Leaseholders Want to Buy Freehold - Chances....?
Discussion
Hello All,
Hoping this is the relevent section, given the number of Housing related topicss in Finance......
I am a leaseholder of a Flat in a Block of four Flats, Purpose Built.
There are 2 x 2 beds, and, 2 x 1 beds in the block....
I own one of the 2 beds, and a chum is about to pull the trigger on the other 2 bed above me.
The other two 1 beds are tenanted at present, and leases are presumably owned by the the Housing Association that own the Freehold and are also the (mis)Management Company.....
We want to buy the Freehold, and eventually the other two leases of the 2 1 bed flats, so eventually we own the whole thing split right down the middle so to speak...
What are our chances of success, and how should we approach this?
As as owner who has suffered more than 5 years of woeful incompetence in just about every aspect of the Management of the Block, I have wanted this Freehold for some time, and am not afraid to pay for it...
How do we approach this with the best chance of success?
Freehold first ideally, then progresively negotiate on the other two Leases?
TIA - Nick.
Hoping this is the relevent section, given the number of Housing related topicss in Finance......
I am a leaseholder of a Flat in a Block of four Flats, Purpose Built.
There are 2 x 2 beds, and, 2 x 1 beds in the block....
I own one of the 2 beds, and a chum is about to pull the trigger on the other 2 bed above me.
The other two 1 beds are tenanted at present, and leases are presumably owned by the the Housing Association that own the Freehold and are also the (mis)Management Company.....
We want to buy the Freehold, and eventually the other two leases of the 2 1 bed flats, so eventually we own the whole thing split right down the middle so to speak...
What are our chances of success, and how should we approach this?
As as owner who has suffered more than 5 years of woeful incompetence in just about every aspect of the Management of the Block, I have wanted this Freehold for some time, and am not afraid to pay for it...
How do we approach this with the best chance of success?
Freehold first ideally, then progresively negotiate on the other two Leases?
TIA - Nick.
NicoG said:
Hello All,
Hoping this is the relevent section, given the number of Housing related topicss in Finance......
I am a leaseholder of a Flat in a Block of four Flats, Purpose Built.
There are 2 x 2 beds, and, 2 x 1 beds in the block....
I own one of the 2 beds, and a chum is about to pull the trigger on the other 2 bed above me.
The other two 1 beds are tenanted at present, and leases are presumably owned by the the Housing Association that own the Freehold and are also the (mis)Management Company.....
We want to buy the Freehold, and eventually the other two leases of the 2 1 bed flats, so eventually we own the whole thing split right down the middle so to speak...
What are our chances of success, and how should we approach this?
As as owner who has suffered more than 5 years of woeful incompetence in just about every aspect of the Management of the Block, I have wanted this Freehold for some time, and am not afraid to pay for it...
How do we approach this with the best chance of success?
Freehold first ideally, then progresively negotiate on the other two Leases?
TIA - Nick.
Worth a look: http://www.lease-advice.org/Hoping this is the relevent section, given the number of Housing related topicss in Finance......
I am a leaseholder of a Flat in a Block of four Flats, Purpose Built.
There are 2 x 2 beds, and, 2 x 1 beds in the block....
I own one of the 2 beds, and a chum is about to pull the trigger on the other 2 bed above me.
The other two 1 beds are tenanted at present, and leases are presumably owned by the the Housing Association that own the Freehold and are also the (mis)Management Company.....
We want to buy the Freehold, and eventually the other two leases of the 2 1 bed flats, so eventually we own the whole thing split right down the middle so to speak...
What are our chances of success, and how should we approach this?
As as owner who has suffered more than 5 years of woeful incompetence in just about every aspect of the Management of the Block, I have wanted this Freehold for some time, and am not afraid to pay for it...
How do we approach this with the best chance of success?
Freehold first ideally, then progresively negotiate on the other two Leases?
TIA - Nick.
You can form a management co but need others (majority) to agree.........but I am almost certain you can't force the Freeholder to sell. There is a calculator where you can input data (groundrent / yrs lease remaining etc) to find the freehold value and perhaps make an offer to the freeholder.
Be awre you will have to pay all legal costs as well as your own and maybe pay an upfront amount beforehand.
Go for self-management before attacking the freehold. Right to manage must be done properly and requires a set % to agree.
You sure the Freeholder is the HA? Is there any real advantage in owning the freehold? Payback on a freehold purchase may not be in your lifetime. The last one I looked at was over 40 years.
You sure the Freeholder is the HA? Is there any real advantage in owning the freehold? Payback on a freehold purchase may not be in your lifetime. The last one I looked at was over 40 years.
Jockman said:
Go for self-management before attacking the freehold. Right to manage must be done properly and requires a set % to agree.
You sure the Freeholder is the HA? Is there any real advantage in owning the freehold? Payback on a freehold purchase may not be in your lifetime. The last one I looked at was over 40 years.
Current lease terms in years left may be a deciding factor in that leaseholders can extend their own leases FOC if they own the freehold - adds value and easier to sell / mortgage if longer lease.You sure the Freeholder is the HA? Is there any real advantage in owning the freehold? Payback on a freehold purchase may not be in your lifetime. The last one I looked at was over 40 years.
But then again, if switched on, the freeholder isn't about to sell the freehold if he can earn money by extending leases.
Would add that flats in converted properties change hands frequently and it can be a nightmare trying to manage / obtain costs etc and not all roses I can assure you. I say this as somebody that bought the freehold of a converted property containing my daughter's flat because of dodgy freeholder / managers - she subsequently moved on and I still have the headache
Edited by alfie2244 on Wednesday 23 March 12:02
You have my sympathies.
Just watched parents go through a right to buy and now looking at the calculation for freehold purchase. You are right about all legal costs being paid.
Sometimes a frequent turnover of leaseholders can be useful as there is a payment that is paid from the sale of the lease into the new management coffers. IIRC it is something like 10% of the original buying price but don't hold me to that. This pushes up the sinking funds considerably, although in OPs case this would be controlled by his managing agent at the moment.
Just watched parents go through a right to buy and now looking at the calculation for freehold purchase. You are right about all legal costs being paid.
Sometimes a frequent turnover of leaseholders can be useful as there is a payment that is paid from the sale of the lease into the new management coffers. IIRC it is something like 10% of the original buying price but don't hold me to that. This pushes up the sinking funds considerably, although in OPs case this would be controlled by his managing agent at the moment.
alfie2244 said:
... it can be a nightmare trying to manage / obtain costs etc and not all roses I can assure you. I say this as somebody that bought the freehold of a converted property containing my daughter's flat because of dodgy freeholder / managers - she subsequently moved on and I still have the headache
I manage the freehold for a block of flats for several owners. I charge for my time in managing things whenever there is a change of ownership etc. Do you not charge for services requested of you?Edited by alfie2244 on Wednesday 23 March 12:02
Ken Figenus said:
alfie2244 said:
... it can be a nightmare trying to manage / obtain costs etc and not all roses I can assure you. I say this as somebody that bought the freehold of a converted property containing my daughter's flat because of dodgy freeholder / managers - she subsequently moved on and I still have the headache
I manage the freehold for a block of flats for several owners. I charge for my time in managing things whenever there is a change of ownership etc. Do you not charge for services requested of you?Edited by alfie2244 on Wednesday 23 March 12:02
I have exercised the right to contact the mortgagees a few times and they have paid but for what I earn out of it is a PITA (£300 p.a. groundrents + 10% management fee).....did try management Co's like yourself but 1 (7 flats) property was of no real interest to them.
I get that - but having just stumped up for several communal refurb 'exceptional' items the owner occupiers were still pushing for more which I had to decline and insist things are done on a longer timeline. Meantime we all chuck in £75 a quarter to a sinking fund and this gives us a pot that we don't have to have much disagreement over how it is spent when its healthy. A management company would want £750 a quarter no doubt and big kickbacks from mates they place the overpriced business with! Best thing I ever did therefore! Control and savings 
Ken Figenus said:
I get that - but having just stumped up for several communal refurb 'exceptional' items the owner occupiers were still pushing for more which I had to decline and insist things are done on a longer timeline. Meantime we all chuck in £75 a quarter to a sinking fund and this gives us a pot that we don't have to have much disagreement over how it is spent when its healthy. A management company would want £750 a quarter no doubt and big kickbacks from mates they place the overpriced business with! Best thing I ever did therefore! Control and savings
Another week or so and it will not be my problem any longer; Sold the flat, gave all leaseholders the option to buy freehold (serving correct notices of which there are a few) now just 1 signature away from being owned by a portfolio investment company (pensions I think) and they have grand ideas about making many changes / improvements which may see the annual outlay for each leasehold dramatically increase.The biggest problem for me in all honesty are buy to let landlords that only worry about their rental income and very little about communal areas etc e.g. Centralised fire alarm system just cost £5K or 3 story Victorian building needs decorating every 5 years inside and out and has to be scaffolded so not cheap - do you think the BTL landlords want to pay when they even query £20 per fortnight to cut communal grass in the summer?
Communal areas are the first parts of the property viewed by prospective purchasers. They can be just as important as the flat itself.
My parents pay approx £170 pm to the self management pot. Any leaseholder who sublets and fails to pay simply has the charge put against the property and this is deducted from any sale proceeds along with the sinking fund contribution. I think one leaseholder is outstanding over £8k alone.
The contents of the lease are key.
My parents pay approx £170 pm to the self management pot. Any leaseholder who sublets and fails to pay simply has the charge put against the property and this is deducted from any sale proceeds along with the sinking fund contribution. I think one leaseholder is outstanding over £8k alone.
The contents of the lease are key.
Leases tend to be 'inherited'. Guess you need to get approval from current leaseholders to modify any lease retrospectively - or maybe this 'charge on property' handy clause is only really workable on a new lease/new build? Its interesting that a self managed property would set the contribution so high - do they have helipad/lifts/concierge etc?!
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