The evil business of Freehold

[MrBen]

Good freehold management has a place to play given this countries rather ancient leasehold / freehold system but for me most freehold companies are right up there with credit card companies, loan pushers and bookies as an evil but legal form of cash extraction.

I let out a flat which I own on leasehold and we've always paid our bills (ground rent, buildings insurance etc) on time to the freeholder.

But in the past few years I've seen an increase in all kinds of charge: an unnecessary asbestos search report, fire extinguisher installation (in an ED terrace!) and today...best of all...?132 and five people to change a communal light bulb (I kid not).

When I lived there I just used to change the tube myself ?10 from Plough DIY.....

Yes there is the old Leaseholders Advice line you can call but.... all of the scenarios above were deemed legally "fair and reasonable". It seems I'm not allowed to change a light bulb on the communal staircase between two flats unless I'm a qualified sparky and have full public liability insurance and kicking up a fuss just gets me lawyers letters and penalty fines. If I took it to court I'd lose.

It's evil and the blight of freehold management companies needs to be destroyed and removed from this fair country - when will the law change?

[Salsaboy]

You could always band together with the other owners in the property and buy the freehold. Then do away with the management company and manage it yourself.

[Jah Lush]

Totally agree with Salsaboy. Has saved me an absolute fortune since I bought my share of the freehold in the small block I live in a few years ago. I regularly used to pay maintenance fees of around ?3,000 a year and now it's around ?800.

[red devil]

Have you thought about getting together with the other leaseholders and buying the freehold?

If your flat is a long term investment it might work out cheaper in the long run, plus when you come to sell it will add a premium to the price...

[Gidget]

IF you don't live in the flat then you don't have the right to buy the freehold.

[red devil]

You only need 50% of the total number of leaseholders to agree to buy the freehold...

[womanofdulwich]

You dont have to live in the flat to buy the freehold

[Gidget]

I thought you had to own it and live in it for a certain amount of time before applying to buy the freehold, unless those rules have changed. Was the case when I wanted to buy freehold of my flat over ten years ago.

[womanofdulwich]

yep the rules all changed.if buying the freehold you do not even have to have owned it for 2 years.

[MrBen]

We missed a trick back in 2002 when we all bought the 3 flats together and the small time developer offered to sell us it for ?5k. We tried to knock him down to ?3.5 to offset some snags that needed correcting from the purchase. He replied he was doing us a favour and stuck it in at Auction....which we went along to and watched it go for ?11k.

A valuable lesson learned - always know the true value of an asset before you start haggling over it. We didn't know it was a bargain versus its true market value.

I reckon it would cost us about ?15k to buy it back (inc legals) and save us ?500 per year each so we'd have to hold for 10 years to get a return....unless it actually does add a premium on sale. I'm not convinced about that. They have 120 year leases so I don't think freehold versus long leasehold makes much difference to a buyer?

[womanofdulwich]

It should make a differnce in value- it does in Central London. If you have an informed estate agent they should recognise this fact. Some depends on what ground rent and service charge you pay now. If you have 2 identical falts for sale - one freehold and one paying ?500 pa ground rent- then technically the freehold one is worth circa ?10 k more. Then if the leasehold has a high service charge ( ?120 light bulbs add up) of saY ?1000 per flat- but you can show you have improved the management costs- but not at the cost of dropping maintetnace/ sinking funds - then this should add value too. However if the potential buyers are uninformed and particularly the local agents then this will not always be picked up.

[red devil]

What WOD said...I believe having a share of freehold also increases the saleability of a property, something you can't put a tangible monetery value against. And as you've found out with the light bulb incident, being in control of how things are run also has a non-monetary value in that you're less likely to get stressed out ;-)

[Annette Curtain]

You let it go for a measly ?1,500

Oh dear, what a dope.

(but you know that don't you:()

[Fabricio the Guido]

Another option, if purchasing the freehold is not feasible is to set up a Right to Manage company and you can run the building without actually owning the freehold.

[MrBen]

Annette Curtain Wrote:

-------------------------------------------------------

> You let it go for a measly ?1,500

>

> Oh dear, what a dope.

>

> (but you know that don't you:()

Yep. But back then I had less than nothing. I bought my flat with a 10k deposit cobbled together from a credit card and a bank loan. I remember getting the keys, opening the front door and realising I couldn't afford any furniture. I slept on a blow up mattress for 3 months and washed my clothes at Underhill Road laundrette. Great feeling though managing to buy your first place...

[Huguenot]

:) I remember my first flat on Oakhurst Grove. It was building site for 6 months!

[gedwina]

I would say the freehold would be worth more than ?15k (three units and sold for ?11k in 2002) - they are fairly nice low level investments. We did a lease extension (to a virtual freehold) fairly recently for around ?15k on a one bed - legal?s were around the ?600 mark.

But as with all leasehold properties it is dependent on ground rent/ service charge / lease length / property type / value and the many unknowns only surveyors seem to understand. If you do decide to go down the route ensure you get a couple of surveys and make sure the surveyor and solicitor doing it is local or knows the area.