How to Start Buying Your Freehold

In order for a freehold purchase [often referred to as leasehold or collective enfranchisement] effort to be successful, a certain number of participating leaseholders are required. A minimum of 50% of the owners all flats in the block will need to participate, although you can get moving with the enfranchisement before this threshold is reached, so long as the 50% is eventually reached. This is particularly important as many potential participants won’t join or commit until they know for certain that the enfranchisement will go ahead. This is the sort of chicken-and-egg situation which needs ironing out in the very early stages.

However, it’s worth bearing in mind that the whole process of collective enfranchisement is often much simpler in smaller blocks. So if you live in a small block of, say, four flats – you only need one other leaseholder to join in. On the other hand if your particular block has 100 flats – getting another 49 individual lease owners to agree to join in, and then to keep them on board throughout the process, is far from simple.

Starting out? Why not send out an invitation

Essentially, the process involved with buying the freehold of your block is best started when a significant number of leaseholders have decided that they would like to buy the freehold on the block of flats. What constitutes a significant number will differ from case to case, but at this early stage a formal invitation should be drafted and sent to all leaseholders proposing the collective enfranchisement and asking them to join in with the project. This invitation is not a legal requirement as such, but is a good way to start the process and contact all leaseholders quickly as well as keeping the contact formal, which will put many people’s minds at ease with regards to the financial and legal aspects of the purchase.

Buying your freehold – What to include in your invitation

The initial document should detail;

  •          what is proposed
  •          the benefits of freehold acquisition
  •          the information regarding the deadline for joining
  •          the deposit that would need to be paid
  •          cost estimates for the whole project should be included, and it must be clearly stated that these estimates are just that — estimates — and that the final cost could vary and will only be known once the whole process has been completed.

Ensuring that everyone has the same formal notice at the same time will also ensure that potential conflicts are avoided, with every owner being treated in the same way. Naturally, there are instances where this might not be a good idea, for example in a case where one or two of the flats are occupied by friends or relatives of the freeholder, who you think might prove difficult and where you run the risk of that freeholder being provided with confidential information regarding the potential collective enfranchisement.

 

Signing up for Freehold Purchase

A sign-up form should be included with the formal invitation, kept brief and simply stating that the responding leaseholder wishes to take part in the purchase of the freehold on the block of flats should the project go ahead and get underway.

This sign-up form is not legally binding, and this should also be made clear. It simply registers the leaseholder’s interest and intent to participate in a collective enfranchisement project should it happen.

 

Enfranchisement – holding a residents meeting?

It might also be a good idea to arrange a residents’ meeting for those who are still unsure or undecided, allowing them to ask further questions and obtain more information before committing. This can often spur people into joining and signing up.

 

If your block is a big one, and the sums involved will therefore be larger and the project trickier, it’s well worth considering getting a specialist collective enfranchisement solicitor to attend that meeting – they will be able to offer advice from a legal basis and ensure that all of the information being provided is accurate. This will also provide peace of mind to the residents as they will be able to see that the information they’re receiving is accurate and provided by a legal professional with experience in collective enfranchisement. Again, this can often sway many residents into joining the effort.

 

Residents and lease owners – you need to know the difference

It’s particular important point to note here however that just inviting residents may not accurately identify the leaseholders. Many flats these days are owned by buy to let landlords – and it’s the flat owner, not the resident, who can exercise the right to buy their freehold.

 

 

Starting to buy your freehold – Summary

Overall, in the initial stages of planning to buy the freehold of your block, make sure you stay focused on the positive outcomes of collective enfranchisement – with each of the stages and the likely costs being laid out as clearly as possible, showing a fellow lease owners how transparent the whole process is. When the very real benefits of enfranchisement can be clearly seen and the efforts and requirements understood by all, you will find your chances of a successful collective enfranchisement will be much higher.

Starting to buy your freehold? Get the right legal advice from the outset. Call us now

Joining together with your fellow lease owners to buy the freehold of your block can prove to be very complex – especially with a big block when you’re going to need the support of  a number of leaseholders.

You are going to need specialist legal advice from lawyers who really know what they doing when it comes to freehold purchase.. Our expert team can help you wherever you live. Contact us today for a FREE first phone consultation;

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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;

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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
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The Difference Between Freehold and Leasehold

When it comes to property ownership in England and Wales, things can sometimes get a little confusing. If you are the leaseholder of a flat, apartment or leasehold house, what do you actually own? What are your legal rights? How about if you live in a block of flats or a house divided into apartments? What is freehold purchase and when does enfranchisement (or collective enfranchisement) apply? What are the differences between freehold and leasehold?

Unless you’re a property expert, all of these terms and definitions can be confusing, and if you don’t feel you know the basic answer these questions when purchasing residential property, either as a home or an investment, you could end up regretting your decision to buy. Here’s a brief guide to the terms freehold, leasehold, and freehold purchase.

What Is Freehold?

Basically, owning the freehold of a house means that you own the actual building as well as the land it stands on. As a freeholder, you will be listed in the land registry as owning the ‘title absolute.’ The main benefits of being a freeholder over a leaseholder is that you won’t have to deal with a freeholder, so you won’t have to pay ground rent every year, you will be in charge of the maintenance of the building and can therefore choose who you hire to do repairs and so on, and you will find your home much easier to sell if you decide to move.

What Is Leasehold?

So what does leasehold mean? Basically, owning the leasehold means that you lease the house from the freeholder (generally this will be your freeholder). You will have a contract for however many years the lease term is for, and, subject to the terms of each individual lease, general responsibility for maintaining the common parts and overall fabric of the property [e.g. the roof and any shared entrance or passageway] will lie with the freeholder. This can be a good thing, but it can also be frustrating if the freeholder is slow to organise repairs or charges a lot for maintenance fees. The leaseholder will have to pay ground rent to the freeholder every year, in addition to a maintenance charge, and will often be faced with restrictions on their enjoyment of the property such as having to obtain permission to change the property or not being allowed pets and so on. Basically, leaseholders have a lot less control than freeholders.

What Does ‘Freehold Purchase’ Mean?

It may be possible as the owner of a leasehold flat/house to buy the freehold of your block. This – unsurprisingly – is called Freehold Purchase or sometimes Freehold, Collective or Leasehold Enfranchisement. You can force your freeholder to sell the freehold of the block of flats to you and some or all of your fellow leaseholders – as long as you meet certain criteria.

There are many reasons why people wish to purchase their freehold, with the advantages being many. For example, you won’t have to pay ground rent to your freeholder (or deal with them at all , as you now share the freehold ownership of the property), you can enjoy more security in your home without fear of eviction, and you can be in charge of the maintenance and management of your home without having to wait for your freeholder to do things. If you want to acquire the freehold on your house or flat, you’ll need to adhere to strict guidelines, so it’s vital to have a specialist solicitor on your side who can guide you through the whole process.

Finding Out More About Freehold Purchase

If you wish to find out more about the possibilities of freehold purchase, it is essential that you speak to a law firm with extensive experience in the area of property law. Only a relatively small number of law firms nationwide, like us here at Bonallack and Bishop, actually specialise in this area.

Selling Your Freehold to your Leaseholders|? Contact our specialists today

Exercising the right to buy your Freehold is complex and you will need expert 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
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Comments or questions are welcome.

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Freehold Purchase: Your Finance Options

The very first option or the standard option for the purchase of the freehold of your block is simply a bank loan/mortgage.  That is to say that you go to the bank or the building society and you request the funding required to exercise your freehold right to buy However, you should not assume that this is the only option available to you.

Another option to facilitate buying your freehold is that all the leaseholders club together and then a company is formed, so that the company buys the freehold, not individuals.  Then you are able to raise funding through the company and this will mean that you can secure money at a preferential rate in terms of your repayments.  So this is definitely a good option.

Creating a fund for the freehold acquisition can also be a good idea.  This is because the whole procedure of the freehold purchase can be a lengthy process.  Leasehold or freehold enfranchisement which is the process of undertaking a freehold purchase is actually a very complex area of law.  So along the way, there will be times when costs arise and the sooner a collective fund is started the better.  In effect this means that exercising your freehold right to buy to can be as smooth as possible.

Sometimes not all tenants wish to participate within the scheme, but so long as 50% of tenants are keen, then it can usually still go ahead.  This will mean that there are some costs that will have to be borne by those who are interested and in these situations; there may be a case for outside investors to be attracted into the scheme.  There is no guarantee that this will happen, but sometimes investment companies may be interested in making an offer and approaching them is certainly a good idea.  Ideally this approach should be made at the very early stages of the freehold purchase.

Freehold purchase or leasehold enfranchisement can be funded by a not for profit co-operative being formed.  This is slightly different from the formation of a company, since companies will ultimately seek to make some kind of profit, but a co-operative has a slightly different ethos and philosophy; but it requires a good deal of co-operation throughout the process of collective enfranchisement.

Thus there are different options available when it comes to freehold purchase. Care should be taken to explore all the options to ascertain which will be the most beneficial for all.  The process of collective enfranchisement is not without its drawbacks.

Considering Freehold Purchase? Contact us now

Buying your Freehold is complex and you will need expert 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.

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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.

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Our other enfranchisement, right to manage and lease extension websites

Our solicitors don’t just specialise in freehold purchase advice; they are also experts in many other areas of property law, particularly with regard to lease extension, lease enfranchisement and right to manage company  formation. For more information about our other property law services and how we can help you, why not visit one of the other specialist microsites listed below.

http://www.leaseextensionuk.co.uk

This niche website is dedicated entirely to the field of residential lease extension. It covers topics such as what leasehold extension actually is, why you might like to consider extending the lease on your flat, who is eligible to extend their lease and how to extend a lease. The site also has a readily updated blog looking at topics related to lease extension.

http://extendingalease.co.uk

This is another niche website dedicated to the topic of extending a lease. If you have owned a residential leasehold property that was initially granted with a lease over 21 years, then you are likely to be eligible for an automatic right to an extended lease for a further 90 years on top of your current unexpired term, which is a great way to add value to your property and make it much more saleable. The website covers topics such as why you should extend a lease, the process of lease extension, how much a lease extension is likely to cost and answers a range of popular FAQs – as well as explaining how our lease extension solicitors can help you.

http://righttomanagecompanyuk.co.uk

If you are a tenant who wants more control over their property then forming a right to manage company with your fellow tenants is something you really should consider. This website is dedicated to the UK right to manage and deals with the issue of how to exercise your rights to manage, what is involved in right to manage company formation as well as dealing with the responsibility involved in running a right to manage companies. The site also explains why it’s so important to use specialist right to manage solicitors to help you exercise your right to manage.

http://www.enfranchisementsolicitors.co.uk

If you have an issue related to any aspect of  individual or collective enfranchisement, this website is there to help you. It covers a range of property law issues, including buying the freehold of your property, establishing an RTM company and extending your lease. It also has valuable information for freeholders and information on why you might like to consider exercising the right to buy your freehold.