Most flat owners do not own the freehold of their homes. Instead, they are known as ‘long leaseholders’. They do not own their property outright, and ownership will revert to the landlord when their lease expires. This type of arrangement can have some pretty significant consequences, particularly in relation to your property’s value, what you are permitted to do with it, and your ongoing payment obligations. Therefore, some long leaseholders decide to exercise their legal right to join together with other long leaseholders in their building to purchase the freehold. You may see this referred to as collective, freehold, or leasehold enfranchisement, all of which mean the same thing.
Here, we discuss five key reasons why, as a long leaseholder, you might want to consider purchasing your freehold.
1. To gain control of your building.
When you purchase your freehold, you take control of the management of your building and have a say in decisions relating to important matters such as maintenance and refurbishments.
2. To bring an end to excessive service charges.
A common complaint among long leaseholders is the perception that their landlord is charging excessive service charges or providing substandard services for the sums demanded. By purchasing your freehold, you gain maximum control of the building and can ensure the service charge expenditure is fair and reasonable.
3. To increase the value of your property.
The value of your property will likely drop as your lease term decreases. In addition, many mortgage lenders do not like short leases, so you may find it more difficult to obtain a mortgage. When you buy the freehold, you and the other freehold owners can extend the terms of your leases to 999 years, thereby increasing the value of your property.
4. To increase your property’s saleability.
Purchasing a share of the freehold is generally attractive to buyers. This, coupled with the ability to extend your lease before selling, can significantly increase your chances of attracting buyers willing to pay a good price for your property.
While there are many clear benefits to purchasing your freehold, it’s important to consider the potential downsides before proceeding. The process itself can be complex, costly and time-consuming, sometimes taking many months to complete. Owning a share of the freehold is a significant responsibility, requiring an ongoing commitment both financially and in terms of your time. An experienced property solicitor will help you understand the pros and cons and decide whether it is the best option for you.
