Is it worth contributing to the purchase of the freehold

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    Is it worth contributing to the purchase of the freehold

    Hello
    I was hoping someone could give me some advice.

    I currently live in a house converted into 2 flats, we own the top 2 floors and the other tenant has the one basement floor.
    We also have access to an undeveloped loft space but as part of the lease is owned by the freeholder.

    The other tenant has requested to buy the freehold, for which the freeholder has quoted £15,000 and offered to us also by law.

    Now i am under the understanding that we could turn down the offer and accept them buying it or block it or make the offer of sharing the purchase?
    Our lease was extended last year, with 105 years left at £150pa ground rent, doubling every 25 years.

    The current managing agent and insurance fees are high but the other tenant has indicated that these will be reduced.

    Where would we stand if we didn't or are there any advantages to buying a share?
    As they would be a tenant owning the freehold, in the future would we no longer have the right to buy the freehold in the future?

    After chatting to a friend, he thinks the offer is high and is probably a result of a short lease on the basement flat.
    Would it be beneficial to us to make an offer but the basement flat pays more based on their lease length?

    Please can anyone help??
    Not sure what the best course of action is.

    #2
    A leasehold title is only a long term rental agreement and your rights as tenant/lessee are less than the rights of the lessor/freeholder.

    The offer of freehold title has to be offered to both leaseholders and if one leaseholder declines , the other leaseholder can proceed to buy the freehold. You can download the free guides to 1. freehold enfranchisement for flats and 2. Right of first refusal from www.lease-advice.org

    Also you need to ask yourself how long you plan to stay at the house ? If you plan to stay long term , then you should look to participating. If your lease terms are different , then you need to work out the cost each flat has to contribute towards the 15K.

    If you contributed to buying a half share in the freehold , you become joint owner of the building and land at your address and responsible for paying 50% of the maintenance costs.

    The benefits you stand to gain are :

    1. you should expect to stop paying the 150 pds annual ground rent which is almost equivalent to having a bank deposit of 5K earning 4% interest = 200 pds per year or 160 pds left after 20% tax deduction .

    2. you may have chance to develop the loft space for no premium if you agree to allow the other flat owner to erect an extension on the ground floor.

    If you don't participate, you will remain a leaseholder as you are now. You will continue to pay 150 pds per year until the next rise in ground rent stated in your lease. If you find the next freehold is a bully, then tough for you !

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