Right to Buy Leasehold
(Last Updated: 25/06/2024)
25/05/2023
5
7 min read
Key Takeaways
- Leaseholders have the right to buy their freehold (or a share of freehold) if they meet certain criteria.
- If the freeholder of your block wants to sell the building, they usually have to give you, the leaseholders, the first chance to buy it.
- If you are looking for information on your right to purchase a council rental, read our article Can I buy my council house? instead.
Under the leasehold reform act, qualifying leaseholders have the right to collectively purchase the freehold. While some freeholders may be willing to sell the freehold informally, eligible leaseholders have the right to buy the freehold, without the freeholder's permission. This is called enfranchisement and is different from the right to buy your council house.
The Leasehold and Freehold Reform Act 2024 was passed on the 24th May 2024, but is not yet in effect and the date for this is not yet clear. We will update our content as and when the finalised legislation is published. Read more - Expected changes
Do you have the right to buy your leasehold?
You have the right to buy the freehold if:
- There are two or more flats in the building (If there are only two, you must both own the lease and wish to purchase the freehold);
- You only own one or two flats in the building;
- You own 100% of your lease;
- Two thirds or more of the flats in the building are owned by leaseholders; and
- Half or more of the flats in the building are owned by leaseholders who also want to purchase the freehold.
You won't have the right to buy the freehold if:
- Two thirds or more of the leases in the building end in the next 5 years and the freeholder can evidence in court that they plan to demolish it; or
- More than 25% of the floor plan of the block is not residential (i.e. flats above a commercial premises).
- The building is a National Trust or Crown property.
The Right of First Refusal
If the right of first refusal (RFR) applies to the property, then the landlord must offer the freehold to the tenants before selling it on the open market. The landlord gets to determine the price, which cannot be disputed at first tier tribunal. However, they cannot then put the freehold on the market at a lower price or under different terms for 12 months after their offer to the leaseholders.
Free initial leasehold advice
Arrange a free consultation with one of our experienced conveyancing executives on:
- Lease extension.
- Purchasing the leasehold, freehold or share of freehold.
- Selling a leasehold property with a short lease.
- Extending the lease at the same time as you sell.
We specialise in lease extensions and have RICS valuers for the premium/negotiation and solicitors for the section 42 notice and formal or informal extension. Request a tailored quote for:
- RICS Lease Extension Valuation or L2 Homebuyers Survey.
- Serving of the section 42 notice or section 13 notice on the freeholder.
- Negotiation with the freeholder (with the support of your RICS valuer).
- Completion of the legal work, including deed of variation.
- Application to Tribunal to determine the premium.
- Vesting order for absent landlords.
Right to Buy Leasehold Enfranchisement Process
1. Preparation
Check if you are eligible. Complete a participation agreement and choose the nominee purchaser.
Not eligible?
If you are unable to to purchase the freehold, you may be able to change the management of the building instead.
2. Get a RICS Freehold Valuation
The valuation is an accurate, impartial price for the premium to purchase the freehold. It is required before you can move onto step 3.
If there are more than 2 participating leaseholders, it is best to set up a freehold management company which will own the freehold. If you choose to do so, you must set it up before you serve notice.
Get in touch for more information about setting yourselves up as a company.
3. Serve Section 13 Notice
This is the legal notice served on the freeholder to trigger the statutory right to buy freehold process. From this stage, all the participating leaseholders become liable for the freeholder's reasonable costs. You'll need to have your solicitors instructed before you serve your notice.
4. Negotiation (if required)
Your freeholder responds to your Section 13 notice with a Section 21 counter notice, with their decision to accept the sale, accept the sale under different terms or refuse with reasons for the court (i.e. they may dispute your right to buy leasehold).
This tends not to happen if you've checked your eligibility properly and used a RICS surveyor for your valuation, as it's hard to find any reasonable argument against a professional, impartial valuation. If you use a less qualified surveyor or propose a premium of your own suggestion, your freeholder may want more money from you for the purchase. It really helps to have an experienced leasehold enfranchisement conveyancing solicitor in your corner for these negotiations. If you are unable to come to an agreement, the case may be settled at tribunal.
If two thirds or more of the leases are due to end within 5 years of the section 13 notice, and the freeholder can evidence to the court that they intend to demolish or redevelop the building, you will not be able to purchase the freehold.
5. Conveyancing of Freehold Purchase
The legal transaction is handled by a specialist leasehold enfranchisement solicitor. They'll deal with the legal work and contracts and transfer the premium to your freeholder at completion, then register the new ownership at the Land Registry.
Frequently Asked Questions
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Written by:
Caragh Bailey
Caragh is an excellent writer and copy editor of books, news articles and editorials. She has written extensively for SAM for a variety of conveyancing, survey, property law and mortgage-related articles.
Reviewed by:
Andrew Boast
Andrew started his career in 2000 working within conveyancing solicitor firms and grew hands-on knowledge of a wide variety of conveyancing challenges and solutions. After helping in excess of 50,000 clients in his career, he uses all this experience within his article writing for SAM, mainstream media and his self published book How to Buy a House Without Killing Anyone.
