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Step by step guide to buying a freehold

Are you looking to snap up the freehold of your flat? Keen to join forces with fellow residents and take back some control? We’ve got you covered with our step by step guide.

Step by step guide to buying a freehold

If you’ve bought a flat, the chances are it’s been sold to you on a leasehold basis.  However, you may be wondering if you can buy the freehold of your property and how to go about buying the freehold.

Many flat owners are happy to buy on leasehold terms. However, you may decide that you want more control over your block and, specifically, the money being spent on it. While you’ll expect to pay ground rent and service charges, sometimes these costs can rise to extortionate levels. You may find unreasonable ground rent increases in the contract from your freeholder or it may be that you and your fellow residents seem to be paying inflated costs for services to the building. In these cases, it’s not uncommon for leaseholders to look to buy the freehold of the property.

But it’s not just flats that are sold on a leasehold basis. Some new build houses are sold as leaseholds too. This can mean homeowners, with their own front door, are forced to pay pricey costs for the upkeep of green or common areas, which are open to all but maintained at the cost of nearby leasehold houses. If they enter into any informal agreements with their freeholder, they could even find themselves dealing with unfair contract clauses which leave the properties virtually unsaleable.

It’s understandable that these homeowners are looking to buy their freehold sharpish.

So, should I buy the freehold for my property?

If the property is a house then yes, you absolutely should. There is no reason for houses to be sold on a leasehold basis. Our advice would be to purchase the freehold as soon as you are eligible to (you have to have owned the leasehold for two years).

If the property is a flat, there are a few other things to consider. Buying the freehold can cost about as much as extending the lease of the property and buying the freehold of a flat is a little bit more complicated since you’ll need to get the other residents of the block involved. You’ll still have to contribute towards service charges but you’ll be able to have more say over how much the charges are.

It’s worth noting that if you have a flat and you own a share of the freehold, you still have a lease. However you should be able to extend it for free and it’ll be from a new entity that owns the freehold (which you’ll be a part of).

It can be quite complicated to exercise your right to buy the freehold, so many people simply extend their lease and carry on with their freeholder.

Want to know how much a lease extension will cost and what’s involved? Our partnered lease extension solicitors can give you a free estimate and advice you can rely on. Find out more and speak to them today

Steps to buying the freehold of your flat

Check you’re eligible

There are a number of requirements you’ll need to meet in order to be able to buy your freehold. For example, the building must contain at least two flats and no more than a quarter of it can be used for nonresidential purposes (so if most of the building is used as offices or occupied by retailers it won’t be an option for you.) See what criteria you’ll need to meet to buy the freehold 

Speak to your neighbours

Your first move will be to get some of your fellow residents involved. In order to buy the freehold, at least half of the flats in the building need to be up for buying it. If you’re all currently facing extortionate ground rents or your freeholder seems to always choose the most expensive option when it comes to services for the building, this may be relatively easy to do.

Find out the cost of the freehold

This is the big one. You need to find out how much this is going to cost you. It’s difficult to give an estimate as the price of freeholds vary as much as house prices do. There are some guides which claim buying your freehold should cost around the same as extending your lease by 90 years (and you can check the cost of lease extension using our leasehold extension calculator) but take this figure as a rough estimate. You’ll need to get an accurate valuation from a surveyor (and bear in mind there will be a cost for that too.) One rule of thumb is that the shorter your lease, the most expensive the freehold will be. 

Consider other costs

Remember, as with most ‘sales’ in property there will be other fees to pay. Along with the valuation costs mentioned above, you’ll have to stump up solicitor’s fees along with the legal fees and valuation costs for the freeholder (yes, you pay their costs unfortunately!)

Work out your finances
Once you know how much the freehold is going to set you back, you need to make sure you can afford it. Most mortgage lenders will extend your mortgage in order for you to buy the freehold, but it’s worth talking to a mortgage broker early on to find out if this will be possible. Get fee-free impartial advice from our award-winning mortgage partners L&C

Get a solicitor

It’s essential that you have expert advice. Freehold purchases are not something that every property solicitor will have experience in. It’s important to find one that specialises in this area. We would always recommend using a solicitor who is a member of the Association of Leasehold Enfranchisement Practitioners (ALEP).

Sign a participation agreement

One of the first things you should get your solicitor to do is draw up a participation agreement for each of the flats taking part. The last thing you want is to have someone drop out at the last minute, increasing costs for everyone else or even dropping below the 50% willing participants number, needed to go ahead with the purchase. A participation agreement is essentially a contract between all leaseholders taking part in the purchase of the freehold, and outlines all matters between participants – including things like the terms for lease extensions once the freehold is acquired.

Get a professional valuation

Now’s the time to stop working to estimates and pay a professional surveyor to value the freehold. Again, it’s worth getting a surveyor with experience in this area – become a member of the HomeOwners Alliance for help on the process of buying your freehold. We can help you find suitable experienced professionals.

Set up a company

In order to buy the freehold, one member of the group needs to take charge as the ‘nominee purchaser’ or you need to set up a company. The latter option is usually the safest and avoids any disputes or power struggles.Obviously setting up a company comes with its own responsibilities. As well as paying set-up costs, you’ll need to file company accounts on time.

Issue a tenants’ notice

We would always advise leaseholders to pursue the statutory route rather than making an informal offer when purchasing the freehold. Your solicitor will need to issue a “tenants’ notice” on the landlord effectively requesting the purchase of the freehold. The notice must be signed by all leaseholders involved in the purchase.The landlord will then serve a “notice in reply”. He should do this within two months (if the matter ends up going to court and the landlord hasn’t responded within the two month time frame it will not work in his favour). In his reply, the landlord should agree to the sale or, if he disagrees, give his reasons why.Be prepared – the landlord can ask you to pay three times the annual rent of the property a deposit.

Once the landlord has agreed to sell negotiations on price can begin.

It’s essential that the notices served on the landlord are correct. If they’re not, you may have to wait another 12 months before you can serve them again. This is why it’s so important that you use a specialist solicitor.

And if all else fails…

If you can’t agree a price or the freeholder is unwilling to sell, you can take your case to First Tier Tribunal (this must happen within six months of the date the notice in reply is served), which is the arbiter of such disputes and will decide the cost for you.

The HomeOwners Alliance can provide guidance on buying the freehold. To see how we can help, find out more about becoming a member of the HomeOwners Alliance

Buying the freehold of your house

Buying the freehold to your house is, in theory, more straightforward than buying for a flat, as you can act alone so you don’t need to convince anyone else it’s the right thing to do (trust us on this one, it is). That being said, you are likely to go up against a professional freeholder who will do everything in their power to stop you buying it.

As above, you’ll need to enlist the services of an experienced leasehold solicitor, get a professional valuation and make an offer via your solicitor. Always follow the statutory route. Informal agreements can backfire – for example you could end up with a freehold which is subject to lease like restrictions.

Just as with enfranchisement of flats, if you can’t agree on a figure or talks hit a dead end you can take it to the First Tier Tribunal. 

Don’t forget that if the freehold costs more than £125,000 on the property you own,  then you’ll be liable for stamp duty.


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25 Comments

  1. Hi Lisa, you might want to speak to a specialist leasehold solicitor. Our partners at Bollanack and Bishop may be able to help. You can contact them here.

    Comment by HomeOwners Alliance — October 15, 2019 @ 12:35 pm

  2. I am in the process of selling my flat and have been advised that we need to offer share of the freehold to the occupants of the ground floor flat as they have been resident for over 2 years.

    we are trying to work out how much is reasonable for us to off this to them for.

    Please can you advise as to how we should work this out and how much something like this is normally sold for as we want to make sure the offer we make is reasonable.

    Comment by Lisa — October 15, 2019 @ 10:24 am

  3. Dear Steve. I’m afraid we can’t offer advice as to whether that is a good price to pay. It might be worth you contacting a leasehold specialist who may also be able to advise on the process for buying the freehold or what it may cost. There is reference to one on our website https://hoa.org.uk/services/find-lease-extension-solicitor/

    Comment by HomeOwners Alliance — September 27, 2019 @ 2:29 pm

  4. I have been asked by my freehold Agent if I want to purchase my property for £2.400 plus £450 legal fees. The property is worth approx £410,000 and the present lease has got 978 yrs left on it. I pay £100 per year ground rent do you think this is a fair price to purchase it?

    Comment by Steve Niblock — September 27, 2019 @ 6:38 am

  5. Hi, we want to build a garden room in our leasehold house. We approached the freeholder company and offered to buy it for £2000. The lease is ove 940 years. They have come back with the offer of :
    Their charge in this instance will be £3,500.
    Legal fees and disbursements.
    Surveyors fees.
    Could you please advise us. We think it may be way over the price we should pay. We are quite restricted economically. It says to let our solicitor contact their solicitor which is another expense. Thanks.

    Comment by Maria — September 14, 2019 @ 3:16 pm

  6. Hello Hamed, we’d recommend you enlist the services of an experienced leasehold solicitor, get a professional valuation and make an offer via your solicitor. We’d always recommend you follow the statutory route. Informal agreements can backfire – for example you could end up with a freehold which is subject to lease like restrictions!

    Comment by HomeOwners Alliance — September 9, 2019 @ 10:12 am

  7. I own a house with a lease of more than 900 years. I contacted the freeholder to buy the freehold, we have agreed a price of £695 that covers any arrears. The freeholder asked for payment and he will do all the necessary work with the Land registry. My question is that, Is it safe to buy the freehold directly from the freeholder as we have both agreed on the value of the freehold or Do I need to go through a solicitor to buy the freehold as the freeholder asked for payment in advance. I will be grateful for your advice will. I look forward to hearing from you.

    Comment by hamed zayer — September 6, 2019 @ 10:13 pm

  8. Thanks Susan for the communication. It might be worth having an initial discussion with a leasehold extension solicitor who can advise whether this seems reasonable. https://hoa.org.uk/services/find-lease-extension-solicitor/

    Comment by Marianne Cole — July 4, 2019 @ 5:17 pm

  9. Hi
    I own a leasehold house. The leaseholders who are a loca firm are selling the leaseholds to a London Company but have offered to sell the leasehold to me for a fee of £1000 plus their legal fees. Their solicitor happens to be the solicitor I used when I bought the house. Should I buy the leasehold and if so should I use another solicitor or stay with the same one.

    Comment by Susan — June 29, 2019 @ 7:58 am

  10. Thanks for the question Steven. It might be worth contacting our partners at Bollonack and Bishop who may be able to give you some advice on the reasonableness of the calculations in the cost and process of buying the freehold

    Comment by Marianne Cole — June 21, 2019 @ 11:59 am

  11. Please could you shed some light on the following query:
    Had offer from Redrow developer to purchase freehold on house for 26 x ground rent (currently £300 per annum) = £7,800.
    Lease is 999 years from 01/01/2015 but we will not have been in the house for 2 years until Oct 2019 so I know it would have to be bought after then. The time limit on the current offer Redrow have put on us buying this by May 2020. We have heard that industry standard multiples for the freehold charges are more like 14-16 times the annual ground rent and not something like 26 that Redrow seem to think is appropriate. Do you have any advice on this? Any help would be greatly appreciated. Kind regards, Steve Battle.

    Comment by Steve Battle — June 21, 2019 @ 8:18 am

  12. Hi Philip – there have been recent consultations on changing leasehold procedures – we are keeping abreast of these and will update our guidance when these are enacted. Sorry to hear of your experience of paying over the odds.

    Comment by Naomi — February 12, 2019 @ 11:46 am

  13. I was just listening to The Money Programme on Radio 4, which was discussing different ways for leaseholders. Out of curiosity I’m interested if there have been changes since 2005, when I bought my freehold with the owner of the other flat in my converted Victorian house. At the time, the contentious variable was Marriage Value – the right of the freeholder to be compensated for the loss of ground rent, plus a share of the increase in value brought about by the joining together of the leases and the freehold, It seemed to be the case that the latter was purely a matter for dispute between the buyer and seller- there were no laws specifying what the freeholder could claim the marriage value to be. At the time I bought my freehold the law changed to allow freeholders to charge more, and unfortunately, because of a delay by my agent (buyyourfreehold.com), I ended up paying £12,000 rather than the £8,000 quoted by them.

    Many thanks

    Philip Gatter

    Comment by Philip Gatter — February 9, 2019 @ 12:42 pm

  14. Hi Chris, we would recommend that you appoint a specialist solicitor to handle the legal aspects. Do give our partners at Bonallack and Bishop a call for a free phone consultation and a free quote. Bonallack and Bishop are members of the Association of Leasehold Enfranchisement Practitioners and have 25 years of experience in leasehold extensions, handling around 350 cases a year, for both the leaseholder and the freeholder https://hoa.org.uk/services/find-lease-extension-solicitor/

    Comment by Sara Hind — January 23, 2019 @ 1:14 pm

  15. Dear Homeowners Alliance
    We own a leasehold house and have recently received an email from the landlord’s representatives (a company Called Freehold Managers, who we pay our ground rent to) offering us the sale of our freehold. The email gives us the cost, plus the landlord’s legal fees. We are definitely interested and it seems very simple just completing a form and sending a payment. They have asked if we intend to appoint a solicitor, but I am of the thinking, if the price is agreeable to us do we really need to appoint a solicitor? It sounds that simple, it makes me feel slightly uneasy!

    Comment by Chris Jepson-Brown — January 18, 2019 @ 6:48 pm

  16. Hi Roy, have you come across the Leasehold Advisory Service? lease-advice.org You could give them a call for some advice, alternatively, please consider becoming a member of HomeOwners Alliance and we’ll do our best to advise you.

    Comment by Sara Hind — July 20, 2018 @ 3:43 pm

  17. I need advice. A new but small development in Liverpool comprising a few freeholders but mainly leaseholders require advice re an estate management company. The area managed is small but with rising costs. For example are there rules of competition we can apply? or other means of challenge. We need an appropriate solicitor but finding one is a sheer impossibility. Help please.

    Comment by roy wakelam — July 20, 2018 @ 12:09 pm

  18. Hi Roy, have you come across the Leasehold Advisory Service? lease-advice.org You could give them a call for some advice, alternatively, please consider becoming a member of HomeOwners Alliance and we’ll do our best to advise you.

    Comment by Sara Hind — July 20, 2018 @ 3:43 pm

  19. We are freeholders on a new build estate. The majority are leasehold. The estate management company who function under benefit and burden and charge accordingly propose to acquire the equity of the ‘managed’ area. What can we do to stop this? Can we replace the management company with our own under rules of competition?

    Comment by roy wakelam — July 20, 2018 @ 11:31 am

  20. Hi Suzanne, and thanks for your query. If you’d like more tailored advice on this subject please consider becoming a member.

    Comment by Sara Hind — July 11, 2018 @ 3:14 pm

  21. Hello

    My sister and I own an apartment together. It is one of three apartments in a house that was converted over 20 years ago. At the time we were offtered the freehold so we bought it. It’s been a good investment. Even though over the years we have been very responsible owners of the freehold we realise we need to be more professional with this responsibility and have tried getting advice of what we need to do to get our ‘house in order’ but have not had much luck.

    The advice above mentions setting up a company. Would you be able to explain a little more about this and how we would go about doing it.

    Many thanks

    Comment by Suzanne Price — July 5, 2018 @ 1:24 am

  22. Hi Kelly, You will have to go down the formal route, which isn’t a bad outcome as you will be better protected. You will need to appoint a solicitor and a surveyor. We generally recommend professionals who are members of ALEP. You can fill out this form to get a free call with a solicitor. They don’t just do lease extensions but can also help with buying a freehold. See https://hoa.org.uk/services/find-lease-extension-solicitor/.

    Good luck and visit us again!

    Comment by Paula — April 12, 2018 @ 1:02 pm

  23. hi could you advise me, we requested informally to buy the freehold of our house- they declined therefore what steps would we now take ? get a solicitor and surveyor ? could you advise where we go from here.

    kelly

    Comment by kelly chapman — April 9, 2018 @ 1:32 pm

  24. Hi James, you can contact our partners at Bonallack and Bishop for a free quote. Bonallack and Bishop are members of the Association of Leasehold Enfranchisement Practitioners and have 25 years of experience in leasehold extensions, handling around 350 cases a year, for both the leaseholder and the freeholder. Go to hoa.org.uk/services/find-lease-extension-solicitor/

    Comment by Sara Hind — March 19, 2018 @ 4:18 pm

  25. The person who owns the lease on my property is willing to sell it to me for an agreed price where each party pays their own fees. Do I have to pay a solicitor £600 or more to facilitate this or is there a cheaper way?

    Comment by james watford — March 5, 2018 @ 4:37 pm

 
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