Purchasing Your Freehold
Purchasing the freehold of a flat is a collective process that involves a group of leaseholders agreeing to purchase the building’s freehold. Though this can seem a daunting task, the benefits of purchasing a freehold far outweigh the cons, which is why experts like ours at the Freehold Collective aim to assist you in making the process of freehold ownership hassle-free, straightforward and rewarding.
What is freehold?
Freehold refers to the permanent ownership of property or land. If you own the freehold, it means that you own the building and the land it stands on as well as being responsible for setting leaseholder terms and managing the maintenance and upkeep of the building.
This differs from being a leaseholder, where leaseholders only own their part of the building, i.e their flat, and not the walls, or building the property is in nor its surrounding land. The length and terms of the lease would also have been set by the freeholder.
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Can you own the freehold of a flat?
It’s not possible to own the freehold of a flat independently, but it is possible for a group of flat owners to collectively own the freehold of a building. To purchase the freehold of a flat, at least half of all other leaseholders in the same building must also show willingness to purchase the building’s freehold. This can sound daunting, but it needn’t be.
Smaller groups can purchase freeholds just with signatures of cooperation from other leaseholders, and at the Freehold Collective, we can provide our expertise to help you approach your neighbours in a way that also doesn’t make it sound as ominous to them.
Once agreed, the group then becomes a collective who each own a share of the building’s freehold. Collective members assign certain leaseholders to be directors (a group must have a minimum of one director), or can assign other specific roles and responsibilities. This means that someone owning a share of the freehold could do so without taking on additional responsibility if they didn’t wish to.
Other legal eligibility requirements to be aware of when purchasing a freehold meanwhile are:
The building must contain at least two flats
Less than 25% of the freehold building must be being used for non-residential purposes, i.e: an office or shop
Two-thirds of all flats or apartments in the building must be owned by leaseholders with long leases (granted for more than 21 years)
At least half of all flats in the building must be owned by leaseholders who show desired cooperation to purchase a share of the freehold
Is it worth buying the freehold of my flat?
The benefits of buying the freehold of a flat are substantial and include, but are not limited to:
Removing the obligation to pay ground rent for freehold owner, whilst collecting ground rent from other non-freeholders
Ability to take out insurance plans which are more comprehensive or affordable
Reducing service charges through finding better, or more affordable service providers
Full oversight of the quality of works and maintenance done to the building
Ability to develop land around the building or or roof spaces to build flats for profit
Ability to make lease extensions free and extended to as long as 999 years at no extra cost, barring legal fees
Ability to reduce or change building terms and conditions
Ability to add value to the building as buyers tend to prefer freehold flats to those of leasehold
Ability to overall take better control of how the building is managed
Different types of freehold
At the Freehold Collective we can help with purchasing the freehold on a wide array of block types, including:
Purpose built blocks
The TFC Freehold Purchasing Process
The journey to purchasing your freehold starts with consulting us. At the Freehold Collective we’re project managers that have been there and done that. Our founder, Mike, undertook his first freehold acquisition when he became disenchanted with how his building was being run. Building on Mike’s personal experience, we crafted a tried, tested and honed process that guarantees success for other freehold purchasers. It looks a bit like this:
In theory owning a 999 year lease is as good as owning the freehold. A 999 year lease does provide benefits such as reassurances around the security of owning the property, and will also outline rights and responsibilities of residents. However, it has the disadvantage of you still being underneath a freeholder, who can hold you to account and cause problems. By buying the freehold, you as a leaseholder will be in complete control, and there won’t be anyone above your head.
The length of the purchasing process can vary depending on the circumstances involved. As there are many stages to a purchasing process, like forming a collective residents group, negotiating with residents and landlords, and then seeing the process through legal stages, a purchase of the freehold could conclude in as little as 6 months, or as long as 2 years!
Yes, an owner of a share of freehold of a building will own a share of the building’s freehold which includes a share of the land the building is placed upon. Because of this, freeholders are responsible for maintaining the property and the land surrounding the building, but this is normally achieved very easily through a managing agent as normal.
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