A situation has arisen on one of our estates that is causing great concern among residents. It is not unique; it has happened in other blocks across Tower Hamlets and more widely across London. The Columbia TRA Committee has written to Mayor John Biggs and other senior managers at London Borough of Tower Hamlets to try and understand the Council’s policy and future intentions.
Companies, describing themselves as ‘developers’, have been targeting the leaseholders, where they are the majority in a block* and offering to manage the process of buying their freehold from the Council. In exchange for organising this buy-out process these companies are tying leaseholders to certain obligations, such as insisting that a building management organisation is set up under their control and/or giving them the right to build additional properties on the land and/or building e.g. additional storeys, extensions etc. Leaseholders coming together to exercise their right to buy their freehold (known as ‘collective enfranchisement’), if all in agreement would not necessarily cause a problem but as it has turned out, third-party agreements can create huge issues for leaseholders and tenants living in a block, particularly when pressurised sales techniques have led to some leaseholders signing away their rights before speaking to their neighbours or getting legal advice.
Given that for most leaseholders their home is their biggest life asset all residents should take extra care if approached by a third-party advocating for them to buy their freehold on their behalf. The pitfalls can be huge, including:
- Hard sales tactics that put pressure of leaseholders to sign agreements quickly without a chance to seek expert advice and speak to their neighbours
- Divide and conquer – some residents will be for it and some against, fault lines can split a community and turn neighbour against neighbour
- Verbal promises that any future major works costs will be offset by these companies, but then the contract offered stating that leaseholders will be fully liable for them
- Contractual promises can be broken if sold on to another company. The company you enter into the agreement with can sell it on and your terms could change
- Companies without a strong financial standing can easily go bust, leaving residents with an uncertain future
- NEVER sign any contract or agreement without speaking to a legal professional – Free legal advice, if you need it, is available locally through St Hilda’s and nationally via the Citizen’s Advice Bureau
- DO take your time – This is a huge decision, do not allow offers or hard sales techniques to rush you
- DO talk to your TRA – we can help you arrange meetings with other residents and signpost you to expert advice
- DO talk to your neighbours – do not allow yourself to be divided as a community
- DO consider council tenants – discuss this with them. Any change of ownership essentially means they have a new landlord which will have a huge effect on their lives
- DO your research – find out about the company approaching you, look at their Company’s House filings and find out about their other projects and how they have gone; understand your rights within the law; speak to an estate agent about how this might change the value of your property.
Contact us is you are approached by a third party suggesting you buy your freehold.
* Where at least two thirds of the property are leaseholders, then as long as a 50% of those leaseholders agree, it is their right to buy this freehold.