Buying Freehold / Collective Enfranchisement

Collapse
X
 
  • Filter
  • Time
  • Show
Clear All
new posts

    Buying Freehold / Collective Enfranchisement

    Hi all,

    I've been browsing the forums here for a while now and have found it extremely informative reading about other people's experiences in buying thier freehold. Just thought I'd add mine to the mix for some extra advice and to provide others with future reference.

    I've recently been looking to purchase the freehold on my flat as from September it will have less than 80 years left on the lease, and I would like to do this before then so as to avoid paying marriage value later. It is a block of 4 flats worth approx £170k each.

    The freeholder initially gave us a price of £30k for the freehold, but after taking some advice we have reason to believe it is worth more like 15k. Here is a rough breakdown of the quote:

    Lease on Flats 1,2,3: 80 years
    Lease on Flat 4: 133 years
    Ground rent: £340/pa (rising to £680 in 2022, and £1020 in 2055)
    Present value: £660,000
    Value with freehold: £680,000
    Marriage value: (zero as more than 80 years on lease)

    With a yield of 8% and a 5% reversion, this works out at less than 15k.

    An informal offer of 20k was rejected by the freeholder (they wanted 25) and we are now looking to serve notice and hand negotiations to a surveyor.

    Assuming our surveyor can negotiate a figure of £17k for the freehold then I estimate our totals costs to be thus:

    Freehold: £17k
    Valuation: £1.1k
    Negotiation fees: £500
    Legal fees: 2k
    Freeholders valuation: £1k
    Freeholder's Legal Fees: £1.5k
    Setting up Limited company: £200

    Total: £22.8k

    I have also calculated that should it go to and LVT tribunal, and we were to settle on the freehold at £15k, the freeholder would be down to well under £12.5k in terms of actual profits, and I would be up to say ~£25k in total costs.

    Obviously we would both like to avoid this, but given what they stand to lose at an LVT, is there any reason why they wouldn't accept a figure of £17k for the freehold?

    Just a couple of questions I've been muling over:

    1) What is it exactly that the lawyer does? I know they serve a notice to the landlord, but 2k seems ridiculous for this amount of work. Is it possible to serve an official notice "ex-legalis" and then employ a lawyer on completion to do the necessary conveyancing?

    2) Also, I was wondering if anyone has had any experience of setting up a limited company, as I would have thought this would have been relatively straightforward to do on your own, or at least achievable with the right research?

    Any comments would be much appreciated

    #2
    I think there is a sample constitution for both a commonhold and an RTE company on the Lease Advisory website which would give you a start.
    I am not a solicitor, I am a lessee/shareholder in conflict with the management. Please seek your own legal advice before relying on my comments in this forum!

    Comment


      #3
      some useful documents

      spent most of the day reading up on stuff yesterday.

      setting up a company seems easy enough to do on companies house.

      I found a model Memorandum of Association and Articles of association for an RTE Company here.

      Seems to come to just over £20 in total, and seems straightforward enough.

      -----

      I also found a model Notice of tenant's claim to aquire the freehold or an extended lease which i have attached. I got it as a sample from a legal website, and it doesn't seem to be editable so will need to cut and paste into another document.

      I was wondering if anyone had had experience of serving their own notice and whether any possible complications could arise. I know if it doesn't meet standards then you are barred from serving another for 12 months!

      It's not really a risk I want to take, but I have a quote for the conveyancing of £600+vat so if I can handle myself until then its a £1400 saving!

      Any experiences with serving notices is welcome here.
      Attached Files

      Comment


        #4
        Originally posted by sandrogalli View Post
        What is it exactly that the lawyer does? I know they serve a notice to the landlord, but 2k seems ridiculous for this amount of work. Is it possible to serve an official notice "ex-legalis" and then employ a lawyer on completion to do the necessary conveyancing?
        The Notices are technical documents. Sure, serve it yourself BUT ONLY IF you can be certain of getting it right.
        JEFFREY SHAW, solicitor [and Topic Expert], Nether Edge Law*
        1. Public advice is believed accurate, but I accept no legal responsibility except to direct-paying private clients.
        2. Telephone advice: see http://www.landlordzone.co.uk/forums/showthread.php?t=34638.
        3. For paid advice about conveyancing/leaseholds/L&T, contact me* and become a private client.
        4. *- Contact info: click on my name (blue-highlight link).

        Comment


          #5
          Hi,

          1. Do you know for sure if the Notice you have is valid?
          2. Do you know what information you need to put in the Notice?
          3. Are you aware that if you get the Notice wrong, although you can serve another Notice, you must pay for the freeholder's legal costs of investigating the Notice?
          4. Do you know what deadlines are involved once the counter-notice is served?
          5. Do you know how to check whether the freeholder's counter-notice is valid?
          6. Do you know what the procedure is if the freeholder's counter notice is invalid?
          7. Do you know what the deadlines are if the freeholder's counter notice is invalid?
          8. Do you know what to do if negotiations fail between you and the freeholder?
          9. Assuming negotiations reach a successful conclusion, do you know what fresh deadlines are imposed upon you?
          10. Do you know what happens if you miss any of the deadlines?
          11. The list goes on....

          The point is, whilst I appreciate the human desire/instinct to save money, by not seeking professional help, you may end up paying MORE money than you are potentially saving.

          I speak from experience. Many of my clients in the past have come to me either as a result of a non-experienced solicitor messing things up, or as a result of non-legal leaseholders attempting it for themselves.

          I leave you to draw your own conclusions.

          Kind Regards

          Tom

          Comment


            #6
            golly i didn't realise there were solicitors browsing these boards.

            my apologies, i didn't mean to discredit what you do, i was just looking to get a clearer picture of the legal side of things and see if it was possible to do any of the work myself.

            as it stands, i am currently in the process of choosing a surveyor and will keep the boards updated with developments.

            san

            Comment


              #7
              Originally posted by sandrogalli View Post
              golly i didn't realise there were solicitors browsing these boards.
              Perhaps because I post so infrequently.
              JEFFREY SHAW, solicitor [and Topic Expert], Nether Edge Law*
              1. Public advice is believed accurate, but I accept no legal responsibility except to direct-paying private clients.
              2. Telephone advice: see http://www.landlordzone.co.uk/forums/showthread.php?t=34638.
              3. For paid advice about conveyancing/leaseholds/L&T, contact me* and become a private client.
              4. *- Contact info: click on my name (blue-highlight link).

              Comment


                #8
                Lol........!

                Comment

                Latest Activity

                Collapse

                Working...
                X