Purchasing Your Freehold
What are the Benefits of Buying Your Freehold?
1. There's no ground rent to pay
-As you are responsible for the land, you will stop having to pay ground rent.
-When you buy the freehold, there is no lease to worry about. There will be a formal legal transfer and you will require a solicitor to do this. The title of the property will be registered in your name as part of this process.
2. You will add more value to your property
-Mortgage lenders and buyers are very reluctant to be involved with a property that has a short-term lease. Many lenders will not give a mortgage on a lease with 75 years or less left. By owning the freehold, you are making the property more attractive financially.
There are two Different Types of Legal Processes for Buying a Freehold:
- For a house - you may have the right to buy the freehold.
- For a flat or apartment - you may have the right to buy a share of the freehold.
Buying a Freehold for Your House
Generally, it is easier to purchase the freehold of a house, as there are fewer parties involved. At Banner Jones, we recommend that you purchase your freehold as soon as possible, however, you must still have owned the lease for at least two years and there must have been at least 21 years on the original lease.
If you want to purchase the freehold, you must serve a "tenants’ notice" to the freeholder. This legal document expresses your interest in buying the freehold. Once served, you should be aware that you then become legally bound to buy the freehold even though the price has not been agreed.
The freeholder, also known as a landlord, must respond to your notice within two months to your request.
When seeking to purchase a freehold, it is critical that you find the correct legal advice. The terms and conditions within a freehold are legally binding for the life of the agreement. For specialist advice, on a freehold agreement speak to Banner Jones Solicitors.
How to buy the Freehold for Your Appartment Block
See what the neighbours think
You need at least 50% of leaseholders that are willing to buy their freehold within a leasehold building. If your fellow neighbours are facing excessive pricing for ground rent and servicing for the building, it should be easy for others to agree.
Find out the cost of the freehold
It is difficult to estimate the price of the freehold, values do vary. We recommend getting a professional surveyor to value the freehold. This will give you confidence when negotiating a price with the freeholder.
There will be legal costs
As you are purchasing the freehold, you are required to pay the legal costs of the freeholder.
Have a look at your finances
Once you know the cost of the freehold, you need to see whether you can afford it. We recommend speaking to a mortgage broker at the start of the process, to see if this process is feasible.
Speak to our team of leasehold solicitors
Getting the correct advice is critical when it comes to buying the freehold of a property, we will ensure that everything is taken into consideration. As a Legal 500 Law Firm, you can rest assured that you'll be in safe hands.
Ask your solicitor to create a participation agreement
We will draw up a participation agreement for each of the flat owners taking part. You don't want anyone backing out at the last minute, as this can see increased costs for the purchase of the freehold for everyone else.
You'll need to set up a company
To buy the freehold, one individual of the group needs to be the 'nominee purchaser' or set up a company. We can guide you though this.
Issue a tenants' notice
Your solicitor will issue a tenants' notice, stating that you want to purchase the freehold. This notice must be signed by a nominated leaseholder, on behalf of all participants. The freeholder will have two months to respond.
Once the landlord agrees to sell, you can start the negotiation process for the value of the freehold. We can assist you with the negotiations.
It's vital that the tenants' notice served on the landlord is correct. Otherwise, you'll have to wait another 12 months to start the process again.
The process of purchasing a freehold is a very complex and drawn out process. At Banner Jones, we've helped many leaseholders take control of their own home, with our hassle-free and easy to understand approach. For more information, speak to our specialised team today on.