In the United Kingdom, a freehold refers to the ownership of real property, or land, and all immovable structures attached to such land; as opposed to a leasehold in which the property reverts to the owner of the land after the lease period has expired.
Since the inauguration of Leasehold Reform Act 1967, leasehold tenants have had the right to acquire the freehold. However, many people remain unaware of the potential opportunities that purchasing their freehold provides.
Why Purchase your Freehold?
Boost value - Similar to extending a lease, purchasing the freehold provides you with an opportunity to protect and, in many cases, boost the value of your investment via extending the lease to a much longer term (typically by 999 years); making it easier to be accepted for financial loans, such as a mortgage.
Service charges – As freeholder, you can budget for maintenance works and make any final decisions in relation to agreeing on the final service charge rates.
Ground rent - As freeholder you can reduce the ground rent to zero.
Take control of your home – Purchasing the freehold means you can decide how your property should be managed and you have more control over aspects including but not limited to insurance, cost savings, and your chosen management company.
To purchase your flat's freehold, there is a certain criterion which must first be met before consideration is given. Further detailed by The Leasehold Advisory Service (LEASE), the most important criteria are:
The property must be held under a long lease (i.e. one which was granted for a term of 21 years or more).
The property must have been owned by you (the current leaseholder) for 2+ years. This timescale begins from the date of registration at the Land Registry. Where a leaseholder who is eligible for the right to the freehold dies, his personal representatives can serve a notice for purchase within two years of the grant of probate or letters of administration.
Although not a legal requirement, we recommend that at least 50% of the leaseholders in your development take part in the freehold purchase with you. For most, the possibility of purchasing the freehold single-handedly would be very difficult to justify – if paid for via mortgage – and/or afford.
'Section 5' Notice
Under the Landlord and Tenant Act 1987, it is a criminal offence for freeholders to sell the freehold to a third party without having first offered it to the flat owners.
If you receive a ‘Section 5’ Notice from your freeholder, you are being offered the right to buy your freehold. It is imperative that you act quickly, since if you do not respond by the deadline, the opportunity may be lost. Therefore, contact us as soon as possible to see how we can help you.
We trust that the aforementioned has been helpful to your understanding of Freehold Purchases. If you wish to find out more, please email us at firstname.lastname@example.org for further information. To see if you can apply to purchase your freehold, please contact us on 0845 838 5172 or email us to discuss how to proceed.
Employing our services gives you greater control over the value of your home, as your property will become more valuable and marketable (important in a tougher economic climate) whenever you come to sell it.
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