Buying the freehold makes your flat more valuable and more marketable. It puts you in control of the block and gets around the main pitfalls of leases. There is no need to worry about your lease term getting shorter or high ground rents when you are the freeholder.

What are the main benefits of buying the freehold?

1.Your asset stops deteriorating. Your lease is a diminishing asset and as it becomes shorter its value decreases. You can preserve, and often increase, the value of your flat by jointly buying the freehold of your block; you can extend your lease for free once you own the freehold.

2.You pay no ground rent. This is a big issue at the moment with some interest groups calling high ground rents a “leasehold scandal”. If your ground rent is higher than £250 (outside of London) your property is potentially un-mortgageable massively depreciating it’s value. Once you own the freehold, you can remove the ground rent from you lease; your new lease will be at a “peppercorn rent”.

3.Enfranchisement increases the value of your home. In addition to a 999 year lease extension and paying no ground rent, prospective buyers are usually more attracted to flats where they will own the freehold.

4.Control over management of your block. You will have direct control over the maintenance and management of the building thereby avoiding the need for overpriced service charges and external management companies. Bad historic management and service charge issues are one of the main reasons why flat owners often decide to go ahead with enfranchising the freehold.

5.Avoid restrictions on your lease. Flat owners are bound by conditions in their leases. These can be overly restrictive and may, for example, prohibit sub-letting or pet ownership. As a freeholder you can update unfair lease terms.

6.Updating your lease. A lease can only ever reflect the drafting technics and law as things stood when the lease was granted. Most contracts and leases do not stand the test of time. Having the ability to update an antiquated lease can add value to your flat and can clarify longstanding issues.

Are there any drawbacks?

Buying the freehold does not cure all ills within your block and flat. You will still have to pay maintenance and a share of the building insurance. You will also still have to abide by the restrictions and rules of your lease unless you can get them removed or amended by a deed of variation. Being the freeholder does not give you or any other participating flat owners the right to breach the leases. Rules concerning noise, anti-social behaviour, owning pets, sub-letting/holiday lets, playing musical instruments, hanging out washing or running a business from your flat will still apply.

You will also have all of the responsibility of a freeholder. That would include keeping up with the cleaning and maintenance of the block as well as arranging buildings insurance. You will be in charge of the service charge so will be tasked with collecting and accounting for the same. In addition, you will now have a freehold company to maintain and will have to file annual accounts and a confirmation statement with companies house. Two or more flat owners will become company directors and they will be tasked with most of the responsibilities.

Our service does not end with completion of your purchase of the freehold. We work with our clients to assist with the smooth running of their block or freehold company well after completion and are always on hand to assist with post completion questions or issues whether these arise in the first weeks or years down the line.

If self management is not for you, we are happy to recommend local managing agents to relieve the burden of freehold ownership.

Who can buy their freehold?

Residential leaseholders can collectively buy the freehold. Normally, the flat owners band together and form a company to buy the freehold. Each participating flat owner will buy a share in the company that owns the freehold and become a “share of freehold” flat owner.

You need at least half of the flat owners to participate. In a block of ten, five flat owners would be required to proceed and those five could proceed whether the other five joined or not.

You do not need to live in your flat. Owners of investment or buy to let flats can participate in the process.

You do not need to have owned your property for any specific period of time. A day one flat owner can join in the freehold purchase.

Are there any restriction?

Some blocks do not qualify. The property in question must have two or more flats and at least two thirds of those flat must have been granted for an original term of at least 21 years.

Even if you meet this criteria, you still may not qualify if:

• The freeholder is a charitable housing trust and the flat is provided as part of the charity’s functions;
• One flat owner owns more than two flats in the building;
• You have a commercial lease;
• The building is more than 25% commercial use;
• The freeholder lives at the property;
• The buildings is within a cathedral precinct;
• It is a National Trust property;
• The freehold includes any track of an operational railway, including a bridge or tunnel or retaining wall to a railway track;
• The property is a Crown property (the Crown is not bound by the legislation);
• You have a shared ownership lease.

Checking eligibility is a complex area of law and is the first step in the enfranchisement process. If you are unsure whether or not your block qualifies, contact us for an initial consultation.

How much does it cost?

The price you pay for the freehold can vary greatly and depends upon several factors including: the length of the leases in the block, the ground rent and the approach the freehold takes. In every case, you will need the expect advice of a surveyor whose role is to advise you on the likely price payable and to negotiate the price on your behalf with your freeholder’s surveyor.

What about other costs?

In addition to the purchase price, you have to pay your legal costs, your surveyors costs and your freeholder’s legal and valuation costs. Your legal and surveyor’s fees will depend upon the complexity of the block and, as part of our initial free consultation, we will be able to give you a clear indication for costs for your specific situation.

What is the process?

Where can I get more information?

We are happy to offer advice on the law and the procedure and always offer an initial consultation for free. Contact us to discuss your eligibility and costs. We can put you in contact with a specialist valuer to establish how much your freehold purchase is likely to cost.

For further useful information, you may wish to visit the government funded website The Leasehold Advisory Service.

I have a complex leasehold framework or situation.

Everyone’s situation is unique but some legal frameworks are more complex and challenging than others.

Some residential leases are structured on the basis of three tiers with the freeholder (the landlord) at the top, the head leaseholder (usually a management company) owning an intermediate lease and the individual leaseholders (the flat owners) on sub-leases. A head lease can make life easier for the freeholder but may cause flat owners issues when purchasing their freehold.

Other leases are complicated by third parties to the lease. This could be a third party management company, a residents’ management company or even a residential association or Right to Manage Company.

Having more than two parties (instead of simply a landlord/freeholder) can push up your legal costs and add extra complications. We are specialists with experience in dealing with all types of leasehold frameworks. We will guide you through the process using plain English. You will always be kept up-to-date and your file will be handled by a partner with years of experience in collective enfranchisement. We will always be at the end of the phone throughout the process.

For a free no obligation initial consultation call 01202 79 89 17 or email contact@ghwc.co.uk.