Lease Extensions and Property Management
Buying your freehold
Whether you own a flat or a house, you may be entitled to force your landlord to sell the freehold title to you. Owning the Freehold means you extend your lease without the payment of a premium and in addition make your own decisions concerning the management and the maintenance of the block.
You can 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.
If you can not get to the 50% threshold then although this would mean the freeholder does not have to agree to the sale you still can approach the freeholder and ask whether you can agree the purchase of the freehold on an informal basis. However, if this is the case 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.
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 three, 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 what is called the Collective Enfranchisement process. This will require the involvement of a valuer/surveyor and a solicitor.
Be aware that 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 at Enfranchisement@boltburdon.co.uk.