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Step by step guide to buying a freehold

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.

If you’ve bought a flat, the chances are it’s been sold to you on a leasehold basis. This means you’re leasing the property for (usually a large) number of years but don’t actually own the property or the ground on which it’s built.

Many flat owners are happy to buy on these terms. However, you may decide that you want a little 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’s 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 new entity that owns the freehold (which you’ll be a part of).

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.)

    Check out our guide on freeholds to see all the criteria you’ll need to meet 

  • 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 here) 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.
    Click here to get fee-free impartial advice from our partners at the award-winning brokerage London & Country
  • 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 – get in touch with us for help on the process. 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.

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 if you’re lucky enough to own a property so grand that the freehold costs more than £125,000 then you’ll be liable for stamp duty!

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  1. 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

  2. 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

  3. 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

  4. 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

  5. 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

  6. 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

  7. 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

  8. 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.


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

  9. 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

  10. 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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