Leasehold property - I own it outright, right?
By: Alexander Vine
Many people, when purchasing residential flats, overlook the nature of their ownership: often they own the property for a finite period only, whether that is 999 years, 84 years or even sometimes only 10 years.
In the majority of cases the freehold will be owned by the developer or a third party individual or company, and there are various reasons that the leaseholders may want to collaborate and purchase the freehold themselves. They have a statutory right to do this under the Leasehold Reform Housing and Urban Development Act 1993 (also known as Collective Enfranchisement).
If the block qualifies - generally if at least 75% of the block is residential - and at least half of the qualifying leaseholders want to proceed, the freehold can be purchased from the current freeholder for a fair value determined by the First Tier Tribunal (Property Chamber), unless the parties can agree a price themselves.
Advantages of owning the freehold include free or below market rate lease extensions, the ability of residents to manage the block as they see fit and the eradication of payment of ground rents.
If you are interested in purchasing your freehold the first step is to invite the other leaseholders in your block to a meeting to discuss this, and to find out who else is interested. If there is sufficient interest a consultation with a solicitor should be made to determine whether the right to purchase the freehold applies. After this, a consultation with a lease extension surveyor is necessary to have a valuation of the purchase price prepared for you. If you or your neighbours are considering buying out your freehold we highly recommend speakign with Ben Colenutt on 0330 2000 063 or [email protected]. If you are looking to sell, buy or rent please feel free to speak with me or my Samuel Estates colleagues here in Streatham on 020 8679 9889.