself should explain things fairly well - has she read it?

(the Chinese whispers here don't help!)

I don`t think so she is in her 80s now and since my brother passed away  I deal with these matters if I can. I think the 5A notice alarmed her

Ok then, have you read the notice?

eddddy

In simple terms, a Section 5A notice means:

• The current freeholder is planning to sell the freehold - the notice should say what the selling price is. The freeholder might already have a specific buyer lined up.

• The law says that the freeholder must give the leaseholders the opportunity to buy the freehold first, for the same price.

• The leaseholders can then club together to buy the freehold. At least 50% of the leaseholders must be involved.

As others say, if your sister's lease only has 37 years remaining (and maybe other leases only have 37 years remaining), the freehold will be expensive.


Often, but not always, the freeholder is responsible for insuring, maintaining and repairing the building. If so, those responsibilities will pass to the new owner of the freehold.

So considerations include...

• The new freeholder might be more (or less) active in their management of the building, which might result in higher (or lower) service charges.

• Has the current freeholder kept the building in good condition, or is it dilapidated? If it's dilapidated, the new freeholder might launch into a programme of major maintenance and repairs. Your sister will have to pay her share of those works.

And more generally, the freeholder will be a different person/company - so who knows if they will be more friendly, or less friendly? Easier to contact or harder to contact? More responsive to problems or less responsive to problems? Etc.

Sirlaughalot

user1977 said:

Sirlaughalot said:

user1977 said:

The notice itself should explain things fairly well - has she read it?

(the Chinese whispers here don't help!)

I don`t think so she is in her 80s now and since my brother passed away  I deal with these matters if I can. I think the 5A notice alarmed her

Ok then, have you read the notice?

No i need to get the complete letter I will see her over the weekend. Do you think there could be some skullduggery  going on?

Sirlaughalot

eddddy said:

In simple terms, a Section 5A notice means:

• The current freeholder is planning to sell the freehold - the notice should say what the selling price is. The freeholder might already have a specific buyer lined up.

• The law says that the freeholder must give the leaseholders the opportunity to buy the freehold first, for the same price.

• The leaseholders can then club together to buy the freehold. At least 50% of the leaseholders must be involved.

As others say, if your sister's lease only has 37 years remaining (and maybe other leases only have 37 years remaining), the freehold will be expensive.


Often, but not always, the freeholder is responsible for insuring, maintaining and repairing the building. If so, those responsibilities will pass to the new owner of the freehold.

So considerations include...

• The new freeholder might be more (or less) active in their management of the building, which might result in higher (or lower) service charges.

• Has the current freeholder kept the building in good condition, or is it dilapidated? If it's dilapidated, the new freeholder might launch into a programme of major maintenance and repairs. Your sister will have to pay her share of those works.

And more generally, the freeholder will be a different person/company - so who knows if they will be more friendly, or less friendly? Easier to contact or harder to contact? More responsive to problems or less responsive to problems? Etc.

Thanks eddddy thats a reassuring response  i think my Sil and her daughters were getting mixed up with the the bad press about 5A notices for tenants of late.
 I do remember in the 90`s the freehold was bought by the owners association but when the leader passed away so did the ownership of the freehold
On a more general note regarding the short lease would it be best to get it renewed now or wait till the law is changed?