Proposed Purchase of Freehold

[Snoopy1948]

Appreciate if anyone can give me some pointers on this one please .....

I purchased my leasehold apartment in April last year and it is one of 66 flats in the block, built in 2010. The original developers went into receivership, stated to be due to a downturn in the market but I suspect it was due to initial marketing prices simply being over optimistic and not being achieved. All flats are now sold and our managing agent has advised us that the receivers now have the intention of disposing of their interest in the freehold.

The managing agents have stated 'that they think it would be reasonable to say that the freehold is worth in excess of £300,000 which at a 50% initial take up would entail a purchase contribution of some £9100.

We have a leaseholders meeting next week to discuss this and the person chairing the meeting has asked that no one from the managing agents attend. I have no experience of buying freeholds in this manner so I wonder if I could have some pointers as exactly what I should be asking here. MY initial thoughts include :

* How is the proposed asking price for the freehold arrived at? Is there a formula in calculation? Should independent advice be taken?
* Is it to the leaseholders' interest to keep the managing agents away from this negotiation ( seeing as a later 'right to manage' application is perfectly possible )?
* What are the immediate advantages of buying into the freehold at first option? Will it affect the asking price of each individual flat for those that wish to sell? Does the flat become more sellable once a share of the freehold goes with it?
* Are there any immediate disadvantages of not buying in on the original offer, apart from costing more at a later stage?
* Are there any other points that I should be aware of or ask the appropriate questions on?

AS usual guys, all opinions gratefully received and I really would like to have some specifics for this meeting next week. Thanks in advance ..

[Crazy council]

Re: Proposed Purchase of Freehold

Appreciate if anyone can give me some pointers on this one please .....



* How is the proposed asking price for the freehold arrived at? Is there a formula in calculation? Should independent advice be taken? Are there management and maintainace costs ( shared areas, insurnaces ect )(
* Is it to the leaseholders' interest to keep the managing agents away from this negotiation ( seeing as a later 'right to manage' application is perfectly possible )? maybe just the initial stages/meeting ( keep an eye on there costs _
* What are the immediate advantages of buying into the freehold at first option? Will it affect the asking price of each individual flat for those that wish to sell? Does the flat become more sellable once a share of the freehold goes with it? Yes, mostly
* Are there any immediate disadvantages of not buying in on the original offer, apart from costing more at a later stage? Depending on the management contracts, someone else might purtchase it and push the fees
* Are there any other points that I should be aware of or ask the appropriate questions on? club together and pay for proper legal and accountancy advice on the matter, could be a few complexity's to consider

AS usual guys, all opinions gratefully received and I really would like to have some specifics for this meeting next week. Thanks in advance ..

when purchasing flats in blocks,r there freeholds, usually, things like shard roofs, drainage, services in-let to each property, have to be properly considered ( usualy, contractualy as part of the sale contracts ), its not usualy a problem but its 20* more prep work than a house freehold.

[Noah]

Re: Proposed Purchase of Freehold

If you are looking at the freehold then yes get legal advice and valuations.

[Snoopy1948]

Re: Proposed Purchase of Freehold

Appreciate the replies to date.

I appreciate that this is a complex matter but it's early days and I just want to be equipped with the appropriate questions on the first leaseholders meeting. :colbert:

[Crazy council]

Re: Proposed Purchase of Freehold

hi [MENTION=62334]Snoopy1948[/MENTION]

Depending on if the leasehold has conditions that include any management contracts , and the difficulty's around re-negotiation of them for shared areas, it really is worth getting a specialist legal adviser in, if only for there liability insurance.

If your ground rents reasonable ( and any maintenance fees ), then at 66 flats, it may not be worth anyone else buying the leases ( no competition for you ), but if the fees are a bit, per unit ( like 40 pcm ) 480 pa * 66 = 31k+ , then you may have some competition.

Also, if you have current management contrast, these may have some terms in about you purchasing the leases.

The managing agents have stated 'that they think it would be reasonable to say that the freehold is worth in excess of £300,000

I bet they would, this wants checking independently ( maybe ask the agents to detail how they came to that figure.) . , Also ask the management agent about normal fees/commision they charge, and then ask if they make any further fees from the receivers for this sale.

Am not suggesting doing this yourself s ( but done be scared of doing that ), but realize that whatever the circumstances, someone is going to be making a lots of commissions from this sale, so make them work for you, usually by letting them know that you lot know, that you ( possibly, check contracts ) not tied in to using them for the sale. argue down there commissions to a minimal,

finally, remember your dealing with receivers over the leases.... usually, they cant hold out like individual buyers sellers do, and they dont like getting bogged down with legality's, Ie , maybe go-in low with some paperwork to back it up ( valuations ect ) let them see if they can spend the money to counter it

Just a suggestion ,

[Snoopy1948]

Re: Proposed Purchase of Freehold

Thanks CC ..

That's great input and given me further food for thought on the night. Have to say, I can understand the current management agents wanting a look in if they are on further commission for selling the freehold.

Currently we have a ground rent of £250 pa each and my current management fees of around £1600 pa ( my percentage based on floor area of each flat I believe ) although no one expects that to stay static as it was built in 2010 and we all anticipate increasing maintenance issues. Indeed, we have just had our passenger lift out of action for nearly two weeks. Those management fees stated of course include all disbursements and their own management fees have been quoted ( on my last bill ) as £12600 pa with a further £10000 for the sinking fund.

[Crazy council]

Re: Proposed Purchase of Freehold

Just food for thought

1. Look through your current managment contracts to see what position your in if the leases sell, in relation to the terms in the current contracts
2. Look for any conditions that give you lot ( owners ) first option for sale, and look at any conditions around that ( like negotiating, choosing agents, solicitors )
3. Look through the leases terms, sometimes they have conditions/requirements in relation to the management contracts as well.

Understanding the above, will let you know what your starting position is, so your not relying on people potentially involved in the sale for advise. Once you know that position, and if your not restricted by the contract from doing so, get your own valuations for the leases, get your own indipendant solicitor to deal with the purchase direct from the receivers. That way, its a good chance that you will get the leases at the lowest, and with lowest possible fees.

unless your contractually obliged to have the agent involved in the lease, its worth looking at dealing with just the purchase of leases yourself with a solicitor ( if they can be separated from the management contracts ). Am defiantly not saying anything about management agents, in these curcs , they can be great. But its a lot of money involved.

like i say, just food for thought, leases around flats and management contracts tend to be very complex docs with liability's and odd interpretations..

this is a decent writeup http://www.moneysavingexpert.com/mor...ight-to-manage