We have acted for groups of leaseholders buying their freehold, with buildings ranging from two maisonettes to over a hundred purpose-built flats. We have also acted for landlords and intermediate landlords who have received a claim from their leaseholders.
Is it worth buying the freehold?
It is usually the case that all of the leases in a block have the same term and therefore all need extending together. While an individual leaseholder has the right to extend their own lease, it is often more efficient and cost-effective for the leaseholders collectively to buy the freehold, after which they can grant themselves new long leases at no ground rent and take control of the management of the building.
What if the freeholder refuses to sell?
If your group meets the qualifying criteria you can require the freeholder to sell, and they cannot refuse. The key point is that at least half of the flats in the building must participate in the claim, and the building itself must qualify. We will check the position before any notice is served.
Can the freeholder set the price too high?
No. If the price cannot be agreed it will be determined independently by the First-tier Tribunal (Property Chamber). The calculation is complex and is based on the value of the freeholder’s interest, the ground rents and the length of the leases, so a specialist valuer’s advice is essential from the outset.
Will we still have to pay ground rent?
The leaseholders who participate can decide to stop charging themselves ground rent. They will continue to be entitled to ground rent from any leaseholders who did not participate. Participants can also grant themselves lease extensions and, depending on the structure chosen, take a share in the freehold company.
Is it difficult to get leaseholders to agree?
It can be. A number of practical issues need to be addressed, and we help with all of them:
- attending group meetings where the process is explained, documents are signed and questions answered;
- using a participation agreement to ensure participants remain committed to the process throughout;
- forming a limited company to acquire the freehold, which is appropriate in all but the smallest acquisitions;
- establishing group liaisons who channel information both ways between the lawyers and the participants.
Acting for freeholders
We also advise freeholders who receive a Section 13 notice, where strict deadlines apply and the consequences of missing them can be severe. See our case study on collective enfranchisement deadlines.
Next steps
Contact us and we can discuss the first steps to be taken, consider the likely costs and explain any points that need elaboration.
The Leasehold and Freehold Reform Act 2024 is being brought into force in stages and will change aspects of the qualification criteria and valuation. This page reflects the position at the date shown.