A Guide to Buying Your Freehold

When a person buys a property, they agree to one of two kinds of agreements: a freehold agreement or a leasehold agreement. In the UK, most houses are purchased on a freehold basis. This means that the buyer has complete ownership of the land they have purchased, as well as any property situated on the land. As such, the owner is able to make any changes they choose and has the freedom to sell the land and property as they see fit.

A leasehold agreement effectively gives the buyer – called the leaseholder – the permission to live in the property for the duration of their lease. In contrast with a freehold agreement, the leaseholder does not actually own the property or the land that it sits on. While most houses fall under the umbrella of freehold properties, most flats will be leasehold. This means that tenants lease their properties from another individual – the freeholder – paying to them a nominal ground rent and maintenance fees where applicable. The length of the lease will vary from property to property (the longer the better), but it is possible for a leaseholder to buy the freehold of the flat/property.


How to Buy Your Leasehold

Most buyers will have taken out a mortgage to purchase the lease for the property in question. It makes sense then, that many would be eager to also purchase the freehold. This helps to erase any confusion that may arise from the situation of purchasing a leasehold property. The good news is that this is a possibility.

Most leaseholders who acquire their freehold do so through the right of first refusal (RFR). This means that, should the freeholder wish to sell their property, the tenant of the property is given the opportunity to buy the freehold before any other interested parties. In this scenario, the landlord will send a written notice to the tenant informing them of their plan to sell, and an offer price to purchase the freehold. This offer is subject to a two-month acceptance period. If the tenant does not accept within this time, the freeholder may put their property on the market.

For the purchase of the freehold, there should be at least two properties in smaller blocks and both leaseholders should be looking to purchase. For larger blocks, at least half of the leaseholders need to participate in purchasing their freehold for the transfer to be successful. These rules mean that, to an extent, leaseholders looking to purchase their freehold are somewhat reliant on other residents doing the same thing.


Collective Enfranchisement and Block Management

There is another option for leaseholders interested in purchasing their freeholds. Under the Commonhold and Leasehold Reform Act 2002, leaseholders can group together to buy the freehold from their landlord – whether they were planning to sell or not. This scenario, known as collective enfranchisement, transfers ownership of the block to participating leaseholders. Similarly, leaseholders can employ the Right to Manage to purchase the freehold from the landlord. In both of these scenarios, at least 50% of leaseholders must agree to participate in the process.

In many cases, the landlord of a block employs a managing agent to oversee the day-to-day maintenance and upkeep of the block. This includes meeting with and keeping tenants informed – including in the case of selling the block. While the landlord may be an external freeholder, as a leaseholder, it is common that you will liaise with a block manager during the process of buying the freehold.

In the case of flat blocks, the purchase of the freehold does not only transfer the ownership of the land and property, but also the responsibility to maintain the building as well as any necessary liaisons with contractors and suppliers. At Horizon Management, our block management team has the expertise to help make freehold transitions as smooth as possible – for both the tenant of the block and the landlord. We work with both external landlords and Resident Management Companies to ensure the effective management of blocks, from administrative and legal duties to everyday management of communal areas.

To find out more about how Horizon Management could help with the management of your block, get in touch with our friendly team today.


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