buying a leasehold flat on auction w/agressively obstructive freeholder

talcy

Hi 
I wonder if anyone on here has experience of buying short leasehold flats on auction when there's no lease and the freeholder is being obstructive because they want buy it back themselves to turn a big profit from the problems they are causing? There's a repossessed flat coming up with various red flags but an amazing opportunity and price point in central London and fits exactly what I'm looking for. The freeholder/landlord however has just sent a letter saying they want to buy back the flat and they will be as obstructive as they can to anyone who tries to buy it - can they do this legally? It means they are kiboshing the mortgage bank from getting the best price they can and wilfully obstructing the free market (major cake and eat it!!). They say:
1. They intend to forfeit the lease (using the fact the property is in disrepair which breaches the repairing covenants in the lease). They intend to pursue all legal remedies in respect of breaches of the lease (even though we won't know what those are as they will not provide the lease) and ultimately to forfeit the lease.
2. Neither the seller nor the land registry have a copy of the lease and they have no intention to provide any assistance and they will not voluntarily enter into a new lease to replace the missing lease.
3. They say the lease (which they won't share) provides for rent reviews in 2006 and 2039 to 10% of the market rent and they are entitled to trigger this review now and are entitled to operate historic rent reviews and demand all 'back rent' due from the new buyer/leaseholder all the way back from 2006 (which sounds mad). They say they will seek to recover 20 years worth of 'back rent'.
4. There is only 47 years remaining on the lease and they say they have no intention of negotiating a voluntary lease extension. They say they are prepared to extend the lease to 125 years for £550,000. (the other 2 flats in the building were granted extensions in very reasonable terms and have very long leases)
5. They will not consent to any alterations to the Property whatsoever and they will not consent to subletting.  
6. They also intend to make the buyer responsible for as much of their legal costs as they can. 

Anyone on here know how I can get advice on whether they are posturing or really can do all that?

Section62

talcy said:

Hi 
I wonder if anyone on here has experience of buying short leasehold flats on auction when there's no lease and the freeholder is being obstructive because they want buy it back themselves to turn a big profit from the problems they are causing? There's a repossessed flat coming up with various red flags but an amazing opportunity and price point in central London and fits exactly what I'm looking for. The freeholder/landlord however has just sent a letter saying they want to buy back the flat and they will be as obstructive as they can to anyone who tries to buy it - can they do this legally? It means they are kiboshing the mortgage bank from getting the best price they can and wilfully obstructing the free market (major cake and eat it!!). They say:
1. They intend to forfeit the lease (using the fact the property is in disrepair which breaches the repairing covenants in the lease). They intend to pursue all legal remedies in respect of breaches of the lease (even though we won't know what those are as they will not provide the lease) and ultimately to forfeit the lease.
2. Neither the seller nor the land registry have a copy of the lease and they have no intention to provide any assistance and they will not voluntarily enter into a new lease to replace the missing lease.
3. They say the lease (which they won't share) provides for rent reviews in 2006 and 2039 to 10% of the market rent and they are entitled to trigger this review now and are entitled to operate historic rent reviews and demand all 'back rent' due from the new buyer/leaseholder all the way back from 2006 (which sounds mad). They say they will seek to recover 20 years worth of 'back rent'.
4. There is only 47 years remaining on the lease and they say they have no intention of negotiating a voluntary lease extension. They say they are prepared to extend the lease to 125 years for £550,000. (the other 2 flats in the building were granted extensions in very reasonable terms and have very long leases)
5. They will not consent to any alterations to the Property whatsoever and they will not consent to subletting.  
6. They also intend to make the buyer responsible for as much of their legal costs as they can. 

Anyone on here know how I can get advice on whether they are posturing or really can do all that?

...sounds like there might be a good reason why the property is going to auction, at a very reasonable price.

user1977

talcy said:

Anyone on here know how I can get advice on whether they are posturing or really can do all that?

What's your solicitor saying about it?

GDB2222

There is only 47 years remaining on the lease and they say they have no intention of negotiating a voluntary lease extension. They say they are prepared to extend the lease to 125 years for £550,000. 

So, they are prepared to provide a voluntary lease extension? 

Personally, I’d steer clear. A retired property lawyer might take this on and regard it as a hobby for his retirement. 

eddddy

So it sounds like you'll have a few fights, if you take this property on.

So it's a case of deciding how much you're prepared to pay for the flat - taking into account all the hassle you might have to deal with.


FWIW, there seem to be ways of dealing with every point on your list.  For example...

If the freeholder wants a court to agree to forfeit your lease for breach of lease, the freeholder will have to tell you what the breaches are and give you an opportunity to fix them...

... and to prove they are breaches they'll almost certainly have to show you a copy of the lease. (So then you'll have a copy.)

GDB2222

Do bear in mind that guide prices at auction don’t always mean anything. So, 'an amazing opportunity and price point' is over optimistic. The property will most likely reach its fair value. The freeholders may influence that a bit, but there will probably be one or two buyers who know what they are doing and they will snap it up if they think it’s cheap. 

talcy

Thanks very much to everyone who responded. They've taken it out of the auction and pushed it to end of month so more time to think on it!! 

ian1246

Sounds like the Freeholders setting themself up for a hiding if they are stupid enough to cause matters to go to court with the letter they ve sent. Judges generally take a significantly dim view of such actions - particularly given its blatantly obvious they are trying to exploit & manipulate the situation to their own gain (at the expense if current owners).