Freehold enfranchisement

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    Freehold enfranchisement

    I bought the leasehold of an ex-council flat in a block of 12 units, my lease term has 95 years remaining.

    I and the other leaseholders have been approached by an investor/ developer to arrange to buy the freehold of the block from the council on behalf of the leaseholders, pay legal fees, cost of buying the freehold from the council and additional sweetener of approx £5K in exchange of Lesholders undertake to sell the freehold of the rooftop of the block to the developer to develop certain number of units and leaseholders to commit to support the planning application.

    Given this is a new venture I made some enquiries, but developers refused to answer any of the common/ basic due diligence questions, such as background information on developers, financial capability, past experience, name of leaseholders agreed to the proposal, introduction to other projects that have been completed and meet its leaseholders to gain views of their past experience.
    In view of the developers' insistence not to provide the basic due diligence information, I refused to join the scheme. However, I understand they have the agreement of 5 leaseholders and can go ahead once they reach 6 i.e 50%.

    I'm concern about any negative consequences of this scheme, or its trustworthiness.
    would very much appreciate your views on the above and your views on the followings

    Has anyone heard of such a scheme? Are they genuine?
    Can the new company that will buy the freehold stop me from buying my share of the freehold without joining the scheme, i.e refusing to sell my share of the freehold of the rooftop to the developer.
    What would be the best advice in these circumstances

    Many Thanks

    #2
    It sounds like a singularly bad idea to have them purchase it.

    Unfortunately however the law makes provision for you to be bullied into this if your colleagues are either
    a) Idiots
    b) In a majority and in collusion

    Comment


      #3
      Thanks, Andrew, I think the other leaseholders are more concern about getting their immediate monetary value i.e 5K and getting the freehold for free. Is the Law so narrow-minded?


      Comment


        #4
        Refer them to this thread and they can ask stuff here. The likely loss to each of them is likely to be massively greater than 5K - i.e probably 100K each of even more rip-off service charge thefts over the next decade or two, this scam artist taking the uplift of value for the building additions which they could otherwise have taken themselves, and a loss of value to their properties as a result of these things.

        Unfortunately yes, the law is poorly thought out (often deliberately so).

        Comment


          #5
          Thanks for your suggestion Andrew, will try it.


          FYI, Only me and another leaseholder who are actively opposing the scheme and trying to stop it.
          The 4 Leaseholders, who we were told have signed a commitment agreement with the Developer, are ignoring our calls and messages. We were told around £5K was paid as sweetener/incentive to sign c agreement.

          Its frustrating situation, like you all, my legal advisor said don't touch it

          Comment


            #6
            Whilst I agree that the long term costs of helping the developer to acquire the freehold are likely to far outweigh the benefit of the £5k sweetener being offered now, is the developer actually looking to acquire the freehold for itself?

            Shaltout refers in post 1 to an undertaking to 'sell the freehold of the roof of the block to the developer' but in post 3 to the other leaseholders keen to be 'getting the freehold for free'.

            If the developer is looking for a 999 year lease of the airspace in return for acquiring the freehold for you (i.e. the leaseholders) at no cost to yourselves then perhaps it isn't such a bad idea? Assuming of course that the tenants are not concerned about an additional floor/floors being built on top of the block...
            All opinions provided are mine and are based on the information posted - please do not act on them without first referring to an appropriately instructed professional adviser (e.g. a solicitor or surveyor). Any action that you do decide to take is entirely at your own risk.

            Comment


              #7
              Thanks, LIP,

              I may agree with you if developers are well known, creditworthy and ready to provide answers to basic due diligence questions.

              There is also the unknown risks one could be exposed to which are endless.

              I'm actually actively thinking of selling the property. It's unfortunate that some greedy developers could take advantage of some layman for their own gains without government/council protection.

              I am here trying to understand whether such a scheme has been widely practised.

              Comment

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