Hi

I live in a big house converted into 5 individual flats. I have recently been approached by others in the house who've been in contact with someone working in the industry, who's indicated that there is potential for us to sell the building as a whole. One option would apparently be demolishing and for the purchasing company to put up new flats on the land.

We've been told we could potentially get the market value of our flat, plus, 30, 35, or 40%. Firstly, does anyone know anything about this type of deal and what kinds of things we should think about?

More specifically, we have been told that what happens is that individuals get their flats valued, then say what percentage increase they would be happy with. These are then added up to make an overall value for the property, so each flat gets a percentage of this based on their valuations.

My question is then, what is to stop people giving an over inflated valuation for their flats, thereby getting an unfair overall percentage?

I'd consult my own lawyer rather than listen to others who could possibly be speculative and deifintely acting in their own interests and not yours.

If you are leaseholders, the ground / building is not yours to sell, of course. You only buy / sell the right to live in your flat for certain period. That's a matter for each invidual to set the price.

If you are shared freeholders, presumably your shared freehold agreement defines arrangements for disposal of the freehold, anyway?

The third scenario would be leaseholders exercising their any right to buy the freehold and then selling. That would certainly require independent legal advice.

Hi vbland

Thanks for that.

4 out of the 5 flats (including ours) are in fact freeholders.

I only actually moved in a few months ago, but don't know if I've seen the 'shared freehold agreement'. Is that a standard thing which we will definitely have? If so, do you then think it likely that will define arrangements for disposal of the freehold, or if not know what the best course of action might be?

If we don't have such an agreement is there anything else you could suggest?

quote:

Originally posted by magicrabbit:
If we don't have such an agreement is there anything else you could suggest?

A lawyer? Seriously, you need to be clear about the arrangements here.

As freeholders of course the disposal would be your business but, again, I don't see how you can do it without legal advice.

Definitely see a solicitor, one who is experienced in property matters.

A developer bought the empty semi-detached house opposite us. He then got the other half of the semi to sign an 'option to buy' agreement. He would pay them over-market value for theirs. He wanted planning permission to knock both down and build flats. Denied, appealed, denied.

Because they did not have a time limit on the option to buy, they couldn't sell to anyone else, the house had probably gone up over and above what he offered anyway, and they were stuck. After over 2 years he gave up and they were free to sell on the open market. He rented his half out and it is now up for sale.

You need to think very carefully about signing anything which might tie you up for a long period.

The other thing is that most people agree that the flat market is oversaturated in many parts of the UK - without planning permission your flat is not worth anymore than market value, and drawing up and getting pp could take a year or more and not be given. Where does that leave you if you need/want to move in the meantime?

Hi castafiore,

Thanks for that. In fact a relative of mine works in a related field and has a colleague who deals with this kind of work. He's agreed to look over any proposals so hopefully that should help.

Are you advising then to not tie ourselves into anything until there's planning permission. Or sign an agreement that states if the sales falls through for whatever reason, we can sell to someone else.

We realise it could take a long time, but in fact we've only just moved in and are not in any rush to move. Indeed, this is only a speculative process at the moment, and we woudln't be too unhappy if nothing came from it.

Thanks,

Sorry for the late reply. I guess I am saying that you would need to be fairly confident that your housing situation will not cahnge within the next year or so. eg job change, relationship change, financial need to sell etc.

I think a developer would want to tie up a deal before getting planning permission, After all, it costs him nothing to tie you up to a deal - the cost of an architect, planning app etc. he would have anyway. He would not want to go to the expense of an architect, planning etc. without knowing that the land was going to be his.

I would definitely get someone to look over the proposal for you. I think I would want a deal which had an end date - eg. If he hadn't bought it from you by a year's time, then the contract was over, leaving you free to sell to others. Some of our neighbours felt that the developer in our case was looking to secure planning permission then sell the deal on - which could have taken ages.