Leaseholds For Sale - Freeholder Solvency Issues

[Real_Politik]

I've recently viewed a couple of not-quite-finished long-leasehold flats which are available at a very good price in terms of rental yield achievable. The flats themselves are in good order but there is some tidying up to do to communal areas (painting doors, removing building waste, connecting entry-phones etc.).

They're repossessions and are two of three in a purpose-built extension to a large converted house - the leaseholder of both has been made bankrupt. One flat has been sold (very cheaply) and just let to a private tenant.

The issue is that the freeholder has a Proposal To Strike Off registered against them at Companies House.

The management company for the three flats is already insolvent.

The converted house now comprises of several flats and has its own management company - from a practical point of view it would make sense to approach the company and determine if the additional flats could be negotiated into the existing management scheme. I assume from the lack of filings at Companies House the freeholder will soon be in administration and the freehold will at some point be offered for sale.

Aside from the obvious repair and maintenance issues, would you even consider buying the flats with the potential unresolved freehold issue?

[jeffrey]

No. Even with indemnity insurance to protect oneself, why on earth buy into a known problem?

[leaseholder001]

I would consider it. Everything would depend on how good a deal the flats are.

Surely even if the freeholder does dissapear, there is some mechanism to obtain control if 2 of the 3 flats are yours?

[sgclacy]

In these circumstances then an RTM would seem appropriate

If you were in a minority then you may have to apply for an appointment of a manager

[jeffrey]

In these circumstances then an RTM would seem appropriate

If you were in a minority then you may have to apply for an appointment of a manager
Rather, where the f/r owner is insolvent or already dissolved/liquidated/struck-off, RTE is preferable. But, still, whyever volunteer for problems?

[Real_Politik]

But, still, whyever volunteer for problems?

Simply because I can buy them for a very attractive price which should result in gross yields comfortably into double-figures.

Could anyone recommend a decent online calculator to give a rough idea of what enfranchisement might cost?

[jeffrey]

Yes- the price is lower probably to reflect V's inability to find any P prepared to buy-in to a problem property.

[Real_Politik]

Did I mention the undischarged planning conditions, meaning the block currently has no planning permission? :)

[jeffrey]

Lower and lower...!