Buying the freehold of a flat
More specifically, you might be able to buy a share of the freehold together with other leaseholders in your building. This procedure is called Collective Enfranchisement and can be complicated as it involves multiple residents. It allows you to become your own freeholder and share ownership of the building and the land it stands on with other flat owners. This would mean you’d have control of your own lease and could extend it on your terms.
How can I buy the freehold of my leasehold flat?
To buy the freehold of your leasehold flat, you’ll need to talk to your neighbours to understand if they’re willing to purchase the freehold with you. You then need to make sure you meet certain criteria.
Step 1: Check your eligibility
To buy your flat’s freehold you need to be a qualifying tenant. This means you need to meet the following conditions:
The building must contain at least two flats
No more than 25% of the freehold building can be used for non-residential purposes (e.g. offices, restaurants, coffee shops)
At least two-thirds of the flats need to be owned by long leaseholders (more than 21 years)
At least half of the building’s long leaseholders must agree to the proposed approach and come together to purchase the freehold. If the block only has two flats, then both must agree to proceed.
Step 2: Calculate the costs and work out your finances
First you need to estimate how much buying the freehold is going to cost you – since sometimes this amount might be the same as extending your lease by 90 years. A surveyor can help you get an estimate of the purchase price of the freehold and decide whether you should go on and buy the freehold or extend your lease. Then, you can work out your finances, factoring in other costs such as conveyancing and legal fees.
Step 3: Instruct a conveyancer
Once you’ve decided you can afford to buy the freehold, find an experienced conveyancer or solicitor who can guide you through the process. The expert conveyancers that we work with can ensure that the legal side is completed on time, while providing support and advice.
Step 4: Sign a participation agreement
Your conveyancer will then create the participation agreement – which is a contract between all the leaseholders buying their freehold that clearly states the rights and obligations of the members and ensure everyone’s commitment. This will help protect you in case circumstances change and people want to pull out.
Step 5: Set up a company of qualifying tenants
To be able to buy the freehold, you can form a limited company together with other flat owners who will own and control it. This is known as Right to Manage or a flat management company and can be a good way to make sure all members have the same legal responsibilities and duties. This enables all residents to collectively manage the freehold, make decisions and resolve any disputes.
Step 6: Get a valuation
Find a surveyor to assess your property’s value and make sure the valuation, which is based on your home’s location, age and condition, will be carried out accurately. They’ll also review the value of similar properties in your area as well as the current performance of the housing market.
Step 7: Complete the sale
Once you’ve got your valuation, you can give a tenant’s notice to your freeholder, and they will need to reply within two months to let you know if they accept your proposal. If the answer is positive, you’ll need to negotiate the cost and agree on the price. Your conveyancer will help you complete your purchase, preparing and submitting any relevant paperwork and updating you on the process.