Buying the freehold interest of a block of flats
Whether you own a flat or a house, you may be entitled to force your landlord to sell the freehold title to you. If you own a flat under the Leasehold Reform, Housing and Urban Development Act 1993 you are entitled to purchase the freehold title provided that:
- there are at least two flats in the building, and
- at least two of the flats are let to 'qualifying leaseholders' (usually leaseholders with long leases which were originally 99 or 125 years long); and
- not more than 25% of the building is non-residential
The Leasehold Reform, Housing and Urban Development Act 1993 does not provide you with an individual right to purchase the freehold title but provides a “collective” right. This means that the number of leaseholders who join in on the purchase must be at least 50% of the total number of flats in the building.
Once again this does not mean that you cannot approach the freeholder to agree the purchase of the freehold on an informal basis in the first instance. However, if this is the case, please bear in mind that the freeholder will be required to serve a formal Offer Notice on all leaseholders (including you) providing them with a right of first refusal pursuant to the Landlord and Tenant Act 1987. For further details on the right of first refusal please click here
Once you have agreed with your fellow leaseholders on proceeding with the right to buy the freehold title under the Act, the next stage will be for you to agree amongst yourselves how you participate in your purchase.
Where there are a number of leaseholders, say more than 3, we would advise you to set up a Freehold Management Company which will own the freehold title then each leaseholder will own one share (if two or more people own one of the flats they will jointly own one share).
When all leaseholders are in agreement as to how they wish to proceed you will be in a position to serve Notice on your freeholder to initiate the Collective Enfranchisement process. This will require the involvement of a valuer/surveyor and a solicitor. Further details on the procedure which will then be followed can be found by clicking here
An important point to note is that under the Leasehold Reform, Housing and Urban Development Act 1993 the leaseholders are required to pay the freeholder’s costs in investigating their title, valuation and conveyancing, and these costs should be taken into account before deciding to go ahead with the purchase of the freehold title.
If you own a leasehold house, the law which governs the purchase of the freehold title is the Leasehold Reform Act 1967. The conditions and procedure are broadly similar to the 1993 Act.
If you would like to discuss any aspects of buying the freehold interest in a block of flats please email us or go back to our other contact details.