Do I purchase upstairs flat to take control of my building?

by Readers Question

12:08 PM, 16th June 2016
About 3 years ago

Do I purchase upstairs flat to take control of my building?

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Do I purchase upstairs flat to take control of my building?

We own a ground floor flat in an East London house converted into two flats in the 1970s. We have 120 years remaining on a 125 years lease.the price is right

The upstairs flat has 60 years left on a 99 years lease. It needs refurbishing; we’ve had leaks through our ceiling. External maintenance has been neglected and is starting to impact on the fabric of our flat.

The leaseholder ignored our suggestions to work co-operatively to sort it out and the freeholder ignores the breaches in the lease regarding repair and maintenance despite them being brought to her attention.

The Current Situation:

The upstairs flat was sold at auction last month, but the sale fell through and it’s coming up for auction again. We are assuming (maybe wrongly) that it will fetch less this time around.

Could this as an opportunity to buy the upstairs flat, exercise control over the fabric of the house – and apply for the freehold because we own both flats. Or are there just too many uncertainties over the potential costs involved, either in a lease extension for upstairs, or in purchasing the freehold.

If the Price is Right:

Clearly the purchase price of the upstairs flat is the deciding factor – and that’s unknown, but in principle is owning both flats the only real way to address our concerns about the overall state of the house?

Many thanks

Elizabeth



Comments

Bill O'Dell

9:47 AM, 17th June 2016
About 3 years ago

I'd make contact with the freeholder first to see if they are willing to sell. If you can buy that, you can exercise some influence over the top flat owner and force their repair and renewal obligations. That would cost you less and protect your flat.
If you want an extra property, then by all means go for buying the top flat, but it won't necessarily help you buy the freehold if the freeholder doesn't want to sell, and will leave you with the repair and renewal obligation.

Francis Drake

9:58 AM, 17th June 2016
About 3 years ago

Normally leases run for the same period in the same building so I presume that you had a lease extension on your lease.
Buying the upstairs even at a price higher than usual is an opportunity not to be missed, Subject, of course, that you have the finance in place.
Then you can list the works needed on order of priority and do them at your own leisure.
Rent the upstairs and hopefully the rental income will cover your repayments
Every penny you spend goes to the fabric of your own building and you are in charge.

Tony Atkins

10:02 AM, 17th June 2016
About 3 years ago

If you have the money to buy, it sounds like a no-brainer to me: it's not the omly solution, but you'll have control and the freedom to upgrade the flats and fix the problems as you wish, then decide if you want to continue letting or sell the improved flats. Either way you should make money courtesy of these third parties who are evading their responsibilities.

Lease extensions and freehold purchases have pretty predictable prices; ask a few surveyors with experience in such matters

Colin Dartnell

10:08 AM, 17th June 2016
About 3 years ago

Unless there are issues with the landlord that would stop you, I would jump at it. You would have control of who lives in the flat for a start, and as you say you can keep the building in good repair without dealing with another leaseholder.

Was there was a lot of interest at the previous auction? See if they will accept an offer before the auction, at least you know what the previous sale price was, offer less then if they refuse it go to the auction.

If you need a mortgage some lenders may not like the short lease.

The freeholder will probably want a high price if they are willing to sell the freehold, to offset what they would have got on the upstairs lease extension.

Francis Drake

10:54 AM, 17th June 2016
About 3 years ago

Reply to the comment left by "Bill O'Dell" at "17/06/2016 - 09:47":

The freeholder has to sell by law once they own both flats in the block

Steve Masters

12:58 PM, 17th June 2016
About 3 years ago

If you haven't already done so you might like to Google "collective enfranchisement" and check out exactly what you're options are in your particular situation regards buying the freehold.

Steve Masters

13:36 PM, 17th June 2016
About 3 years ago

The term for leaseholders forcing a freeholder to sell is called "collective enfranchisement", Google it for more information.

Francis is right so long as following is NOT true:-
• The building is a conversion into four or fewer flats and not a purpose-built block AND* ALSO
• the same person has owned the freehold since before the conversion of the building into flats AND* ALSO
• he or an adult member of his family has lived there for the past twelve months

Regardless of who owned the freehold at the time of the conversion, so long as the person living upstairs is not a member of the freeholders family then you can buy the freehold once you own both flats.

As others have said, owning both flats puts you in a very advantageous position to control your own interests.

terry sullivan

14:02 PM, 17th June 2016
About 3 years ago

you need the freehold--if you buy with short lease--the freeholder has you by the proverbials!

Nick Pope

9:35 AM, 18th June 2016
About 3 years ago

If you can get it at a reasonable price and et the freehold then that's the best solution. You could then do up the flat, provide a new lease to enhance value, sell on and retain the freehold so that proper maintenance is done. Many flats such as these do not have proper maintenance arrangements and it would be an opportunity to bring the lease up to date as well. I agree with the comment above regarding enfranchisement - I don't believe that this applies to blocks of only 2 flats.

If you get nowhere on that tack then perhaps you should contact the auctioneers and inform them in writing, perhaps by formal letter from your solicitor that there is an ongoing dispute between you, the occupier of the flat and the freeholder regarding maintenance. The auctioneer would then be forced to inform any potential purchasers that there was a dispute. If conditions of sale have already been prepared then this might have to be at the auction. I suggest that you let them know that you will be there and if it not made clear you will get up and ask why a potential dispute has not been disclosed. Buyers are then likely to refuse to bid and the sale aborts again.

This should focus the minds of both other parties to get it sorted one way or another.

Adam Withford

23:39 PM, 18th June 2016
About 3 years ago

We are in almost the same situation, ground floor flat with one flat above in a converted house.

We have suffered leaks and considerable damage to our flat for 6 years and and no help from either the above leaseholder or the freeholder.

The managing agents are largely incompetent and ineffective, even to the point that they have ignored a breach in the neighboring party wall by next door's refurbishments.

We are starting the process of purchasing the freehold. We have been offered an above market value price for it but we feel that the cost is worth not only having control of the building but the interest on the loan would be nothing compared to the management costs, extremely inflated insurance and the ground rent.

We do believe that we should be able to force the freeholder's unwilling hand to act by a solicitor's letter stating a breach of covenant to not be allowing "quiet enjoyment" but this would only delay things further and not necessarily make them act in future.

You could impede the sale of the above flat as described by Nick Pope, but maybe it would be better to go to the auction and meet the purchaser face to face. It is more than likely that they would be interested in “collective enfranchisement” as described by Steve Masters. It would probably costs them much less than extending their lease, which they could not do for 2 years anyway. The costs saved are probably more than the cost of fixing the plumbing!

Also the price the FH would have to then sell at would be set by a professional survey, not just what they 'want' for it, as it is with us. Just make sure to get a solicitor to manage the process for you because it is quite involved and slippery.

I wish we had your opportunity!

Good luck.

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