Can I buy the freehold for my flat?
Monday, 20 May 2019 | Admin
Flat owners often don’t own the freehold to the building they live in – it is held by the landlord. But legislation exists giving leaseholders the right to buy.
When you own a flat where the leasehold is owned by an individual landlord or a company not related to the flat owners, you are liable to pay certain charges to them. These include ground rent, service charges, insurance fees and repair bills. The landlord has the power to say how much you pay and to choose which insurance companies and building companies are used.
Do you qualify to force the landlord to sell?
There are numerous requirements to force a sale, or qualify for collective enfranchisement as it is known.
Firstly, there must be two or more properties in the building. At least half of the leaseholders would need to be a party to the purchase and at least two-thirds of the flats must be held by qualified owners.
There is a requirement that there be a minimum of 21 years left to run on the lease. It is also cheaper to buy a freehold when there are more than 80 years left, so if you’re nearing either 21 or 80 years, you may want to consider buying now.
Advantages of buying your freehold
Once you and your fellow leaseholders own the freehold, you will be able to extend your leases subject only to legal costs.
You will also be able to arrange your own insurance and property maintenance as well as agree to put aside regular payments into a sinking fund for future large expenditure.
How to buy your freehold
Once you are confident you meet the necessary criteria you should consider forming an agreement between leaseholders setting out the rights and responsibilities you consent to and detailing how you will fund the purchase and ongoing costs. A limited company is often set up by leaseholders for the purposes of flat management.
You will need to obtain an estimated market value for the freehold from a qualified valuer. This is then used in an equation to calculate a fair price. Notice is served on the freeholder of your wish to buy, together with your offered price. You will be liable for the freeholder’s reasonable costs.
The freeholder has two months to respond with a counter-offer and you can then both enter into negotiations. If an agreement cannot be reached, the matter can go before the Leasehold Valuation Tribunal.
Collective enfranchisement can be beneficial to freeholders who wish to extend their lease and have more say over their property management, however it is complex and should be handled by a qualified lawyer.