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[Misc] leasehold/freehold



pearl

Well-known member
May 3, 2016
12,712
Behind My Eyes
I own a flat and have a share of the freehold with two other leaseholders.
We formed a company and are all directors. I do all the (rather pointless) Companies House admin and deal with the insurance. My friend is in a similar situation, but they haven’t formed a company. They say it isn’t necessary. Just wondered if anyone on here knows an alternative, legal and secure way of maintaining/owning the land/building?
Any advice much appreciated
 






Jimmehh

Well-known member
Mar 21, 2016
758
Sussex by the Sea
I got an offer to buy the share of freehold for my recently purchased property... but considering there are 19 other flats who have all just recently bought, i am guessing it's not going to happen...

What does everybody think? Worth it for a 2 bed new build or nah?
 


pearl

Well-known member
May 3, 2016
12,712
Behind My Eyes
I got an offer to buy the share of freehold for my recently purchased property... but considering there are 19 other flats who have all just recently bought, i am guessing it's not going to happen...

What does everybody think? Worth it for a 2 bed new build or nah?

I think it depends who owns the freehold now and if you plan staying there long
 




Jimmehh

Well-known member
Mar 21, 2016
758
Sussex by the Sea
I think it depends who owns the freehold now and if you plan staying there long

It's currently held by the developers who built it... I mean... It's my first home, so I plan on being here perhaps 3 years... 5 years max before moving onto something bigger and better (a house)...

Good thing to have though right? Good selling point?
 


Gazwag

5 millionth post poster
Mar 4, 2004
30,093
Bexhill-on-Sea
I have just set up a company for my daughter. She bought a flat in a new conversion of five flats in total. The freeholders offered the freehold to the five flats of which 4 have agreed to purchase and we are just starting the legal process to get things sorted. My view was a freehold company owning the land offers more protection than each individual owning a share and makes future sales much easier.
 


Gazwag

5 millionth post poster
Mar 4, 2004
30,093
Bexhill-on-Sea
It's currently held by the developers who built it... I mean... It's my first home, so I plan on being here perhaps 3 years... 5 years max before moving onto something bigger and better (a house)...

Good thing to have though right? Good selling point?

Better to be on the inside sharing the control than on the outside having to do and pay what you are told by the others - probably will had a bit to the value and you can save on ground rent.

If it isn't purchased within the current owners the developer will put it up for auction and who know who will control your maintenance costs
 




lost in london

Well-known member
Dec 10, 2003
1,780
London
I got an offer to buy the share of freehold for my recently purchased property... but considering there are 19 other flats who have all just recently bought, i am guessing it's not going to happen...

What does everybody think? Worth it for a 2 bed new build or nah?

You've only got two months to agree with a majority of the other leaseholders to go for it, difficult thing to organise, and you need some really keen people who are going to drive it on and then pick up the management role post-completion.

Most people given this offer years into their lease after experiencing bad management would jump at the chance (if they can afford it) as it gives the leaseholders control over their own block. On a new development where everyone is likely to be a bit skint after buying I can see it would be a difficult thing to persuade people to do. Probably best to try and organise a meeting to see if there is any appetite for it.
 


lost in london

Well-known member
Dec 10, 2003
1,780
London
It's currently held by the developers who built it... I mean... It's my first home, so I plan on being here perhaps 3 years... 5 years max before moving onto something bigger and better (a house)...

Good thing to have though right? Good selling point?

The other advantage though is you can grant yourselves 999 year leases and avoid the need to have to go crawling to a landlord in 30/40 years to buy an extension to the lease (assuming you've got 125 year leases.
 


Jimmehh

Well-known member
Mar 21, 2016
758
Sussex by the Sea
You've only got two months to agree with a majority of the other leaseholders to go for it, difficult thing to organise, and you need some really keen people who are going to drive it on and then pick up the management role post-completion.

Most people given this offer years into their lease after experiencing bad management would jump at the chance (if they can afford it) as it gives the leaseholders control over their own block. On a new development where everyone is likely to be a bit skint after buying I can see it would be a difficult thing to persuade people to do. Probably best to try and organise a meeting to see if there is any appetite for it.

Yeah I mean, that's pretty much where I stand... A lot of people in the block - like my partner and I, are first time buyings as it's the way of getting on the ladder now (with Govt. help), and will so many flats to organise I am doubtful it'll happen - it is also one of the reasons that I am thinking of not staying any longer than I need to... although there is an agreement on ground rent not rising until 2024 - so I plan to at least be gone before then!
 




Gazwag

5 millionth post poster
Mar 4, 2004
30,093
Bexhill-on-Sea
The other advantage though is you can grant yourselves 999 year leases and avoid the need to have to go crawling to a landlord in 30/40 years to buy an extension to the lease (assuming you've got 125 year leases.

This is another thing, lease extensions for people who don't own a share of the freehold can cost tens of thousands of pound, those who do own it can do it for just legal fees either at the point of purchasing the freehold or afterwards
 


Jimmehh

Well-known member
Mar 21, 2016
758
Sussex by the Sea
The other advantage though is you can grant yourselves 999 year leases and avoid the need to have to go crawling to a landlord in 30/40 years to buy an extension to the lease (assuming you've got 125 year leases.

It's got 152 years on it currently so it's not my plan to extend yet - but see your points.

Just not sure if it'll be that easy getting everybody else on board!
 


Gazwag

5 millionth post poster
Mar 4, 2004
30,093
Bexhill-on-Sea
It's got 152 years on it currently so it's not my plan to extend yet - but see your points.

Just not sure if it'll be that easy getting everybody else on board!

You only need 51% not everybody, although the more that join in the cheaper it will be, how much are they offering to sell the freehold for
 




pearl

Well-known member
May 3, 2016
12,712
Behind My Eyes
It's got 152 years on it currently so it's not my plan to extend yet - but see your points.

Just not sure if it'll be that easy getting everybody else on board!

See [MENTION=11350]LamieRobertson[/MENTION] post 2. There's some useful info about Right to Manage that might help
 


Jimmehh

Well-known member
Mar 21, 2016
758
Sussex by the Sea
You only need 51% not everybody, although the more that join in the cheaper it will be, how much are they offering to sell the freehold for

Ah okay - always thought it was all or nothing in regards to buying it but that makes it slightly easier. I think (docs at home) it worked out about 8k for each flat... so about £150k ish (probably nearer 160k in total)...
 


Gazwag

5 millionth post poster
Mar 4, 2004
30,093
Bexhill-on-Sea
Ah okay - always thought it was all or nothing in regards to buying it but that makes it slightly easier. I think (docs at home) it worked out about 8k for each flat... so about £150k ish (probably nearer 160k in total)...

This is a good calculator to see if the amount is reasonable, you need to estimate the cost of all 19 flats and total ground rent of all 19 but it will give you a guide. My daughters is just over £4k each with a 125 year lease (with 4 out of the 5 joining in)

https://www.freeholdcalculator.com/freehold_simple.php
 


Jimmehh

Well-known member
Mar 21, 2016
758
Sussex by the Sea
This is a good calculator to see if the amount is reasonable, you need to estimate the cost of all 19 flats and total ground rent of all 19 but it will give you a guide. My daughters is just over £4k each with a 125 year lease.

https://www.freeholdcalculator.com/freehold_simple.php

That's easily done then - as I can see on my report the ground rent figures for every property from when i purchased.

Thanks
 


lost in london

Well-known member
Dec 10, 2003
1,780
London
Ah okay - always thought it was all or nothing in regards to buying it but that makes it slightly easier. I think (docs at home) it worked out about 8k for each flat... so about £150k ish (probably nearer 160k in total)...

There's talk in the industry of the government stepping in and controlling ground rents. Unlikely they will do anything dramatic, but it might affect the price they can achieve if buyers are nervous that their yield will drop after government rent controls. Personally I wouldn't go for it (a) because £8k is a lot, (b) they may never get £150kish on the open market (c) you can control management via the right to manage rules mentioned above (d) you're unlikely to get a majority anyway (e) your lease is longer than most (the end of the building's useful life is probably going to come sooner than the time you would need to extend the lease), and you will be long out of the property by then I'm sure.
 



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