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Buy your freehold

How to buy the freehold or get the right to manage

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Jenny | Edited by Martin

Archived July 2015

It sounds bonkers. We're happy to stump up six-figure sums for flats, when often someone else owns the land they stand on. Leaseholders must pay £10,000s to extend leases, and unfair service charges are rife.

Yet in England and Wales powerful laws mean leaseholders can force the freeholder to sell the freehold or they can just take over their building's management. This step-by-step guide shows how to fight back.

This guide's been written in association with Consumer Futures and with kind help from The Leasehold Advisory Service, News on the Block, Crosse + Crosse Solicitors and Clarke Mairs LLP.

Is it worth buying my freehold?

Legislation has made it easier for leaseholders to take control and buy their freehold, effectively giving the freeholder the boot.

It's all about a legal process called collective enfranchisement, which gives you the right to club together with other leaseholders to buy the freehold for a fair market price. This underused right was brought in by a 1993 law, and boosted by the Commonhold and Leasehold Reform Act 2002.

Lease extensions are cheaper

If you don't own the freehold, leases can cost £10,000s to extend, especially if they drop to 80 years or less. Plus leaseholders must pay ground rent (usually small) and service charges (often a fair whack) to the freeholder.

You could add value to your flat

Most estate agents add 1% to property values if you own the freehold Estate agency Kinleigh Folkard & Hayward says most surveyors add an additional 1% to a flat's value for the benefit of the freehold, compared with an identical flat with the same number of years on the lease but no freehold.

Some inspiration ...

Here are a few MoneySavers' experiences for inspiration, but remember this won't work for everyone. If you've bought a share of the freehold, please post your experiences, good and bad, in the Buying a share of the freehold discussion.

Buy the freehold vs right to manage

Leaseholders who want more control over their flat have two options. They can buy the freehold, but under the Commonhold and Leasehold Reform Act 2002, most leaseholders can apply with other leaseholders for the 'right to manage' their building.

How much does buying my freehold cost?

The cost (exc. fees) is roughly the same as for extending the lease by 90 years.

The bulk of the cost is the share of the freehold itself. There's no set price. It depends on lease's length, flats' values and ground rent. It also rests on negotiations and the surveyors' valuation. The shorter the lease, the higher the cost.

Buy the freehold – step-by-step guide

To qualify to buy the freehold, generally you need:

At least two flats in the building, a lease longer than 21 years and for at least 50% of leaseholders to take part.

How to buy the freehold

The process typically takes about a year – more if you have a meanie freeholder who is determined to drag it out. You will need expert advice from a solicitor specialising in collective enfranchisement.

Step 1. Galvanise the other flat owners

Step 2. Find a solicitor

Step 3: Value the freehold

Step 4. Set up a company

Step 5: Negotiate the price

Step 6. Go to a First-Tier Tribunal

The freeholder must offer flat-owners the freehold

If a freeholder wants to sell the freehold, by law the must first offer it to the flat-owners in the building. It is a criminal offence not to.

Right to manage - step-by-step guide

Under the Commonhold and Leasehold Reform Act 2002, most leaseholders have the 'right to manage' their building. You don't have to prove any negligence, poor service or wrong doing.

This guide will continue to develop over time. Please feed back on how you find this info and your successes and failures.

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