Buy the Freehold
Collectively buy the freehold of your building
In many buildings a majority of flat owners have the right to buy the freehold. This right is known as ‘collective enfranchisement’ and is a right that Masters Residential Leasehold Law can help you exercise.
The right to buy the freehold of the building in which your flats are situated is especially beneficial where many or all of your leases need extending, or if there is otherwise dissatisfaction with management.
What do we have to pay?
In addition to their own legal and valuation fees, the flat owners making the claim usually have to pay the following:
- The purchase price
- The freeholder’s reasonable legal and valuation costs for responding to your claim and conveying the freehold to you
- Disbursements such as Land Registry fees
The purchase price stays the same no matter how many flat owners participate.
The purchase price is not necessarily split evenly between the flat owners as it is directly linked to the value of each of the flats, the length of each lease and the ground rent payable under them.
If the freeholder can argue that by selling the building they will lose the ability to develop the building, they can add compensation for loss of development value.
If there are any flats or other units in the building that are not subject to a long lease, then they may need to be included in the claim, sometimes increasing the price significantly.
There are a number of rules that determine whether the flat owners in a building can force the freeholder to sell them the freehold.
What buildings qualify?
The building must either be free-standing or a self-contained part of a larger building.
It must have at least two flats in it.
Two-thirds of the flats in the building must be held by ‘qualifying tenants’ (flat owners whose leases were originally granted for 21 years or more and who do not own more than two flats in the building).
The building must not be in more than 25% commercial use.
How many flat owners need to participate?
At least 50% of the flat owners in a building must participate in order to make a claim to buy the freehold.
Where there are only two flats in a building then the owners of both flats must participate.
If someone owns three or more flats in the building, then they will not count towards the 50%.
How is the claim made?
In order to exercise the legal right to buy the freehold a formal notice must be served on the existing freeholder and any intermediate landlords or other interested parties. The notice must comply with s.13 of the Leasehold Reform Housing and Urban Development Act 1993.
The notice must let the landlord know how much the flat owners are proposing to pay for the freehold and set out the extent of the property they are proposing to buy. This firm can help draft and serve the initial notice.
How long does a claim take?
Collective enfranchisement claims usually take between 6 and 9 months from beginning to end.
Occasionally claims can be settled more quickly but sometimes they can take over a year to complete, especially where the parties cannot agree on the purchase price and the matter is submitted to the Property Chamber of the First-tier Tribunal for determination.
What property can be included in the claim?
Provided the building qualifies for collective enfranchisement, a majority of flat owners are entitled to claim the freehold of the building containing their flats. In addition they are entitled to claim any intermediate leasehold interests in any of the flats in the building or over any of the common parts.
The flat owners may also be able to claim any appurtenant property that benefits their flats, such as gardens or parking areas.
Extensive information about the right to collectively buy your freehold can be found on the Leasehold Advisory Service website.
Our prices depend the complexity of your claim. If you email us information about your building we will be able to provide you with a detailed quote. There is no obligation to instruct us.
The factors that influence our prices are:
- The number of participants
- The size of the building
- The level of complexity in what the participants have agreed regarding the price and their rights and obligations (i.e. whether a participation agreement is needed at the outset)
- The number of parties on whom the claim must be served (i.e. where there is a head landlord as well as the freeholder)
- Whether the matter proceeds to a Tribunal
- The complexity of the conveyancing (this will be more complex if the freehold is not registered or only part of an existing freehold title is being purchased)
Where the building contains two flats, the flat owners are splitting the price evenly, there is no intermediate landlord, the conveyancing is straight-forward because the freehold is registered and the whole of the existing freehold title is being purchased, then we would typically charge £900.
Where the building contains eight flats, the flat owners need a participation agreement to set out how the purchase price will be split, there is an intermediate landlord on whom the initial claim notice must be served, the conveyancing is straight-forward because the freehold is registered and the whole of the existing freehold title is being purchased, then we would typically charge £1,600.