We are a block of five flats considering a collective enfranchisement (CE) action in which all leaseholders wish to participate. The long leases on four of the five flats have already been extended (by 99 years), but the fifth flat has not with only around 60 years remaining. In order to minimise the cost of acquiring the freehold, our plan is to undertake the CE action without the fifth leaseholder initially since there would then be no marriage value to pay. We would subsequently include him on the freehold after the ownership had been transferred to the nominee purchase company (NPC).
I have given this some thought, and concluded that the easiest way to structure this would be for the fifth floor to make an interest-free loan to the NPC which would then be repaid after the freehold had been transferred to the NPC in exchange for the fifth flat's share of freehold. My question is, would this loan be disclosable in the course of the freehold acquisition? If so, I guess the freeholder may be able to bid up the hope value and we might have to think of another way to finance it.
Although this would be the neatest way to finance the acquisition, I thought it would make sense to first run it by the pros! Thanks in advance for any advice you might be able to give me on this.
I have given this some thought, and concluded that the easiest way to structure this would be for the fifth floor to make an interest-free loan to the NPC which would then be repaid after the freehold had been transferred to the NPC in exchange for the fifth flat's share of freehold. My question is, would this loan be disclosable in the course of the freehold acquisition? If so, I guess the freeholder may be able to bid up the hope value and we might have to think of another way to finance it.
Although this would be the neatest way to finance the acquisition, I thought it would make sense to first run it by the pros! Thanks in advance for any advice you might be able to give me on this.