SOLICITORS SPECIALISING IN HOUSE FREEHOLD PURCHASE
Kings Speech November 2023 Leasehold Houses Update – the speech confirmed that the Government intends to introduce legislation, sometime during this Parliament, which would ban the creation of new leasehold houses (unless in exceptional circumstances). This would mean that all new houses future would be sold with freehold, rather than leasehold title. However no further detail was provided and it remains to be seen whether the current government will manage to introduce the legislation before the next General Election.
Freehold purchase of a leasehold house is much less common than a group of leaseholders coming together and buying the freehold of their block of flats (in a process called collective or freehold enfranchisement).
Enfranchisement, or buying the freehold of a house in this way is much less common for one simple reason. There are relatively few leasehold houses. Individual flats are always sold on a leasehold basis and the vast majority of houses are freehold.
PERSIMMON LEASEHOLD HOUSE ENFRANCHISEMENT UPDATE July 2021
June 23rd, 2021, saw one of the country’s biggest developers, Persimmon plc, cut the premium they charge owners of leasehold houses to buy their own freehold from £3750 down to £2000. In addition, the house builder will now refund £1750 to everybody who who had earlier paid the higher £3750 price to buy that freehold.
If you’re looking to buy the freehold of your Persimmon leasehold house – we can help. We have already helped numerous homeowners buy the freehold of the person house – and following this new announcement, are taking on many more.
How our specialists can help you in buying the freehold of your leasehold house
Most solicitors rarely deal with lease extensions and often struggle with the complex timetable and regulations involved. Even fewer deal with enfranchisement – especially the freehold purchase of a house. We do all of these regularly.
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Leasehold Houses – More Common Than You Might Think
However, although estimates vary, the United Kingdom is believed to contain approximately 5m leasehold homes. Unsurprisingly almost all of them are flats – but you might be surprised to learn that approximately around 670,000 of them are actually houses.
More recently, certain national developers have started to increase the number of houses they build as leasehold, most of them quite unnecessarily in our view. As a result, we regularly act clients in buying the freehold of leasehold houses built by the likes of Persimmon, Redrow and Taylor Wimpey Homes.
And leasehold houses are particularly common in the North West – a full 27% of houses sold in the region in 2018 were leasehold.
Many of those were sold with leases of 99 or 125 years [though some were lucky to be granted a 99 year lease]. And while Britons seem quite happy to buy leasehold flats – they’re much more reluctant to buy leasehold houses.
Can I Buy the Freehold of my Leasehold House?
If you live in England or Wales and are the owner of a house on a leasehold basis, then you could be entitled to buy the freehold of your home – if either your landlord decides to sell the freehold, or if you meet the criteria needed to start the freehold purchase process yourself.
Buying the freehold of a house can be more complex, and very few solicitors [even those few with plenty of lease extension and freehold purchase experience] have much experience of the process. However rest assured that our team has all the expertise needed to deal with this sort of case.
5 Great Reasons to Buy the Freehold of Your Leasehold House
There are many benefits to owning the freehold of your house.
- No more rent payments: If you have to pay ground rent to your landlord, then that stops when you buy the freehold.
- It increases the value of your house; Owning the freehold increases the value of your home
- It makes your house much easier to sell; Most buyers have little understanding of leasehold houses and almost always prefer to buy a freehold house. In fact the vast majority of purchasers simply won’t even consider buying a leasehold house.
- Management and maintenance control: being the freeholder gives you much more flexibility and control over when you do repairs and maintenance on your house. It also means that as there is no freeholder, you don’t have a service charge to pay, or get their permission when you are thinking about doing home improvements.
- Security: This is a benefit which should not be underestimated. Leaseholders never completely own their property, even if the mortgage has been paid off years ago. This could mean that there is always a chance of eviction. Buying the freehold gives you peace of mind in the knowledge that your property is entirely yours, and you will not face eviction unless you don’t pay the mortgage.
Can I extend the lease on my leasehold house?
Yes, the owners of long leasehold houses also have the right to compel the freeholder to extend the lease – in a similar way as they do with flats. House lease extension is far less popular however. It won’t give you the kind of control you get with buying the freehold – and the costs are not that different. What’s more, unlike the enfranchisement of blocks, you don’t have the added complication of needing to ensure your fellow leaseholders are on board throughout the process.
Click here to read more about lease extension for houses
How Do You Define A House Anyway?
It may sound a ridiculously obvious question, but in legal terms at least, it’s not.
The definition of “house” encompasses many different types of buildings. As far as enfranchisement is concerned, a “house” can be lots of things, such as a shop with a flat over, a block of flats, offices and flats, a pub with a flat or a normal house.
Rights to buying freehold of houses have been around since the 1967 Leasehold Reform Act but there are still legal cases brought regularly as to whether a building constitutes a house.
One of the important legal points to think about is that a house must not have an over or under-hang with another building, and if it does, it is probably a flat and not a house.
Buying the Freehold of My Leasehold House – Am I Eligible?
In order to make a claim to buy the freehold, you have to have been the legal owner of the house’s lease for at least two years.
However, you can get round that two-year ownership rule as follows:
• when purchasing your house, the vendors can submit the freehold purchase application themselves – provided that they have owned the property for at least 2 years. There’s no fee or premium involved for them at this stage
• on completion, they can assign the benefit of that application to you
Our team regular handle this kind of scenario. However given that very few solicitors indeed have any experience of freehold house purchase, we would recommend that we take over responsibility for the vendors issuing that initial freehold purchase application. We find most solicitors are more than happy to rely on us and it make sure that you get the benefit of a properly served application on day 1.
Freehold house purchase – do I need to have lived in the property?
You still qualify even if you have never lived there yourself and rent out the house to tenants – as long as your lease covers the entire house.
If the house is a split tenancy (such as a company renting a shop and someone else the flat upstairs), the tenant must have lived in the property for at least two years out of the previous 10.
Does My Lease Qualify?
That’s an easy one. The lease must simply have been originally granted for a term of at least 21 years – which is often referred to as “long leasehold”.
Buying the Freehold of Your Leasehold House – Initial Steps
Buying the freehold of a property is more straightforward to organise than collective enfranchisement of a block of flats – simply because you are in control of the process and don’t have to on the ongoing involvement in the process of other leaseholders.
The first thing you have to do is instruct a solicitor who has plenty of experience buying the freeholds of houses. Beware – very few have enough experience. Choose carefully, as even solicitors who do a lot of work with lease extensions and enfranchisement might have scant experience when it comes to buying the freehold of a house.
You also need to find a surveyor who has expertise in producing a valuation of the premium required for the freehold purchase of a house. Don’t worry – as part of our one-stop shop, we can help you appoint the right surveyor
After you have established that you do indeed have the legal right to buy your freehold, the first step is to issue a formal notification to the freeholder that you intend to follow that path. This is called the “initial notice” and is a formal legal document served on the freeholder. We can so that on your behalf.
Throughout the enfranchisement process, there is a strict timetable which has to be stuck to – and again beware – if deadlines are missed you have to start all over again from the beginning of the legal process. After the initial notice is served, the freeholder is given two months to respond to your notice with a counter notice.
Then, negotiations about the price and terms of the purchase can start. Your solicitor and your surveyor can help with this.
Valuation of the Premium
Like collective enfranchisement and lease extension, your freeholder will need to be compensated for the loss of their freehold interest. This compensation is paid in the form ought is referred to as a “premium”.
When you come to buy the freehold of your house it’s really important that you get the right valuation. You will normally find your freeholder will have appointed an expert surveyor – so know exactly what he should be charging – but if you don’t that information, you are very vulnerable to being charged over the odds to buy the freehold.
When it comes to valuing the premium, don’t rely on any old surveyor – you really do need someone who knows exactly what they doing in this specialist field.
Click here to read more about Enfranchisement Valuation
The 80 Year Rule – Watch Out
Just like lease extension and enfranchisement, the premium payable for the freehold purchase of your house may involve what’s known as “marriage value “. The most important thing you need to know is that the day your lease drops below 80 years, you’re going to need to pay more – probably thousands of pounds.
So if at all possible, make sure you buy the freehold of your house for that lease drops below 80 years– or you’ll end up paying more to buy the freehold.
How Long Will It Take to Buy the Freehold of My House?
The length of time it takes to buy the freehold of a leasehold house is partly affected by legislation – the process, for example, gives your freeholder two months to reply to your initial notice. However the speed of the entire process is dictated by how cooperative your freeholder is.
However, in general terms, assume it will probably take between 6 and 12 months from the date of your initial notice.
Informal freehold house purchase – the alternative to your legal right
Subject to meeting the criteria set out above, you have a legal right to buy the freehold. But there is actually an alternative way to go.
Instead of the formal statutory route, which as you can see has a rigid timetable and conditions attached, you could use what is known as the informal or voluntary route.
An informal freehold purchase does what it says on the tin – there are no conditions or timetable. Instead you are able to agree a price directly with the freeholder, although you will still need a solicitor to help you draft the correct documents.
The informal route does have potential advantages – it can be quicker and legal costs are generally a little lower. But the real risk is that using the voluntary route means that you have no legal rights and instead your freeholder can withdraw at any stage – or simply change the terms of the deal they’ve offered. As a result we normally advise clients to maintain control by using the formal route.
A Dispute with the Freeholder over the Price?
As with the freehold purchase of a flat, if you and your freeholder simply can’t agree on the right premium to be paid, or you disagree on the level of your freeholder’s reasonable legal and valuation costs, then the matter can be resolved by the First-Tier Property Tribunal (previously known as the Leasehold Valuation Tribunal or LVT).
It’s not just about the size of the premium – watch out for details of the lease
Increasingly we find that when acting for owners of houses recently by the likes of Persimmon, Redrow and Taylor Wimpey Homes, they offer the freehold to those homeowners who bought their property to years ago.
And we have found that amongst the terms of the deal offered by these developers, are some rather nasty clauses – in respect of which we’ve managed to negotiate a better deal for many of those purchasing the freehold of houses from these developers.
Want To Buy Your Freehold? Call Us Now
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