Vail Williams’ Fixed Charge Receivers were appointed by a specialist buy-to-let lender in respect of a fixed legal charge of a leasehold interest of a property in London.
An 11th floor 1 bedroom flat with living room, kitchen, family bathroom and balcony measuring circa 506 sq ft, within a 13 floor 1960s block of flats managed by the local authority. The flat was rented out at £500 per week.
The Council owned the head leasehold interest and had, in years gone by, granted underleases to tenants and occupiers to increase homeownership in the borough. However, they granted a lease for a term of 125 years from 1989, when their own lease was for a term of 80 years from 1977. The lease therefore only had 37 years remaining.
The freeholder, a private property company, wanted to regularise the issue on a flat-by-flat basis and was embroiled in a longstanding dispute with the Council, with legal fees mounting.
How we helped
- We sought agreement from all parties including the borrower, lender, Council and freeholder to rectify the lease so that it could be sold
- Sought specialist leasehold enfranchisement valuation advice to understand the likely sale price once resolved, and the premium required to extend the lease
- Re-let the flat to generate rental income while these issues were solved
- Additional legal advice suggested a genuine risk that the ‘interest’ under which we were appointed could not be assigned at all, and potentially had no value
- Meanwhile the borrower sought any opportunity to suggest an under-value sale
- Further legal advice led to a deed of rectification between the Council and Receivers
- Eventually this was formally registered by the Land Registry, ensuring a saleable interest
- In recognition for the Council’s historic error, they waived all outstanding service charge and ground rent payments
- We remained in regular contact with both the freeholder and borrower throughout, to ensure the best possible outcome for all parties.
- The flat was sold at auction for £400,000, over and above the valuation and in excess of the outstanding mortgage debt and associated fees
- Although the whole process took almost 2 years, the flat was re-let for much of the intervening period
- This created a net profit rent that paid for the ongoing legal fees and management costs
- All parties achieved a satisfactory outcome:
- The lender was satisfied that the mortgage was repaid in full
- The borrower was satisfied that surplus funds were returned, and we were thanked for our efforts to solve a problem they have been unable to do
- The Council and the freeholder had a rectified lease that coincided with the head lease.
Get in touch
If you think you may need similar support to that described here, or you would simply want to have an informal chat with a member of our team to discuss your property needs, get in touch.