I want to buy my freehold, how do I do this?
Buying the freehold on your leasehold property can be a sensible move, giving you more control over the property as well as reducing or eliminating many ongoing costs involved in being a leaseholder, such as ground rent and service charges.
The exact process for buying the freehold and the outcome will depend on how long you have held the lease on the property and whether it is a house or a flat.
Understanding your right to buy the freehold on your property
You are free to attempt to negotiate with the freeholder to buy the freehold at any time, however, they are under no obligation to sell you the freehold unless you qualify for ‘leasehold enfranchisement’.
Leasehold enfranchisement means you will have a statutory right to buy the freehold (or extend your lease) whether or not the freeholder wants this to happen. Your right to leasehold enfranchisement is defined by the Leasehold Reform Act 1967 as modified by the Commonhold and Leasehold Reform Act 2002.
Under these acts, you will normally have a statutory right to buy the freehold (or a share of the freehold), as long as the lease you were originally granted was for a minimum of 21 years and you have held the lease for at least two years.
If the freeholder decides to sell the freehold on their property at any time, they will normally be required to offer the leaseholder/s the ‘right of first refusal’. This means they must give the leaseholder/s the chance to make an offer first before offering the freehold for sale on the open market.
Buying the freehold on a leasehold house
Buying the freehold on a house is normally relatively straightforward as there will generally only be a single leaseholder, so there is usually no need to co-ordinate with other leaseholders.
You will need to serve a ‘tenants notice’ on the freeholder setting out your intention to acquire the freehold. You do not need to specify a price at this stage as the value of the freehold will be calculated based on the rules set out in the regulations governing leaseholds.
The landlord will then have two months to serve a ‘notice of reply’ if they wish to dispute what is or is not included within the property covered by the leasehold.
The freeholder and leaseholder will then need to negotiate a price for the freehold, using the calculation set out in the regulations as a guideline. If they cannot agree a price, the tenant will need to apply to the First Tier Tribunal (Property Chamber) or the Leasehold Valuation Tribunal in Wales for a valuation.
The value of the freehold will be based on three factors:
- The property’s current value.
- The annual ground rent due on the property.
- The number of years remaining on the lease.
Buying the freehold on a flat
The rules are slightly different for buying the freehold on a flat, as you will usually need to buy the freehold on the entire building the flat is part of. This means you will need to work together with the other leaseholders to buy the freehold together.
The right for a group of leaseholders to buy the freehold on their building is known as ‘collective enfranchisement’. To qualify for collective enfranchisement, at least half of the tenants in the building must qualify for leasehold enfranchisement as set out above.
There will also need to be at least two flats in the building, which can cause an issue for people who hold the lease on a single flat about a shop. If the building is part residential, part commercial (e.g. flats above a shop or other commercial premises) then no more than 25% of the building can be in commercial use.
If you and enough of your fellow leaseholders qualify and wish to buy the freehold, you will need to serve a joint tenants’ notice and negotiate the price with the freeholder together.
Once you have acquired the freehold, you will then need to work together to handle the management of the building, including maintaining the communal spaces and overall fabric of the building.
The usual approach is to set up a residents’ association to ensure these common interests are taken care of and many residents’ associations will hire third party management companies to hand the day-to-day management of their buildings.
Get expert legal advice for buying the freehold on your home
At Atkins Hope, our experienced, reliable residential property solicitors can offer clear, practical advice on buying the freehold on your leasehold property, as well as assisting with all other residential property issues.
As members of the Law Society’s Conveyancing Quality Scheme, we offer the highest legal and professional standards with our property services.
For expert help with buying a freehold, please get in touch with our specialist residential property solicitors in Croydon and Blackheath now.
