Freehold / Directorship of Ocean Wharf

Background

At a recent meeting of the Ocean Wharf Residents’ Association with London Residential Management Ltd (LRM, 31st October 2008), we were informed that the Freeholders intended to dispose of the Freehold of Ocean Wharf 2000 at the earliest possible opportunity without offering first refusal to the current owners of flats as is normal practice. It is clear that this is of considerable concern to flat owners because if the Freehold is sold to another party an opportunity for owners to purchase may not arise again for a considerable period of time, if at all.

What are the benefits of owning the freehold?

• Increased property value
• Elimination of annual ground rent payments
• Complete control over the development through voting rights as shareholders in the Ocean Wharf Management Company

What are the risks of not owning the freehold?

• Another freeholder could insure the property at uncompetitive rates in order to gain maximum insurance commission and put in place a pet managing agent which could result in significantly higher service charge for all lessees.
• Theoretical risk of losing the Lease due to violation of the terms of the Lease

What has been done already?

As a result of ongoing work between LRM and OWRA Committee, the finances are now in good shape with a long-term plan in place, and all serious outstanding maintenance issues (e.g. soil stacks) have been resolved. This addresses any liabilities which would have been inherited through purchase of the Freehold.

What needs to be done now?

Collectively decide whether OWRA should bid for the Freehold

Given this situation, if we wish to purchase the Freehold, we need to inform the current Freeholders of our intent as soon as possible. Indeed, we may need to flag up our interest within days. LRM has advised that the majority of maintenance issues relating to Ocean Wharf have now been identified and appropriate planning has been implemented and they consider that this would be an appropriate time to purchase the Freehold. According to current estimates it is likely that the cost per flat of purchasing the Freehold will be a one-off cost between 14 and 20 times our ground rent of £100 per flat but the details are yet to be confirmed.

The main purpose of this letter is to seek the view of each flat owner on the purchase of the Freehold. As the matter is of extreme urgency I would appreciate a response at your earliest convenience as to whether or not you are interested in purchasing the Freehold of your flat, either by email to ctte@oceanwharf2000.com or to Adam Spiers (OWRA Secretary), Flat 70, Block A.

Later steps

If we decide to bid and win the bid, then directors would need to be identified and appointed and other safeguards put in place (e.g. directors’ liability insurance, financial stability, proper account filing).

Why has this arisen so suddenly?

LRM learned of the Freeholders' intention to sell the Freehold on 30th November 2008 and LRM's solicitors have not yet had time to check the legal situation. However, the Freeholders have apparently told LRM that they have been advised that they are under no legal obligation to offer the Freehold to owners as a first step in the sale.