We have acted for groups of leaseholders buying their freehold, with buildings ranging from two maisonettes, to over a hundred purpose built flats. Large or small, we have the experience and knowledge to run the project from start to finish.
Why is it worth buying my freehold?
It is usually the case that all of the leases in a block of flats have the same term and therefore all need extending together. Whilst an individual leaseholder will have the right to extend their lease, for various reasons it can be more efficient and cost-effective to collectively buy the freehold, and then grant yourselves lease extensions as a separate step once the freehold purchase completes.
But won’t the freeholder just refuse to sell to us?
If your group can meet certain criteria, you can demand the freehold and the current freeholder cannot refuse to sell. The key point to remember is that the qualifying criteria works on a “per building” basis. If your development is made up of many buildings, you need to consider each building separately. Based on the numbers participating, you may find some buildings qualify, and some don’t. It is possible to acquire one building separately, which in effect “severs” the freehold. The number of participators must be at least 50% of the flats in the building. Where there are only two, both must participate.
Can’t the freeholder just set the price so high that it isn’t worth buying?
No – if the price cannot be agreed, it will be determined independently by the Leasehold Valuation Tribunal. The calculation of the price can be complex. It is based on a number of factors, such as the market value of the flats, the length of their lease terms remaining and the ground rents currently paid.
Does this mean I won’t have to pay ground rent any more?
The group of leaseholders who participated in the process can elect to stop charging themselves ground rent if they wish. They will be able to charge ground rent from all the leaseholders who did not not participate. They can grant themselves lease extensions and, depending on the structure of the leases, take over management responsibilities for the site.
Isn’t it difficult to get a group of leaseholders to agree on such a process?
It can be. A number of different issues should be addressed:
- Attending “group session” meetings where the process is explained, documents are signed and questions are answered.
- Using a Participation Agreement to ensure participators remain committed to the process throughout.
- Forming a limited company to acquire the freehold, which is usually appropriate in all cases except for the smallest freehold acquisitions.
- Establishing “group liaisons” who channel information both ways between lawyers and participators.
What is the next step?
Contact us now and we can discuss the first steps to be taken, consider the likely costs and explain any points which need elaboration.