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Thread: Flats Freehold, potential purchase, value, responsibilities and liabilities advice

  1. #1

    Flats Freehold, potential purchase, value, responsibilities and liabilities advice

    Under "Collective Franchise" legislation, as flat owners we are being offered the freehold to the 18 flats (3 blocks of 6) before it goes to auction.

    As long as a majority of owners (10 in this case) want to buy, and we can raise the funds between us, we can go ahead.

    However as flat owners we don't really understand the liabilities we might be taking on. There are the usual collection of paths, common walls, garages, drying areas etc.

    As a Health and Safety Manager, the H&S aspects don't worry me, but are there any other responsibilities we need to worry about?

    Is there anyway an unscrupulous freeholder could monetise the freehold, if it doesn't fall into our hands?

    Finally, is the anyway, given a 999 year lease 50 years in, fixed ground rent of 15 per year per flat (270 per year total!), we can put an approximate value on the freehold?

    Many thanks in advance!

  2. #2
    Master draftsmann's Avatar
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    Being in control of the freehold puts flat owners in the best position IMO. With leases of that length and minimal ground rent the share of freehold acquisition cost per owner should be no-brainer small.

  3. #3
    Grand Master Chris_in_the_UK's Avatar
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    My wife's sister's MIL (if that makes sense) bought a flat local to us in town in similar circumstances. She is very shrewd and some of the issues that needed some attention were:-

    Shared liabilities for maintenance and upkeep - including a 'fire fund' for any unforeseen major issues. Things like maintenance of 'common' areas, lift maintenance etc.

    Agreements (signed) relating to property and contents insurances.

    Formation of a committee for the ongoing (collective) residency and management of the above.
    When you look long into an abyss, the abyss looks long into you.........

  4. #4
    Id put an offer in circa 10k.

    Specialist buyers may pay more ....

    If it falls into one of the big ground rent companies then prepare yourself for high fees imposed on all sorts of consents/supply of info on flat sales

    As to the responsibilities- they will all be set out in the lease. Generally maintenance/service charge collection and insurance

    Once bought the 10 or however many participants would normally form a company to own the freehold. They can then outsource the day to day management to a property management company of their choice. The beauty of that is if they are doing a poor job you get to hire and fire




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  5. #5
    Master wileeeeeey's Avatar
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    Would be nice to own the freehold if possible but as your lease started at 999 years that is commonly known in the property world as "virtual freehold". More of a chance to be the masters or your own destiny rather than a good investment.

    What was said above about forming a company to own the freehold then giving shares in that company is correct.

  6. #6
    Quote Originally Posted by dandanthewatchman View Post
    Id put an offer in circa 10k.

    Specialist buyers may pay more ....

    If it falls into one of the big ground rent companies then prepare yourself for high fees imposed on all sorts of consents/supply of info on flat sales

    As to the responsibilities- they will all be set out in the lease. Generally maintenance/service charge collection and insurance

    Once bought the 10 or however many participants would normally form a company to own the freehold. They can then outsource the day to day management to a property management company of their choice. The beauty of that is if they are doing a poor job you get to hire and fire
    Thanks to all so far.

    By "high fees" are you talking the 750 to 1000 range by any chance? This, I assume, until the practice is outlawed by legislation (very soon?)?

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