LandlordZONE

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Sep, 2014

Tuesday

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  1. #1

    Default How much should we pay for our freehold?

    Can anyone help with an idea of cost for our freehold? Its a converted house with five flats (we own flat one and two), and flat five is the freeholder, flats three and four are other tenants. The lease was 999 years in 1966, and the ground rent per flat is 100. I would say the flats are around 200k each
    in value, but they probably vary a bit.

    The freeholder is saying he is thinking of selling both his flat and the freehold but I understand that he has to give existing leaseholders first option to buy the freehold. Is that right?

    Thank you and best wishes

  2. #2
    Join Date
    Jun 2010
    Location
    Foundation trench for New Shed@ Ham on Rye
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    14,655

    Default

    If all the flats are 999 year leases 4yrs expired, assuming he would grant similar to his flat on sale, and there are no other income streams or development rights, a ball park is 7.5 to 10k.

    He is exempt form the right to first refusal. however he is not immune from the right of the other leaseholders to exercise the right to collectively enfranchise ie forcibly buy the freehold from him, but as you own two flats, the other leaseholders must join in to make up the requisite majority.

    By all means follow the mehtod and try and negotiate. http://www.lease-advice.org/publicat...nt.asp?item=11

    Many sales are agreed this way.
    Based on the information posted, I offer my thoughts.Any action you then take is your liability. While commending individual effort, there is no substitute for a thorough review of documents and facts by paid for professional advisers. More ramblings atleaseholdpropertymanager.blogspot.com

  3. #3

    Default

    Thank you for this information. Did you mean around 10k in total for all of the flats to divide between them. Also can I ask why would he be exempt from giving us first refusal? Presumably this means we need to act quickly before he sells it off elsehwhere
    best wishes and thanks

  4. #4
    Join Date
    Jun 2010
    Location
    Foundation trench for New Shed@ Ham on Rye
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    14,655

    Default

    its exempt from R2FR as he is resident landlord.


    its 10k for the freehold how much per flat depends on how many participate and as posted that on sale he would grant a similar lease and rent to the incoming purchaser. The average buyer would be hard pressed to find a lender as they will not lend on a freehold with a retained unit - a flat without a lease. In most cases he would be best off selling the freehold to one party and the flat to an owner.

    In most cases the residents are the one who would pay the most as they have the most to gain or as some would say the most to lose, if they are saddled with a commercially minded landlord who appoints and agent incurring their fees as well as the service charge.
    Based on the information posted, I offer my thoughts.Any action you then take is your liability. While commending individual effort, there is no substitute for a thorough review of documents and facts by paid for professional advisers. More ramblings atleaseholdpropertymanager.blogspot.com

  5. #5
    Join Date
    Aug 2008
    Posts
    3,385

    Default

    In 1960s most leases were usually offered for 99 years. Do you mean 99 years lease ?

  6. #6

    Default

    no its definately a 999 year lease that begain in abou 1967. All of the flats have the same long lease, so its not about extending leases, just about having control of the freehold. But there is a hurdle as the landlord has a flat in the property. However he has said he wants to sell the freehold and his flat (presumably not necessarily to the same person) ie he could sell leasees the freehold and we could form a company, and he could sell the flat then on the market as normal

  7. #7
    Join Date
    Jun 2010
    Location
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    Default

    Yes the vast majority of the value is in the lease of a flat so he sells that on the' same' lease, and sells the freehold to your joint company.

  8. #8
    Join Date
    Aug 2008
    Posts
    3,385

    Default

    If all flats pay 100 p.a ground rent ( = total 500 pds p.a ) then I would agree to the ballpark price which LHA has posted in #2 ( between 7.5K to 10K ).

    If all flats agree to participate in the purchase, it would cost 2K + a share of conveyancing cost per flat.

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