Can we insist that the freehold for the properties is sold separately from the leases?

Can we insist that the freehold for the properties is sold separately from the leases?

9:18 AM, 26th February 2016, About 8 years ago 5

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Some time ago I asked for your views about purchasing the freehold of the development where we live. Your comments were very helpful.insist

On the 21st December the solicitors, acting on behalf of the bank, served a notice pursuant to section 5 of the landlord and tenant act 1987, prior to the property being sent to auction in May this year.

A group exceeding the requisite number of the qualifying tenants have served a section 6 notice on the seller by the deadline, naming all those who are accepting the offer with their addresses.

The notice served by the bank’s solicitors to the qualifying tenants invites us to purchase the FREEHOLD. Our understanding of the Landlord and Tenant Act 1987 (as amended) is that we are only legally entitled to buy the FREEHOLD at the price reached at auction. However, we have now been told that the sale will include the leases of the 45 unsold flats, the leases of some commercial premises and an area of land not yet developed. This is likely to put the price way beyond what the qualifying tenants can afford, but they will have sufficient funds to purchase just the freehold. It will be in the order of 7 times the freehold cost.

What we would like to know is , under the Act, can we insist that the freehold for the properties is sold separately from the leases.

We are looking to employee a solicitor to advise us in connection with the remainder of the procedure to enable the qualifying tenants to successfully purchase the freehold of the property pursuant to the Landlord and Tenant Act 1987. However, there is little point in taking things to the next stage; indeed we are unlikely to get sufficient support to do so, if the freehold is not sold separately.

Many thanks


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11:42 AM, 26th February 2016, About 8 years ago

Unfortunately no, you cannot insist on the division of the freehold however, in my opinion, the solicitors are not doing themselves any favours as each constituent part will have perhaps, a better individual value. More work to draw up leases for the commercial etc. but its no great hassle!

It does sound like an interesting opportunity and perhaps we could discuss a joint purchase with you? I work for a private investment company (very old British family) with a portfolio of several hundred residential properties in London and the south of the UK along with 40,0000 plus acres. I appreciate it must be daunting not knowing who your new freeholder is likely to be but we would be happy to work with you?


10:48 AM, 27th February 2016, About 8 years ago

Why does this not qualify for Collective Enfranchisement? Contact the Leasehold Advisory Service and look at their website before you do anything else.

Kate Mellor

11:04 AM, 27th February 2016, About 8 years ago

You say, 'the leases' of the 45 unsold flats & some commercial properties and undeveloped land. I just wondered whether in fact the leases had not yet been created and split from the freehold title and were in fact PART of the current freehold being sold. In which case it would be both time consuming and expensive to first create the leases & split the titles. In any case if the existing freehold for sale is on a single title the sale would still be for the freehold of the same area (although considerably cheaper with the leases removed) so if you were only wanting to purchase the freehold for the flats (or maybe your own flats) this will additionally involve splitting the title. Much less easy to accommodate. If it's all been done and your freehold exists on its own separate title ready to go, it may be worth offering them a premium to the value to incentivise them to sell separately bearing in mind it's worth more to you & your neighbours perhaps than to a potential investor. But it is most likely the least valuable aspect of the sale and as such may be considered not worth their time & effort to separate. Also, banks do not tend to be very flexible or negotiable or in fact business-like when it comes to these things. They are quite robotic.

Elizabeth Arnold

10:43 AM, 7th March 2016, About 8 years ago

Thank you all for your help. Unfortunately, as qualifying tenants, we will not be taking this any further. We did contact the Leasehold Advisory, the information available was great and we will keep the address for future reference. We sent them a question but they said they normally respond within 15 days, which was too long. We did take other legal advice.

The good thing that has come out of it is that we are all more aware of the legal position and we now know a lot more of the leaseholders.

Should you be interested, the property is a marina development and will go to auction with Acuitus on the 19th May. They have said that there will not be a reserve but who knows. It would be nice to think that someone more responsible than the original developer will buy it, Simon.

Chris Byways

16:21 PM, 7th March 2016, About 8 years ago

I know nowt, but reaction was, as Simon said "the solicitors are not doing themselves any favours as each constituent part will have perhaps, a better individual value."

If you discussed with potential investors, (like Simon) to bid, sell residents the freehold, then keep/sell off the other constituent parts, it could be a win win? Or for the ambitious, arrange funding to diy.

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