Chestnut Posted April 24, 2009 Report Share Posted April 24, 2009 My daughter has been offered the freehold of the flat she bought as a new build and rents out. The builder is selling their interest of the group, which has communal stairs, fire alarm, carpark ,etc. and has offered first refusal. I understand that such offers have to be accepted by at least 50% of the owners who if they wish to buy then have to form a management company but I need advice and opinion on:- 1) Is buying one's freehold a good thing to do? Presumably it gives opportunity to control the communal maintenance and charges. e.g. Does it add value to the individual flat? 2) Would the amount of the offer negotiable? 3) What action is recommended? Link to comment Share on other sites More sharing options...
Mortitia Posted April 27, 2009 Report Share Posted April 27, 2009 Hi Chestnut, Yes. I would recommend buying a share in the freehold. I have done this myself and in the first year reduced insurance costs on the block by 75% by shopping around on the net. (I can recommend Bob@Assetsure.com) It also puts the management company in control of other repairs and expenses and does increase the value of the flat. Managing agents are notorious for charging outrageous sums for poor quality repairs. You don't say how many flats there are in this block? It would help your daughter if everyone in her block had a share in the freehold. If a third party buys in they will be looking to make profit and not do everything for the good of the leaseholders. I had a feeling 75% had to buy to form a company but I stand to be corrected. Yes the offer amount would be negotiable. Try to find out what others have paid/offered or even form a group. If the seller has to offer this at auction he will get far less than he is asking from you. I would try to negotiate one third off the asking price. If several are going to buy an interest in the freehold I suggest you all use the same solicitor and negotiate a block price. Get same solicitor to set up the management company and register it. You will then need to have and AGM and elect a chairman, secretary etc. and agree contributions to be paid by each party . The company will need a name and bank account. Barclays offer a free one for this sort of thing. You will also have to appoint an accountant. This all sounds a bit technical but worth it when your consider how much your daughter could be ripped off in maintenance contracts and repairs. Mortitia Link to comment Share on other sites More sharing options...
Trenners Posted April 27, 2009 Report Share Posted April 27, 2009 Hi Chestnut, I agree with Mortitia .... buy the freehold because it gives the management company control of how the flats are run. Good luck, Mark Link to comment Share on other sites More sharing options...
Chestnut Posted April 27, 2009 Author Report Share Posted April 27, 2009 Many thanks for helpful answers which I will forward to my daughter. Mark, I have since read your comprehensive answer dated Feb 2007 by searching this site. Good that you're consistent! One concern, also revealed from the search, is what if flat is mortgaged - it is. Presumably the mortgage company should be consulted for permission, terms etc. Thanks, Chestnut Link to comment Share on other sites More sharing options...
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