There are many reasons why buying your property’s freehold is a good move for leaseholders. Whether you live in a house or a flat, the benefits of security, not having to deal with your freeholder, the property’s increased value and not having to pay any more ground rent are clear to see. There are however some key things you need to ask and understand before exercising the leaseholders’ right to buy your freehold – using the process also sometimes known as collective, freehold or leasehold enfranchisement or freehold purchase.
But before you even start taking steps to purchase the freehold of your property, make sure that you talk to a solicitor who has plenty of experience of freehold purchase. Very few solicitors specialise in this area.
Looking for specialist advice on every Leaseholders’ Right to Buy the Freehold of their Block? Call our specialist team on FREEPHONE 0800 1404544 for FREE Initial Phone Advice
Am I Eligible to Buy the Freehold of My Block?
Needless to say buying the freehold of your leasehold house is much more straightforward than buying the freehold of a block of flats –where participating leaseholders will need to set up and run a block management company as a collective.
Collective enfranchisement is only possible if the participating leaseholders are eligible to buy the freehold there are enough of them.
In general terms that means at least 50% of the leaseholders in the block will need to join in. But it is worth noting that if you have a small building with just two flats, then both tenants must join in the application
If there are any questions or doubts on your eligibility to purchase your leasehold, our specialist solicitors can advise.
Click here to read more about buying the freehold of your leasehold house.
Why Should I Buy My Freehold?
Knowing why you want to buy the freehold of your property is the first things you should establish. An individual leaseholder’s reasons for wanting to buy their freehold is not always the same
Some want to be done with the hassle of dealing with a freeholder and the stress of waiting for things to be fixed for weeks when it would be easier to sort out the repair themselves. Others grudge paying the annual ground rent, which with some older properties can get really quite expensive or feel that the service charges are simply too expensive.
A longer term consideration is often the desire to increase the value of your home and your security by purchasing the freehold.
And knowing why you want to buy your freehold is important – because keeping a lease enfranchisement claim going where the block is a big one with numerous leaseholders involved can be difficult.
Is lease extension a better option for me?
That really depends on what your If your sole reason for buying the freehold is to increase a property’s value and to increase security, a better option may be lease extension- especially if your real problem is a short lease.
Extending your lease doesn’t involve any of the other leaseholders in your block. As a result, it’s often quicker and easier to complete too, especially if you happen to live in a larger block.
And there are 2 ways to extend your lease extension – the formal or informal lease extension.
You can negotiate an extension of your lease directly with your freeholder by any length and do so on an informal basis. This option is usually referred to as a voluntary lease extension. But there’s a real potential risk involved for you. That’s because as it is an entirely informal process, the freeholder can simply decide to withdraw or change the terms of the deal at any stage. And there’s nothing you can do to stop them.
But provided you meet the criteria for what is known as a formal or Statutory Lease Extension, you can force your freeholder, whether they like it or not, to grant you an extra 90 years on the lease. There are of course expenses involved – you will need to pay a premium to the freeholder and be responsible both for your own legal and valuation costs, as well as a reasonable legal and valuation costs of your freeholder. Nonetheless, despite this expense, the increase in your flats value as a result of a 90 year lease extension should make it worthwhile.
Click here to read more about Lease Extension
Leaseholders’ Right To Buy Your Freehold – rewarding, but it can be tough
The timescales, required paperwork and deadlines needed for collective enfranchisement are broadly similar to the process for extending a lease. But whilst buying your freehold gives you much more control over the block, it does come with its own problems and difficulties and does need a long term commitment.
In particular, keeping a large group of your fellow leaseholders on board with the scheme for many months can prove tricky to say the least. However again there is a solution.
I’m worried that the other leaseholders involved in the freehold purchase will not stick with it
Acquiring the freehold of your property isn’t a simple process, especially when your block is a medium or larger building with numerous leaseholders. So, if you are considering buying the freehold of a block of flats along with many other fellow leaseholders, this sort of collective purchase gets even more complex.
Unless your block is a very small one, then getting the buy in from day 1 of a sufficient number of leaseholders can prove a problem – as can keeping them on board throughout the process.
Our strong advice, therefore, is to have everyone signed up to a legally binding participation agreement on day one. And our team can help you draft a participation agreement that fits your particular circumstances.
Click here to read more about how an Enfranchisement Participation Agreement can help you and your fellow leaseholders
Buying the freehold of your block – a long term commitment
Unfortunately the work doesn’t stop after the enfranchisement process has been completed – now you and your fellow leaseholders own the freehold of your block. That’s because after purchasing that freehold, you and your new co-owners will have ongoing commitments – e.g. responsibility for management of the block and keeping up with the paperwork of the new freehold company.
In most circumstances, freehold purchase is definitely a better bet – but it really does depend on your particular circumstances. Leasehold extension might be the best way to go if you are dealing with a large number of leaseholders and struggling to get enough people involved to drive the project forwards.
Click here to read more about lease extension
Is Buying the Freehold of My Property Too Expensive?
Finance and affordability are the other main considerations when it comes to buying the freehold. In basic terms – how do you plan to pay for it?
This can prove to be a major worry for many people who are considering buying the freehold. It can be difficult to estimate total costs before starting the process. But things can be made clearer by having a valuation of the price you’re going to have to pay to buy the freehold (referred to as the “premium”) prepared beforehand to give you a ballpark figure to begin negotiations on price with your freeholder.
And for that valuation you’re going to need a specialist surveyor, and there aren’t many of them. But rest assured, we work with some of the best and have an informal panel of specialist surveyors with plenty of experience of enfranchisement valuation – and as part of our one-stop shop service, we are more than happy to introduce them to you and if necessary instruct them on your behalf.
On top of the cost of the buying the freehold itself, you also have to factor in both your legal and surveyors’ fees, as well as those of your freeholder.
And of course, when you’re buying your freehold with other leaseholders, those legal and surveyor fees are divided between all of those participating in the purchase.
And it’s also worth noting that if you feel the price you are given by your freeholder for buying the freehold is unreasonably high, you have the right to take the case to the First-Tier Tribunal Property Chamber who will make a ruling. Fortunately this is rarely necessary.
Our freeholder has offered to sell us the freehold – is the process different from enfranchisement?
Yes – if you are going to buy your freehold under the right of 1st refusal, the process is different, but the outcome, owning your own block, is exactly the same.
Click here to read more about the Right of 1st Refusal
We are not satisfied with our block manager – are there any alternatives to buying my freehold?
Yes, there are. So, if you feel either that buying your freehold is going to prove too expensive or too difficult to arrange, then there are two alternatives which allow replacement of the current block manager
• Right to manage If a group of leaseholders in a block of apartments just wants more say and control over how things are run, it might be easier and cheaper to exercise what it known as a “right to manage” (or RTM) rather than going down the full freehold purchase route.
Click here to read more about the Right to Manage
• Court-appointed block manager. This achieves a not entirely different outcome to right to manage. However the difference between the court-appointed manager and RTM routes are that the former can be undertaken by a single person rather than a majority of leaseholders. Asking the court to appoint a new block manager also requires the applicant to prove that the current block manager is somehow at fault. And you’re going to need to provide evidence of those faults or failings.
And what’s more, the court appoints a specified manager to take over responsibility for the block.
In contrast RTM means that a group of leaseholders together take responsibility for block management – though they may decide to appoint a professional block management company to work with them.
Click here to read more about the court-appointed property manager
Is my Solicitor a Freehold Purchase expert?
It is important to choose solicitors who are specialists in this area. Freehold purchase is a complex legal area. Surprisingly few property lawyers have much experience of lease extension – and still fewer have dealt with any let alone many enfranchisement projects.
So, don’t be afraid of asking any solicitor you’re thinking of appointing the following simple question – “how many clients have you helped with collective enfranchisement?”
We specialise in freehold purchase, lease extension, RTM and Right of First Refusal applications.
And what’s more we are the only solicitors recommended for these three kinds of work by the HomeOwners Alliance, Britain’s leading organisation promoting the interests of 17 million homeowners.
Need legal advice on the Leaseholders Right To Buy Your Freehold? Call us now
Coming together to buy your freehold is complex – especially with a big block when quite a number of leaseholders will need to participate.
You are going to need specialist legal advice. Our expert freehold purchase team can help you wherever you live, provided your block is based in England or Wales. Contact our solicitors today for a FREE first phone consultation.