Can I block the sale of my building?

by Readers Question

10:28 AM, 16th August 2016
About 2 years ago

Can I block the sale of my building?

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Can I block the sale of my building?

I bought a Buy to Let flat in 1999 and since then there has been significant capital growth. Two years ago the lease holders bought a share of the freehold and I now have a 999 year lease. veto

A developer has expressed interest in buying the block from the freehold company, knocking it down and redeveloping it into many more flats with an adjacent building and grounds. If it goes ahead is it true that if the majority of the lease holders want to sell, then I have no right to say no and block the deal going through?

Am I in any position to force the developer to provide me with a similar size, two bed flat in a new block and, if so, would I then have to pay CGT?

Many thanks

Susan



Comments

Charles King - Barrister-At-Law

12:29 PM, 16th August 2016
About 2 years ago

Hi Susan, I suppose it is conceivable that you gave the freeholder an option to purchase your flat in certain circumstances when you bought the place, but it would be very unusual in my experience for a lease to contain or be accompanied by any terms which would effectively allow a compulsory purchase at the whim of the freeholder. The usual position is the exact opposite: that the freeholder must offer you the option to purchase if they intend to sell. It may depend on where the property is (weird things happen in London and Scotland). Everything will depend on exactly what the terms of your lease are - check the lease very carefully. Others on this site may have come across this situation before, but it's not at all normal. It's a contractual matter. In general nobody is allowed to steal your flat and knock it down no matter how many of your neighbours want it. It's a fundamental principle of the law of property! Good luck

David Price

12:40 PM, 16th August 2016
About 2 years ago

The freehold and the leases are entirely separate and any prospective purchaser (developer) must negotiate separately for each individual lease. The trick is for all the leaseholders to band together and ask for an offer that no one can refuse. If I have understood your position correctly one dissenter could stop the whole deal.
You do not say whether the freehold is owned jointly with all the other leaseholders of whether it is a commonhold? There are rules about selling the freehold which can be found on the LEASE website.

David Aneurin

13:47 PM, 16th August 2016
About 2 years ago

1. I assume that the leaseholders jointly purchased the freehold and you have a share of that through the management company.
2. The freehold could be sold but you have a 999 lease and I would assume that the only way you could be forced to give that up is by compulsory purchase.
3. Any price offered should take into account a premium sufficient to cover any tax payable.
4. May be that you agree to sell as long as you get the pick of the apartments in the new build, and a cash bonus as well.

sue walker

14:06 PM, 16th August 2016
About 2 years ago

Thank you for your comments. The flat is in the home counties. You are correct in assuming that the leaseholders jointly bought the freehold and I have a share of that through the management company. Regarding the comment about having the pick of the new apartments, I am trying to find out how this would affect the capital gains tax. Does a transfer mean that I would not have to pay any CGT or would it simply be like buying a new flat with the enhanced stamp duty etc? If the latter, I can't see a benefit of selling the flat within the next ten years or so, even at a premium, because, I bought and paid for it while I was working and now the rental income supplements my pension.

David Aneurin

14:11 PM, 16th August 2016
About 2 years ago

I think you would have to pay CGT but the price offered must be at a premium to make it worth your while to accept. i.e. it has to be the current price of the flat, plus an amount to cover CGT and I would also suggest a premium.
The developer cannot expect you to be out of pocket so his offer has to make you interested.

David Price

16:43 PM, 16th August 2016
About 2 years ago

Collectively and severally the leaseholders hold all the aces. Drive a hard bargain.


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