To get the process of Buying your Freehold underway, speak to one of our specialist Conveyancing Solicitors today - call us on 0330 660 0286 for more information, or request a callback.
The Leasehold, Reform Urban Housing and Development Act 1993 gives ‘qualifying tenants’ the right to buy the freehold of their property in return for the payment of a premium. This right is known as ‘collective enfranchisement. ’
In order to be a 'qualifying tenant', the tenant must have a lease of 21 years or more. If the tenant owns 3 or more flats in the building they will not be treated as a ‘qualifying tenant’ for the purposes of buying the freehold.
One of the advantages of buying your freehold, is that you will able to grant yourself a long lease of 999 years at a peppercorn rent. This right is especially valuable where the unexpired term of your lease is less than, say, 80 years or so. Properties are generally harder to sell once the unexpired term starts dropping below 80 years unless a lease extension process is underway.
Before the initial Notice is served on the landlord a company should be formed to conduct the buying of the freehold process on behalf of the qualifying tenants. The company will be named in the Notice as the ‘Nominee Purchaser. ’ Qualifying tenants representing at least 50% of the flat owners must become members of the Nominee Purchaser company.
Costs of buying the freehold
The tenant must be advised from the outset of the costs they will be liable for. They are responsible for the reasonable costs of the landlord and any intermediate landlord. This excludes any costs associated with Leasehold Valuation Tribunal Proceedings.
Steps involved when buying your freehold:
- Serve the initial notice
The Notice must be in a prescribed form containing certain information. If the Notice is not prepared in the proper way it will be deemed invalid. A fresh Notice can only be served after 12 months have passed. The Notice will specify who the Nominee Purchaser is.
- Landlord’s Counter Notice
Provided the Notice is valid, the Landlord must serve a counter notice within the time limit specified in the Notice which must be no less than two months from the date the Notice was deemed to have been received. The landlord can either admit the right to collective enfranchisement or deny it. It can only be denied on limited grounds and your Conveyancing Solicitor will advise you of these grounds.
If the Landlord denies the right to collective enfranchisement an application can be made to the court for a declaration that the Notice is valid. This must be done within 2 months of giving the counter notice.
The Landlord must specify which proposals in the Notice are agreed and if any are disputed, the Landlord must give a counter proposal.
If the Landlord admits the Notice but terms cannot be agreed upon, the matter should be referred to the Leasehold Valuation Tribunal (LVT).
If the Landlord fails to serve a counter notice then an application for a vesting order
can be made to the county court and this must be done within 6 months of the date the counter notice should have been received.
- Absentee Landlord
If the Landlord cannot be found or is an absentee landlord the Nominee Purchaser can make an application to court for a Vesting Order and the premium will be paid into court.
- Exchange of Contracts
Once the right to collective enfranchisement has been established and all matters agreed upon, the landlord must prepare a contract and give it the Nominee Purchaser within 21 days. The Nominee Purchaser must make any amendments to the contract within 14 days. The Landlord will have a further 14 days in which to make further changes.
A deposit of £500 to 10% of the premium may be requested by the landlord upon exchange of contracts.
Completion will take place on the date agreed.
Buying the Freehold for your property can be a complicated and drawn out process. Fridaysmove are happy to answer any questions at all on the Freehold Buying or Collective Enfranchisement process so contact us now and we would be happy to advise you further.