Buying the freehold on my block of flats

[motorbiking]

I already covered that.. but maybe I wasn't clear enough.

.., yes you need to find a fair way to value the purchases of the lease. The Lower the years left the more value there is. As part of your purchase you could make a proposal to top everyone up to 125 years and charge perhaps 10 or 20% of the total cost per year gained. You need to be careful not to alienate buyers. If you don't get consensus then you hold the freehold separately and the resident owned freehold company can charge them at a time in the future.

Everyone pays 80% of the total costs (who sign up now).
You take the remaining 20% of the total costs. You add up the total of the years added to all those who sign up now. You divide the total costs by the number of years to get a per year cost. Each person pays 80% + their portion of the 20%.

You can play with the split as you like. The difference should be trivial.

Importantly you also need to look at those with shorter leases and use a calculator to work out the market value of their extension.

Those who sign up today, will be "collecting" from those who sign up tomorrow.

 

[denso13]

Are you saying the lease extensions will be free? Surely,we've got to charge something?

What would u charge people with short leases compared to people who've already extended their lease?

My neighbour who just extended his lease for £20,000 wants long lease holders to pay less? How much should I suggest?

With respect, you need to get a solicitor appointed and they will guide you through this. If something goes wrong then it would look rather silly to say "someone on a DIY forum told me what to do".

 

[motorbiking]

he's got a solicitor dummy, the above is "commercial" not "legal".

not that you have a clue.

 

[denso13]

Ad hom noted.

 

[Keitai]

I already covered that.. but maybe I wasn't clear enough.

Everyone pays 80% of the total costs (who sign up now).
You take the remaining 20% of the total costs. You add up the total of the years added to all those who sign up now. You divide the total costs by the number of years to get a per year cost. Each person pays 80% + their portion of the 20%.

You can play with the split as you like. The difference should be trivial.

Importantly you also need to look at those with shorter leases and use a calculator to work out the market value of their extension.

Those who sign up today, will be "collecting" from those who sign up tomorrow.

So 80% of the total of £61000 +£4200= £65200.

80%= £52160

20%=£13040

then im confused. You say total of the years added. Do you mean the length of everyone's lease added together?


The total of the years is everybody participating 's length of lease added together? If this is correct, do I then divide £13040 (20% of total ) by total number of years of each individual participants lease added to get per year cost?

If this is correct, they won't understand it. (Most these people are cleaners/roofers/on benefits. I'll need examples. My lease is 116 years so how much do I pay? and I'll need to show them an example of someone with 60 year lease so it's clear, how much would the 60 year person pay? I'll need examples of different lease lengths so they walk away with ballpark figures of what they'll be paying. A formula won't cut it.

 

[motorbiking]

maybe an example.. And this is just a commercial suggestion on how to come up with a fair contribution.

5 flats in the block lets say. (using your numbers)
No1 lease is 90 years remaining
No2 100
no3 85
no4 100
no5 90

1. 125 - 90 = 35
2. 125 - 100 = 25
3. 125 - 85 = 40
4. 125 - 100 = 25
5. 125 - 90 = 35

160 years, £81.5 per year. each flat pays 1/5th of the 80% + their share of the 20%.

1. £2,852 + 10,432
2. £2,037.5 + 10,432
3 £3,260 + 10,432
4. £2,037.5 + 10,432
5. £2,852+ 10,432

In all cases the top up should/must be lower than the commercial value of extending the lease and the goal is to keep the difference very small, while acknowledging those with short leases are getting a more value from the deal than those with longer leases.

 

[Keitai]

maybe an example.. And this is just a commercial suggestion on how to come up with a fair contribution.

5 flats in the block lets say. (using your numbers)
No1 lease is 90 years remaining
No2 100
no3 85
no4 100
no5 90

1. 125 - 90 = 35
2. 125 - 100 = 25
3. 125 - 85 = 40
4. 125 - 100 = 25
5. 125 - 90 = 35

160 years, £81.5 per year. each flat pays 1/5th of the 80% + their share of the 20%.

1. £2,852 + 10,432
2. £2,037.5 + 10,432
3 £3,260 + 10,432
4. £2,037.5 + 10,432
5. £2,852+ 10,432

In all cases the top up should/must be lower than the commercial value of extending the lease and the goal is to keep the difference very small, while acknowledging those with short leases are getting a more value from the deal than those with longer leases.

Little clearer so total of 20% is £13000. My lease is 125- 116 so 9 years so if 11 people sign up most of them on 60 years ball park figure us ill pay about £150 and 60 year man pay £1000 added to the 80% total. Of approx £5000 so I'll pay £5150. He'll pay £6400 . I need to tell them well all be paying within £1000 of each other.

Tbh easier we all just pay the same in mu opinion

 

[motorbiking]

Well that is certainly an option. and with such wide differences, you may want to reduce the differences (e.g. 10% or 15%). remember the goal is to get as many as possible to opt in, thus reducing the cost for everyone. A lease under 80 years has lost a significant amount of its value that is a fact you shouldn't ignore.

Those getting a flat fee to top up a 60 year lease are getting a bargain at the expense of those with 80+ years.

The other option is park the lease extension and just agree favorables rates for those buying in now. i.e. everyone gets the right to add-years for x, but we all pay 100%/ divided by holders for now. thats fairer on those with long leases.

 

[blup]

With respect, you need to get a solicitor appointed and they will guide you through this. If something goes wrong then it would look rather silly to say "someone on a DIY forum told me what to do".

Tbf you wouldn’t this advice from a typical solicitor free or otherwise

 

[denso13]

Tbf you wouldn’t this advice from a typical solicitor free or otherwise

You want someone you have some fall-back on, taking advice on this sort of thing from a DIY forum, from people who you have no clue about is not the way to go about it.

A bit of advice is one thing, splitting 10's of thousands over 100 year leases is quite another. My first question to the OP would be, "how did you calculate the figures? Someone on the internet did it? Erm ok..."

 

[motorbiking]

Again these are commercial decisions, not for the lawyer. A surveyor would be the person assessing if this freehold offer is a good deal or not. Nobody has suggested it is or isn't. There are various calculators available online to estimate the cost of extending the lease. The solicitor will be aware of the The Leasehold and Freehold Reform Act 2024 and may give some guidance on the impact.

The standard valuation method for collective enfranchisement is here:

Leasehold and Freehold Reform Act 2024

www.legislation.gov.uk

more guidance here:

Leasehold and Freehold Reform Act 2024 - The Leasehold Advisory Service

14 October 2024 The Leasehold and Freehold Reform Act 2024 (“the Act”) will make it easier and cheaper for leaseholders to buy their freehold, increase standard lease extension terms to 990 years for houses and flats, and provide greater transparency over service charges. The Act will also...

www.lease-advice.org

Should I wait to extend my lease? I have heard that planned changes could make lease extension cheaper. - The Leasehold Advisory Service

This is a difficult question to answer and depends on your personal circumstances. The Act is not in effect and […]

www.lease-advice.org

 

[blup]

You want someone you have some fall-back on, taking advice on this sort of thing from a DIY forum, from people who you have no clue about is not the way to go about it.

Anybody who relies on advice on a diy forum is asking for trouble unless they think through the advice themselves and apply it only if it makes sense to them

A bit of advice is one thing, splitting 10's of thousands over 100 year leases is quite another. My first question to the OP would be, "how did you calculate the figures? Someone on the internet did it? Erm ok..."

The OP keeps coming back if he is unclear

 

[denso13]

Again these are commercial decisions

Again, getting detailed advice of this kind from, for all the op knows snake oil salesmen, is foolish. In my humble opinion.

 

[motorbiking]

I think you may be missing the fact that nobody is telling the OP, if the offer is a good deal or not. That is for him and his neighbours to decide.
The more research he does the better he will be informed and the lower his legal fees.

Whatever your field of expertise is, I am sure you appreciate that when someone needs knowledge, the value is as much in what questions to ask as much as the answers given.

 

[blup]

Again, getting detailed advice of this kind from, for all the op knows snake oil salesmen, is foolish. In my humble opinion.

My only query would be why skew the deal to the benefit of the leaseholders with less to run; they are not going anywhere unless they extend their leases, whereas the long leaseholders can sell if not happy.