06 Sep Buying the Freehold
If you are a leaseholder of a flat in England or Wales then you might have the right to buy the freehold interest of your property. Customers pay upwards of six figure sums for flats when is many cases, someone else owns the land on which their dream home is built on. Leaseholders therefore in many cases folk out £10,000s to extend leases and pay even more on service charges.
Though what you might not know is that at least in England and Wales, powerful laws mean that leaseholders can force the freeholder to sell and part with the freehold or even perhaps can just take over their building management. This can only be done by buying the freehold.
The process known as collective enfranchisement, gives the leaseholders to group together to buy the freehold for a fair market price. This quite underused yet sometimes lucrative right was brought about in 1993 and then was given a further boost by the Commonhold and Leasehold Reform Act 2002.
The process of buying the freehold is not as straight forward as a typical conveyancing transaction, however with someone such as Express Conveyancing to guide you through the legal minefield, the transaction can certainly be a lot smoother.
Lease Extensions Vs Buying the Freehold,
Most lenders require at least 70 years remaining on the leases if they are to lend against the property. What this mean is that potentially when it comes to you selling the property and you are buyers are purchasing with the use of a mortgage, then you will be requires to extend the lease(lease extensions) prior to selling. The main reason for this is the fact that by law, you should have legally owned the lease for a minimum of 2 years before enfranchisement can be carried out. Freeholders can therefore charge potentially 10,000s to consent to extend the lease. Further leaseholders must pay ground rent (usually small) and service charge (which in many cases run into the thousands).
What you do need to bear in mid however is that a flat with a share of the freehold differs from a freehold house. Flat owners with a share, shares this with the other freeholders jointly.