Do all leaseholders have to agree to buy freehold?

Leaseholders of 50% or more of the flats in the freehold must come together to purchase the freehold, unless there are only two flats, in which case both must purchase the freehold together.

Can you convert leasehold to freehold?

If you purchase the freehold of your leasehold house, you can then merge the titles so that you own the property as a normal freehold. This is not possible on a flat or apartment due to shared parts of the building like the roof, basement, garden, stairwells, etc. Instead, you can own both your own leasehold and a share of the overall freehold.

What is the leasehold reform in 2023?

According to the Commons briefing note there are 4 proposed reforms we may see brought in in 2023: Prescribed rates for the calculations at market value and an online calculator This avoids expensive negotiations or arguing between your valuer and your freeholder's valuer, over various parts of the calculation. Instead, these rates would be set in stone to keep them fair and universal. However, if certain rates are reduced, this will disadvantage leaseholders because it will make their extension premiums more expensive. Abolish marriage value Currently, you must split the increase in value of any leasehold you are extending from below 80 years, with the freeholder. Most people are in agreement that this is unfair and it looks likely that the government will abolish it. Cap treatment of ground rents at 0.1% of the property value Formal lease extension currently reduces ground rent to one peppercorn (essentially zero, one peppercorn per year). You'll have to buy out the remaining ground rent, but by paying it in a lump sum you'll get a discount (probably 6%) against paying it over the duration of the lease. The government have pledged to cap this buy-out payment at 1% of the property's value. However, it is likely that freeholders will lobby against this change, as it could cost them a lot of money. It has been speculated that the government may introduce the 1% cap, but reduce the discount applied. Buy out the ground rent without having to extend the lease You may be able to buy out the ground rent without extending the lease, if your lease is already 'long'. This may save people with long leases the cost of extending when they only need to buy out the ground rent. However, it may still make more sense for leaseholders to do both at once, rather than pay another set of legal fees down the line, if or when they need to extend. Extend by 990 years Currently, a formal lease extension adds 90 years to the remaining term. With the ability to extend by 990 years, as for some people this will be preferable, it means that you won't have to deal with another extension later in life and neither would whoever inherits the property from you. The earliest this bill may reach parliament is Autumn 2023. If it is pushed into 2024, it may not get through before the next general election. The next government may change or abandon the bill altogether. Labour has expressed their desire to abolish leaseholds, but this may not be their first priority if they were to take office.

A block of leasehold flats. SAM Conveyancing explains Right to Buy Leasehold rights.

Get in touch for free initial advice & quote for your extension or enfranchisement.

We have excellent leasehold conveyancing solicitors for serving your notices and negotiating the deal, plus knowledgeable RICS surveyors for your valuation.

Right to Buy Leasehold

by:

Caragh Bailey

Created on:

25/05/2023

(Last Updated: 29/06/2023)

Read by:

37

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
Further reforms are unlikely before 2024

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.

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.

In-depth Enfranchisement Process

Frequently Asked Questions

Agree

Convert

Reform

Written by: Caragh Bailey

Caragh is an excellent writer in her own right as well as an accomplished copy editor for both fiction and non-fiction books, news articles and editorials. She has written extensively for SAM for a variety of conveyancing, survey 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.

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