RTM or Purchase Freehold?

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    RTM or Purchase Freehold?

    Hello All

    I've been reading this forum for years and didn't think I'd have to ask advice as we were quite happy with our set up. Until now.

    We live in a converted Victorian semi. There are four flats-three on long leasehold and one shared ownership. The SO flat and at least two of the others have extended their leases recently. The FH is a housing association.

    For over 20 years we have carried out our own cleaning of the communal parts and have maintained the front garden and car park at the rear of the house. We have now been told that we MUST have the FH's cleaners and gardeners because "if someone hurts themselves doing the cleaning..."

    To be honest over the years we have done any minor repairs-changing light bulbs, putting up a security light-because their workmen are invariably rubbish and expensive rubbish at that. We really don't wish to pay them any more money.

    We (all the leaseholders & SO)have owned these properties for over ten years and don't intend to sell anytime soon. Two LHs are non resident but I keep up with them via email & phone. We're wondering whether we should buy the FH or exercise RTM. I don't think the housing association would be awkward if we did ask to buy the FH. I believe we wouldn't have to set up a RTE company to do this but would it be wise to do so?

    On the other hand RTM would be quicker (hopefully) and less expensive but as most have extended their leases, would RTE be a better option?

    Any idea how the SO flat would be dealt with? The share is 50-50 with the housing association.

    Thanks

    #2
    The building may be exempt from RTM and RTE because of the HA ownership and a retained SO flat.
    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.

    Comment


      #3
      It isn't. RTM applies to HAs. See Nicholas Kissen's short article called "Tenant Takeover"on the LEASE site.

      And in case of enfranchisement, the SO would be on leaseback if the FH sold.

      Comment


        #4
        Well you seem to already have your answers. I said may for a reason, the least of which is that I have a few lines posted to comment. If you are content on the basis of a brief article and you feel that you have done your research, then I wish you favourable winds.

        As to RTE v RTM then the decision comes down to a comparison of whether you are prepared to save the money that you would use for RTE for yourselves or your homes, against the trade off of
        limited involvement with the freeholder over consents etc and the lack of the right to forfeit a lease in breach.

        If on the basis of your post the HA has been content to leave matters to you, if your leases allow for the appointment of and the expenses of a manager, you might think of creating a management company to act as agent for the HA.
        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.

        Comment


          #5
          Thanks for the response.

          Sorry for any misunderstanding re the Lease article which I have used only by way of example. I have been dealing with LA and HA (and private)leaseholders for the past ten years. The assumption was RTM could be permitted where the qualifying criteria were met in a mixed tenure building. The CIH Leasehold Management guide actually says that lessees (but not Shared Owners)of Charitable Housing Associations can *generally* exercise RTM and this guide was approved by the NHF and the Housing Corp.(god what a useless bunch of people I had to deal with at the Housing Corp)

          I think the fact that our HA has granted lease extensions-even in the case of the SO flat-tends to indicate that they are not considering the building an exempt property.

          I believe the Brick Farm/Richmond Housing Partnership decision in 2005 has settled the right to enfranchise issue. But if you are aware of a later case which has cast a new light on this, I would be interested to know of it. We did have a discussion about this a few years ago and the HA was willing to sell.

          In any case-we are asking the HA about both and should receive an answer fairly soonish.

          The query was whether RTM or buying the freehold would be the best option. In terms of cost then RTM is the obvious best choice. Even if the other leasehiolder has extended his lease, there is a large loft which I don't think the FH is going to forget when valuation time comes round.

          If, however, we do decide to buy the freehold, is it best to form a company?

          Comment


            #6
            The freeholder owns the building and external gardens/pathways, subject to the leases of the demised flats. Under the terms of the leases, it has the right to receive annual ground rent and demand service charge contributions from leaseholders. The freeholder has duties under the leasehold system to keep records of lessees and if required, give consents to transfers,register changes of mortgage charges on the leases and registering subletting. etc. It has powers to grant new leases to 999 years.

            The RTM Company allows the leaseholders to claim the right to management the service charge account for maintenance of their building. The RTM can appoint an agent or self administer the service charge account and perform the duties under the leasehold system ( excluding collection of ground rent and dealing with forfeiture and granting new leases ).

            Yes, it is better to buy or form a new company to hold the freehold title. The Land Registry only allow a maximum of 4 names on the property title and this becomes a problem if some flats have joint owners.

            Comment

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