Buying your Freehold
The first step in buying your freehold is to obtain a valuation of the likely price you will have to pay to the freeholder. You will need to instruct a surveyor who is experienced in carrying out such valuations.
Your surveyor will visit your property and carry out an inspection. Based on that inspection and a statutory formula he will provide you with an estimate of the price you could expect to pay for the freehold.
The surveyor will be able to give you a ‘top’ and ‘bottom’ figure so that you will have some idea of the range within which the purchase price for the freehold will fall. The bottom figure will be the figure proposed to the landlord in the statutory notice you will serve. The top figure is the figure which the landlord is likely to propose when they serve a counter-notice.
The valuation is the first step of the procedure not least to give you an idea of whether you can afford to buy your freehold.
You must bear in mind that you will be responsible for the legal and valuation fees of your self and the landlord from the date of service of the notice, even if you subsequently withdraw from the process, and so it is important to ensure at the outset that you will be able to complete the process before you begin.
The purchase price and the costs involved in buying the freehold will be shared between the flat owners although bear in mind that in some circumstances there may be leaseholders who do not wish to participate in the acquisition of the freehold and you may have to bear the cost of funding those non-participators.
We would advise leaseholders who wish to buy their freehold to enter into an agreement with each other committing them to proceed with the purchase once the process has been started. The legislation requires at least two-thirds of the leaseholders to participate in the collective enfranchisement claim and so it is important to ensure that the leaseholders who say they are interested remain committed to the purchase throughout the process.
We can draft a Participation Agreement which sets out matters such as:-
- Which flat owners are participating
- The proportion of the purchase price attributable to each flat
- The proportion of the costs payable by each participating flat
- What professional advisers to appoint
- What the majority shall be for decision making i.e whether to accept any offer made by the freeholder
- Who will be appointed to liaise with the professional advisers
- A Participation Agreement will set out the relationship between the participators and will reduce the liklihood of disputes arising which may jeopardise the claim.
Before a notice is served on the freeholder you will need to nominate a party to buy the freehold. The Nominee Purchaser will be the party nominated by the participating leaseholders to own the freehold and the Nominee Purchaser will beome the owner of the freehold interest on completion of the purchase.
The Nominee Purchaser can be the leaseholders as individuals or a company set up by the leaseholders to own the freehold. Up to four indivuals can own the freehold so if there are more than four flats in the building you will need to set up a company. You may decide to set up a company even if there are only two or three flats in the building. This is a decision for you and we can advise you on the benefits and disdavantages of each option (See notes on Joint Ownership as Individuals and Joint Ownership in the name of a company
Once you have obtained your valuation and have an idea of the price you can expect to pay for your freehold it will be necessary to serve a statutory notice on your landlord.
We will prepare this notice on your behalf. The notice must be signed by all registered owners of the flat personally. It is important to ensure the details in the notice are correct as any inaccuracies may lead to your notice being invalid.
Once the notice has been signed we will serve the notice on your landlord who will have 2 months within which to serve a counter notice either admitting or denying your right to buy your freehold and indicating the price he would be prepared to accept.
Generally your landlord will admit your right to by the freehold but will propose a higher price.
Following service of the counter notice there will be a period of six months during which time each parties valuers will negotiate in an attempt to reach an agreement on the price payable for the freehold.
If the valuers cannot reach an agreement on price it will be necessary to make an application to the Leasehold Valuation Tribunal for the premium to be determined.
In addition to the purchase price payable for the freehold interest you will also be responsible for the legal and valuation costs of the landlord from the point of service of your notice until completion or withdrawal of your notice.
We will be happy to provide a breakdown of our fees on request Quote Request for Buying your Freehold
Once all terms are agreed we will collect the funds required for completion and your purchase of the freehold will be completed and registered at the Land Registry.
Following completion you will be able to deal with the extension of the leases of the flats and to determine how you wish to manage the building. This may be done by you as individuals or you may prefer to delegate this to managing agents