Avoiding endless service charge disputes during freehold purchase

Organising the collective enfranchisement process in order to purchase the freehold on your block of flats can be both an exciting and draining time, with the amount of work required to succeed often seeming quite daunting. However, there are some things which should be avoided in order to help the process to run much more smoothly and efficiently.

One of the most draining aspects of the freehold acquisition process can be the ongoing service charge disputes. Often, residents’ associations can be affected by tunnel vision which stops them from seeing the bigger picture in the purchase of the freehold. Naturally, residents will be unhappy about what they see as unreasonable service charges but it is vital that these concerns are put to bed so that the process of collective enfranchisement can continue successfully. Engaging in endless fights with your freeholder over service charge disputes may well lengthen the whole process and lead the residents’ association into an ongoing battle which may never end.

Legal advisors and solicitors experienced in collective enfranchisement will be able to explain that residents’ associations that continue to run around in circles chasing service charge disputes with claims and counter claims will hardly ever be successful in their efforts to purchase the freehold on their block of flats. Largely speaking, this is a waste of energy which can be better focused on the greater good of collective enfranchisement. Remaining focused on the final goal is vital to ensuring the success of the process and is particularly important when working with residents’ associations or large groups of people as the focus can often be easily lost, making the whole process much more bloated and inefficient than it needs to be.

It is worth noting that if you are about to exercise your right to buy the freehold of your block and aren’t aware of any service charge disputes, you may well come across some during the process. As part of buying the freehold, the leaseholders must pay to the freeholder any unpaid and outstanding service charges-because they are buying the whole legal entity of the building including its assets and liabilities. It is vital, then, that the cash flow process is carefully managed in order to ensure that the funds are available for the service charges at the end of the process and that these charges are expected and anticipated properly.

It should be agreed in writing at the start of the process that the residents’ association will not pursue service charge disputes during the process and that each participant in the freehold purchase process will be responsible for his or her service charges. It should be stated that the aim of the residents’ association is solely to ensure the collective enfranchisement and not to waste time on pursuing other, smaller goals. It can be difficult for all residents to agree to this as they will naturally want to pursue what they see as unfair charges, but as long as everything is laid out clearly in writing before the process begins, it will ensure that the whole process runs much more smoothly than it otherwise might do.

When organising a group of people around a lengthy legal process like freehold purchase, trying to get the right advice across can be challenging and difficult. It is for this reason that hiring a solicitor specialising in freehold purchase work might well save you a lot of money in the long run as well as a lot of hassle. By consulting an experienced solicitor you will ensure that your residents’ association has all of the relevant information to hand and can take advantage of the advice that your solicitor can offer through their experience of the process with other residents’ associations.

Thinking of Freehold Purchase? Contact us today

Acquiring the Freehold of your block can prove really complex and you are going to need really good legal advice. Our specialist teams can help you wherever you live. Contact our solicitors today for a FREE first phone consultation on  your Freehold Purchase;

  • Call us on FREEPHONE 0800 1404544
  • Or use the contact form below

    Comments or questions are welcome.

    * indicates required field

5 Questions to Ask When You Buy Your Freehold

There are lots of different reasons why buying your property’s freehold is a good move for leaseholders. Whether you live in a house or a flat, the benefits of security, not having to deal with your freeholder, the property’s increased value and not having to pay any more ground rent are clear to see. There are however some key things you need to ask and understand before embarking on the process of buying your freehold.

Before you even start taking steps to purchase the freehold of your property, make an appointment to see a solicitor who has experience in the world of buying the freehold for a property. This is also sometimes known as collective enfranchisement or leasehold enfranchisement. Before the first meeting with your solicitor, ask yourself the following questions.

Am I Eligible to Buy the Freehold of My Block?

Collective enfranchisement can only work if the leaseholders are actually eligible to buy the freehold. Whether or not a group of leaseholders have the right to collective enfranchisement depends on a range of factors, including how long the leasehold has been owned, what the lease covers and how long is left of the lease. Things are complicated further in blocks of flats where a flat management company needs to be set up in order to purchase the freehold as a collective. If you just want to buy the freehold for your house, the process is far more straightforward.

There are certain groups of people who are not allowed to buy the freehold, so if the freeholder is a housing trust with charitable status, the freehold also covers the property next door, you have your lease for business purpose or if the public has a right of access to your property you will need to get advice from a specialist property solicitor. If there are any questions or doubts at all on your eligibility to purchase your leasehold, a specialist solicitor can advise. Click here to find more about eligibility.

Why Am I Buying My Freehold?

Knowing why you want to buy the freehold of your property is one of the first things you should establish. Every leaseholder’s reasons for wanting to buy a freehold will differ. Some want to be done with the hassle of dealing with a freeholder and the stress of waiting for things to be fixed for weeks when it would be easier to sort out the repair themselves. Others grudge paying the annual ground rent. A longer term consideration is often the desire to increase the value of your home and your security by purchasing the freehold.

If a group of leaseholders in a block of apartments just wants more say and control over how things are run, it might be easier and cheaper to exercise what it known as a “right to manage” rather than going down the full freehold purchase route.

If your sole reason for buying the freehold is to increase a property’s value and to increase security, a better option may be lease extension. A lease extension doesn’t involve any of the other leaseholders in your block and is often quicker and easier to complete too.

Is Buying the Freehold of My Property Too Expensive?

Finance and affordability are the other main considerations when it comes to buying the freehold. In basic terms – how do you plan to pay for it? This is a major worry for many people considering buying the freehold. It can be difficult to estimate total costs before starting the process, but things can be made clearer by having a valuation done beforehand to give you a ballpark figure to begin negotiations on price with your freeholder. On top of the cost of the buying the freehold itself, you also have to factor in surveyors’ fees, and the legal costs for both you and your freeholder.

If you are buying as a group, legal and surveyor fees can be divided between all of the leaseholders who are participating in the purchase. If you feel the price you are given for buying the freehold is unreasonably high, you have the right to take the case to the Leasehold Valuation Tribunal [ re-titled the First-Tier Tribunal Property Chamber]
who will make a ruling. Fortunately this is rarely necessary.

Am I confident that the other leaseholders involved in the freehold purchase will stick with it?

Acquiring the freehold of your property isn’t a simple process. If you are considering buying the freehold of a block of flats along with many other fellow leaseholders, this sort of collective purchase gets even more complex.

Is my Solicitor a Freehold Purchase expert?

This is a very complex area of the law and there will be many more questions than those addressed above. The best advice is to make an appointment with a solicitor who specialises in this area of property law and ask them to provide the answers. Not many solicitors deal with freehold purchase as their core business, and even solicitors who specialise in conveyancing may never have been asked for help in buying a freehold. Maximise your chances of a smooth and simple collective enfranchisement process by looking for a specialist solicitor at the earliest opportunity. Don’t be afraid of asking any solicitor you’re thinking of appointing the following simple question – “how many clients have you helped with collective enfranchisement?”

Need legal advice on the Leaseholders Right To Buy Their Freehold? Call now

Coming together to buy your freehold is complex – especially with a big block when quite a number of leaseholders will need to participate. You are going to need specialist legal advice. Our expert freehold purchaser team can help you wherever you live. Contact our solicitors today for a FREE first phone consultation;

  • Call us on FREEPHONE 0800 1404544
  • Or use the contact form below

Comments or questions are welcome.

* indicates required field

 

Gain Greater Security With the Acquisition of Your Freehold

The one place you want to feel safe and at home in is of course your home. Many people who own their own homes – a house perhaps, or a bungalow – get this feeling every time they walk through the front door and close it behind them – because houses are usually owned outright – on a freehold basis. But if you happen to own a flat under a leasehold agreement, you may feel slightly differently about it.

When you buy a flat with a lease you are, in effect, simply buying the right to stay in the flat for a set length of time at most. So in essence your purchase is somewhere between renting a property and owning it outright. Even when you have paid your mortgage off you won’t own the flat – you will still lease it. If the lease happens to be quite short by this time, you will probably feel insecure as to what the future may hold.

Acquisition of Your Freehold – the benefits

You can see then how beneficial it can be to think about buying the freehold to your flat. You cannot do this alone but if enough other people in your block of flats are interested in freehold acquisition as well, you should definitely consider it, especially if you and/or the other leaseholders have a short lease. Buying your freehold [or freehold enfranchisement as tenants clubbing together to buy the freehold jointly is also known] does give you more benefits with regard to your security.

It is not just the fact that you don’t have to worry about the length of the lease when you opt to purchase the freehold of your block. You also have the advantage of knowing you have more options should you ever decide to sell your flat. If you look to sell the flat in the future, you will doubtless find it easier to sell if you have a freehold to offer rather than if you just own a lease. Share of freehold properties are more attractive to prospective buyers. This is particularly true if the lease on the flat has been considerably shortened by the time you try to sell, as many seller’s with a short lease experience difficulty selling the flat due to mortgage lenders being unwilling to lend on short leases. As such, the flat may have become impossible to mortgage and, hence, unsaleable.

A freehold acquisition is seen as being far more valuable to the flat owner. The share in the freehold can be transferred to the buyer on completion of the sale. People are generally willing to pay more for the freehold to a property than they will for a comparable property that only has a leasehold interest. This is another fact in favour of the security that such an agreement offers.

If you can meet the legal requirements needed to exercise your right to buy your freehold, it is certainly something you should give serious consideration to. You will understand why it offers more in the way of security both now and in the future.

Considering Freehold Acquisition? Contact our specialists today

Buying the Freehold of your block of flats can prove complex. You are going to need specialist legal advice. Our expert team can help you wherever you live. Contact our solicitors today for a FREE first phone consultation on your Freehold Acquisition;

  • Call us on FREEPHONE 0800 1404544
  • Or use the contact form below

Comments or questions are welcome.

* indicates required field