Landlord is selling freehold of my London btl flat by auction we have first refusal...

[Frazzzled]

But a bit concerned at how much this could go to at auction as i understand this is the cost that would be offered to us! The freehold is for 3 flats in north London. Anyone have any experience of this or where I can look for previous freehold auctions in London? I did a google and only got freehold properties. Hope this makes sense. Btw we have 117 years left on the lease
Thanks in advance.

Bump!

And if we register interest it means the freeholder knows we want to buy the freehold, then what's to say at auction he doesn't send a friend in to up the price?

Maybe I should post this in legal?

Anybody? Please!

I thought that if the freehold is being sold, the leaseholders would get first refusal? It's all worked out on a formula so your freeholder cant just charge the earth. Unless things have changed, or that doesnt apply if only 3 flats under the frehold? Sorry, not much help

yes I'm sure you have to be offered chance to buy it first. there used to be an exemption for local councils (who sold mine without telling us ) but even that disappeared. I think there's a "leaseholders' forum" somewhere with info. try google.

www.lease-advice.org/publications/documents/document.asp?item=16
he does have to offer it to you first according to this

Thanks, yes we are getting first refusal but from speaking to the landlords solicitor the cost will be determined by the highest bid at auction which could be made by his friend just to boost the price? Plus isn't the point of an auction is allowing the highest bidder to purchase and not give it up to lease holders as first refusal! Sounds mad I know.. But I just don't get it!

Will google thanks mama!

We have flat in North London and 7 years ago 3 leaseholders exercised our right to purchase freehold. The link that Yesmaam has given is for the leasehold advisory service and I remember calling them up to get a calculation for value of the freehold. Since the unexpired term of your lease is quite long it's likely that the freehold value should be relatively low.

We decided to buy the freehold in the end in order to have control over maintenance decisions. Best thing we did.

Thanks Maggie yes I hope it's low, but not hopeful, was your price determined in an auction? The freeholder offered the freehold to us 6 years ago for I think £30k but declined too high! I'm the only ordinal buyer of the 3 now and I've a feeling the price may rocket at auction!

Any further info, advise much appreciated, this auction bit I really don't get. I will contact the advisory and think we'll have to appoint a solicitor.
Thanks again

I think the 'Auction' issue is a red herring. The solicitor/landlord may be being cavalier with the truth.
If you have a statutory right of first refusal - then the freehold can't be sold (anywhere) until that process has been completed. He would in effect, be auctioning somethng he didn't have the right to sell.
He might get no bidders, of course, so is he saying he will give it to you for nothing in that scenario?
You need to speak to a solicitor asap. The website linked above - and the leasehold valuation tribunal are good sources of help for you.
Do not give away your right of first refusal by, for example, not complying with a notice or timescale - you need to find out anout this asap

Definitely take the advice already offered. If at all possible I would try and buy the freehold, the upside is it will give you more control over what happens with the property (maintenance/improvements) and it should increase its value when you sell. Possibly more importantly though, if it is sold to another party you risk ending up with a landlord that could rip you off at every opportunity, vastly increasing costs such as buildings insurance and service charges.

I can't see how selling it at auction and then offering it to you at the auction price would work. The auction company wouldn't accept a property interest that is unable to be sold. Which would be the position until the landlord has completed the process with you and you (or the other leaseholders) have declined to buy.

Thanks all, am on hold for the leasehold advisory as I type! Yes I worry that new landlord could rip us off so true!

No, not at auction. Not sure how the fact that you declined offer affects things but that was 6 years ago so it may be that they have to offer to you again because of the passage of time. Perhaps you have the info you need from LEASE now.

I recall that landlord wanted to sell us freehold for a ridiculous amount until he realised that we were armed with sufficient knowledge and our counteroffer was accepted.

I do hope you get f/hold because I see where we were ripped off. Ten years ago we were paying higher buildings insurance than what we pay today! Landlord probably couldnt be bothered to shop around.

If you look on Amazon there is a book which is a guide to exercising your right to buy your freehold. We used it when buying ours and it was very useful. Sorry am on phone so can't link, but just do a search and you'll find it.
Auction seems suspect frankly. Are you going to get your own legal advice? Could save you £ in the long run, especially if split with the other flats.

Thanks, I spoke to the leasehold advisory and although we do get first refusal the price will be determined by public auction and there is nothing to stop the landlord to send in one of his own to boost price knowing we have registered interest! The link above confirms this also, section 5b I think.... Can't believe this is all legal!! Crazy! Yes we will be getting legal advise for sure! Thanks for chipping in.

It may not be as bad as it initially seems. After all, if he genuinely wants to sell the freehold (and there is a formula for valuing these things - I think a surveyor could give you an accurate valuation) he's not going to get a mate to bid it up to a ridiculous level at an auction - because if you don't buy it, then nor will 'the mate' (there's no point in buyinh his own freehold from himself), so he's back at square one.

A genuine investor who buys freeholds will not pay more than its actual value (see surveyor) and so as long as the tenants are prepared to pay in that range then you should be able to secure it. If you think the price he offers it to you at has been 'fixed' artificially high (by his mate), then I guess if you call his bluff, he'll have to come back to you or start the whole process again.

Could you not try and head him off by having it valued and making him an offer before it goes tthoruhg the whole auction route.

We are in the final stages of buying our freehold. The leasehold advisory people will probably tell you this but if you are going to get a valuation you can get one done for free to give you an idea of what cost will be - do not pay straight off. It is a very complicated formula! There is a very helpful co called leasehold doctors that will do it for you but it is informal. You will need to provide the values of each flat in the block, if you were to sell today, together with length of each lease.

If you go on to enter into formal negotiations to buy the freehold then you will probably need to get a full written valuation done and this will cost you money, it has to be done by a specialist freehold valuer, not just a normal surveyor/estate agent. The value our formal report gave was in the same region as the informal free one but if you cannot amicably agree a value with the landlord then you get into exchanging reports etc.

Our landlord was also the owner of the insurance company used to insure the buildings, the total was over £4000 pa. We now have same cover insured for £1,000. We are convinced other costs were inflated to provide backhanders to landlord. We resolved this by taking over the running of the freehold, which you are legally entitled to do. If you don't end up buying freehold you may want to look at this process, known as right to manage. PM me if you want to know any more about our experiences!