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Stuart J
Stuart J, Solicitor
Category: Law
Satisfied Customers: 22401
Experience:  PGD Law. 20 years legal profession, 6 as partner in High Street Practice
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We are in a terrible quandry as to whether we should purchase

Customer Question

We are in a terrible quandry as to whether we should purchase our freehold or not. We live in a block of 62 flats up until yesterday they didn't have enough people to purchase the freehold but then three owners of a few flats in the block came forward to make it up to the 51%. Because we already have an 84 year lease our purchase for the freehold has worked out to about £8,500. We are pensioners and only have a £100.000 pot for our old age and are not sure whether it would benefit us losing nearly £9,000 of this just to own the freehold. What are the benefits for us? We are having to make a decision by 10.30 this morning
Submitted: 3 years ago.
Category: Law
Expert:  Stuart J replied 3 years ago.
Thank you for your question here on Just answer. It is my pleasure to try and assist you with this today. Please bear with me if I need to ask for any further information from you in order for me to be able to advise you fully. My name is Law Denning and I am a practising solicitor. I have been an expert on this website in UK law since 2008. During that time, as you appreciate, I have answered thousands of questions from satisfied users on a variety of subjects.

Because we are all in practice with clients and court and other users, I might not always respond in minutes, particularly evenings and weekends. Please bear with me in that case. I will be online and off-line all day most weekdays and weekends.

How long have you lived in the flat?
Customer: replied 3 years ago.

8 years

Expert:  Stuart J replied 3 years ago.
One of the beauties of owning the freehold is that the freeholders can decide how much to charge for a new lease. There is a valuation formula which is extremely complicated and beyond the scope of this site but provided that is not exceeded, the freeholders can extend your lease at any price, below that, that they wish.
They can also choose to charge the non-freehold owning leaseholders anything up to the market rate for a lease extension.
Lease extensions are not cheap.
The biggest problem with owning the freehold is that someone has to manage it and if the managers are leaseholders they have a vested interest because they pay the service charge. Indeed, there can be a distinct conflict-of-interest between maximising income for the management company to do repairs and so on and keeping costs as low as can be for the leaseholder.
What owning the freehold does for you is to give you an element of control however it seems likely that there will be 32 of you running it and 30 people sitting on the sidelines looking by.
Here is more reading for you

http://www.lease-advice.org/publications/documents/document.asp?item=76


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