Leaseholders have a legal right under the Leasehold Reform Act 1967 to buy the freehold of their house if they meet certain qualifying criteria. Sadly, we see too often that leaseholders are held to ransom by Freeholders who ask extortionate prices without any basis for the same.
The Freehold of your home can be bought one of two main ways:
By agreement with the Freeholder, separate to any formal process. During this process, you simply agree a figure with the Freeholder and once that figure has been agreed, the transaction proceeds just like any other Property transaction. If a figure cannot be agreed, you have no right under the informal route to apply to the First Tier Tribunal for determination of the price. To do so, you would need to proceed down the formal route as outlined below.
If you cannot agree a figure, you have the option of proceeding down the formal route under the Leasehold Reform Act 1967.
Provided you meet certain qualifying criteria (the main criteria is that you have held the Lease for at least two years), the first step is for a formal Tenant’s Notice to be prepared and sent to the Freeholder. The Notice triggers the statutory procedures for acquiring your freeholder, and it is also at this point that you become liable for the Freeholders reasonable costs as from the date he received the Notice. It is therefore important that the Notice contains no inaccuracies or misdescriptions because an incomplete or incorrect Notice can be rejected as invalid and this can prevent you from serving another notice for a period of 12 months. If the Notice is accepted, negotiations can begin as to the reasonable price of the Freehold.
Generally each party will instruct their own surveyor, to prepare a valuation of the Freehold. This will cost you around £165 - £200. You can have a valuation prepared at any point before or during the procedure. You will rely upon the figure proposed by your surveyor as the basis for negotiating a suitable purchase price of the Freehold. The value depends on a number of factors including the rateable values of the house at different dates, the ground rent, the number of years left on the lease and the value of the house today.
If agreement is reached, the freehold purchase then proceeds just like any other Property transaction.
Agreement Not Reached
If you cannot agree what is reasonable, either party may apply to the First-tier Tribunal (Property Chamber) for an assessment to be made and the Tribunal will decide what price is reasonable, based on the surveyor reports of each party. Any such application must be made within 6 months of the Counter notice from the freeholder.
Once price has been determined, the freehold purchase proceeds just like any other Property transaction.
Our Partner Alex Kilby at Devonalds works closely with local residents and Councillors to ensure that local residents will pay a fair and reasonable price for the purchase of their freeholds. We are a local, friendly firm who are dedicated to serving the needs of our community.
Contact our Partner Alex Kilby today on 01443 755189 or at email@example.com for further information or to start the process now.