Buying your freehold

If you live in a leasehold flat you may be able to buy your Freehold to your building, in conjunction with the other leaseholders, provided that you meet certain criteria, you can act together to buy your Freehold.

The process is known as collective enfranchisement and involves the participating leaseholders forming a company which will act as the nominee purchaser to purchase your freehold.

To proceed under the terms of The Leasehold Reform Housing and Urban Development Act 1993 at least 50% of the qualifying leaseholders must participate in buying your Freehold.

Where there are only two flats in the building, both qualifying leaseholders must participate together to purchase your Freehold.

How Much Will It Cost To Buy My Freehold?

The length of the leases when you apply to purchase the Freehold will have a significant effect on how much it will cost to buy your Freehold. The compensation due to the Landlord for the sale of your Freehold is made up of three parts:

  • Loss of income received from ground rents
  • Loss of reversionary value of the freehold on expiry of the leases
  • The marriage value

The majority of the compensation is usually made up of the last part; the marriage value. The marriage value is the potential for increase in the value of the flat arising from the grant of the new lease and the act stipulates that it should be split 50:50 between the Freeholder and leaseholders.

The legislation also stipulates that where the unexpired term of the lease exceeds 80 years the marriage value will be disregarded.

If you live in a block with provable development potential, such as scope to construct additional flats on the roof, the Freeholder may be entitled to further compensation.

The likely costs of purchasing your freehold to your building can be calculated by a Chartered Surveyor specialising in that type of work. If you require any further advice on buying your Freehold please call Dominic Henderson on 020 7129 1114 or email dh@hendersonpw.co.uk

Frequently Asked Questions

What is meant by the term "leasehold enfranchisement"?

This is the process of freeing yourself from a lease. The term applies only to residential property and there are various statutory provisions distinguishing the different rules for houses, individual flats and blocks of flats.

Is this connected with the term "right to buy?"

No. This term is used to refer either to those rights conveyed by the Landlord and Tenant Act 1987 or those rights applying to public sector accommodation. The 1987 Act is concerned with that situation where the landlord intends to sell his freehold reversion. In that event, he must give the tenants of the block a right of first refusal in matching the bid received from a third party.

What do you actually do?

We specialise in advising lessees on the likely price payable to acquire their freehold or extended lease. We also represent clients in negotiation with the view to reaching a satisfactory settlement and appear as expert witnesses before valuation tribunals and courts of law. In summary, we save people money.

How does your function differ from that of a lawyer?

These claims involve both legal and valuation issues. The lawyer can advise you on your legal rights and deal with the necessary conveyance. The surveyor is the one who acts as a valuer in advising you as to the correct price. He then acts as a negotiator in seeking to agree the best price with the opposing party. In those rare occasions where the matter is referred to the Leasehold Valuation Tribunal, the surveyor must then act as an expert witness in presenting evidence at the hearing.

First, as a valuer we prepare a valuation to estimate how much it is likely to cost. In the case of claims under the Leasehold Reform, Housing and Urban Development Act 1993, it is necessary to propose a price in the notice and, following case law, that price must be reasonable. It is therefore essential to have such advice prior to serving a notice under the 1993 Act.

With claims under the Leasehold Reform Act 1967, there is no requirement to propose a price. However, it is still advisable, as any statutory notice makes the claimant liable for the landlord’s legal and valuation costs, whether the transaction is completed or not. Therefore obtaining a professional opinion at the outset may avoid the possibility of the price subsequently proving unacceptable, resulting in the need to withdraw from the claim and incurring abortive costs.

If the client decides to proceed with a statutory claim, the procedure to establish a legal right is best dealt with by a solicitor with whom we will consult to ensure that a suitable price is proposed in the notice, where this is necessary.

Once the landlord has admitted the claim, our function is that of negotiator and our aim is to reach a settlement at the best possible price. There may be issues relating to the form of the new lease which fall within our responsibility, but generally issues relating to the form of the new lease, or the terms of the freehold transfer, are best dealt with by a solicitor.

By far the majority of claims are resolved by negotiated settlement, but where this is not possible, the matter may be referred to the Leasehold Valuation Tribunal. In this event, our role is that of an expert witness. We will prepare the necessary proof of evidence, and consult with counsel, if counsel is to be appointed. We will then present a submission to the tribunal by way of an examination in chief and deal with cross-examination by the opposing counsel.

How long does it take to enfranchise a lease?

It can be anything between about two months and thirty months. Most range from start to finish at about six months. A typical series of events would be as follows:

  1. A statutory notice is served requiring a response within 2 months.
  2. 2 months later the notice is admitted (but it could be that much sooner).
  3. As soon as the notice is admitted, the landlord may file an application with the Leasehold Valuation Tribunal and at the same time it will then be possible to enter into negotiations with the landlords' surveyor. Those negotiations may endure for several months.
  4. After about six to eight months, if one of the parties has lodged an application with the valuation tribunal, a date for the hearing may be notified in two months time.
  5. Once the price is agreed or determined by the tribunal, the statutory regulations allow that the landlord cannot serve a completion notice for one month and that completion notice must allow one month - so that's two months in aggregate - and if completion has not taken place by the end of those two months, the landlord can serve a second notice requiring interest to be paid. If it has not completed by the expiry of those two further months - so that's now four in aggregate - the claim is deemed to be withdrawn, the landlord can claim their abortive costs from the tenant and the tenant is debarred from making another claim for three years.
  6. If either party lodges an appeal to the Lands Tribunal, it would delay matters by about a year.

What are your fees?

We prefer to propose a fee basis according to the specific circumstances of the case.