Freehold

[Petra]

I have a purpose built flat 1994 with 125 yr lease, so 97 yrs remaining. The building is 3 storeys high.  I have received a Notice  under the Landlord and Tenant Act 1987, Section D offering the right to purchase the freehold.  The Landlords Agent is a well known ground rent fund manager , however the Landlord is shown as being a Company based in Switzerland.  Initially the ground rent was £75 per year,  it was increased to £180 in 2019 and is due to be reviewed every 25 yrs. The current flat valuation is approx £185,000 They are offering the sale of the freehold of 14 flats for £80K

Looking for views/opinions on this. On one hand it appears a good idea as lease can be extended without any premium having to be paid, but I do have concerns over the extra responsibilities and potential pitfalls. I am also wondering why they are looking to sell at this stage, when I asked this question to their solicitors all they said "its an internal transfer"  I believe the government have stopped new build houses being leasehold, and there has been talk in the press about stopping all leaseholds. Is any one aware of any potential change being proposed  regarding leaseholds/ ground rent  etc

Thank you for reading.

[Carryon Regardless]

Aside from the 'possibility' of legislation changing the leasehold situation I would say you should buy.

I made the mistake of not doing so and I have been at the mercy of the freeholder and charges raised, but it can be worse.

For less than £6k per flat it sounds cheap. There are solicitors fees on top of course.

If all 14 don't wish to participate those that do then become share holders in a management company. That company then raises charges to the lease holders that aren't shareholders.

You would need legal advice on the make up, but your solicitor would already be in play.

I'm sure Grampa can offer some constructive insight.

 

[Grampa]

Well there is talk of the government phasing out the charging of ground rents but i have no idea how far this has progressed or if there is a date for it. This could be part of their decision making in choosing to sell the freehold.

The cost of the freehold does appear reasonable on the info provided in the post but do look in the legal costs as they can be hefty especially if their solicitor is linked to their company which costs you will likely have to pay plus yours.

If you do go ahead with it, it will likely put value and desirability on the flats. It also means you can either manage the block yourself and control the costs and management and very likely make a good saving on the block insurance because most block companies get a referral fee in the region of 20% so there is no incentive to get the cheapest quote.

If you don't want to manage the block yourselves after taking ownership of the freehold you can still shop around and instruct an block agent of your choice. This means you are the client and can therefore negotiate fees and choice of contractors etc and still leaves you in control.

 

The downside is you could possibly get some owners who are difficult and wont agree to anything or want everything on the cheap. Or if you get one who doesn't pay their service charge you (the freehold Co) may have to take them to court for payment. But if you instruct a good block agent they should be able to deal with that for you.