If you are interested in extending your lease click here
Why buy the freehold of your house?
The defining feature of a lease is that one day it will come to an end, and the landlord (either a landlord or someone with a longer lease than yours) will get the property back. It is a 'wasting asset', worth less with every year that passes.
Leasehold houses are comparatively rare, because most leaseholders have had the right to buy their freeholds on favourable terms since the Leasehold Reform Act 1967. The 99-year leases of many Victorian houses were coming to an end when the Act was passed. It allowed the leaseholder to buy the freehold by 'enfranchisement' at a price based on the value of the site, not the house itself. The risk of enfranchisement makes it pointless for a builder to sell a new house leasehold instead of freehold, so few new leases of houses are created nowadays, and many people who owned leasehold houses before 1967 have since bought their freeholds.
If you buy a leasehold house, you can be pretty sure it will be worth more with the freehold. The increase in value from enfranchisement should be more than the price you have to pay for the freehold. You can claim the freehold once you have owned the house for two years, and it makes sense to buy it as soon as you can afford to, unless the lease still has many years to run.
How much will it cost?
You may be able to agree the price of the freehold with your landlord. Even if you do, it may still be worth getting a professional valuation from a surveyor, to make sure you are not paying over the odds. If you can't agree, a surveyor's valuation can be ammunition for negotiations, or a surveyor can negotiate for you.
Valuation under the 1967 Act is not a simple process, because there are different ways to work out the price, depending on the level of the leasehold ground rent, the rateable value of the house at various dates, and the length of time the lease has left to run. We can introduce you to surveyors we regularly work with and have found reliable. Once agreement has been reached, the purchase of the freehold is a conveyancing job, and we shall be happy to deal with that for you.
What if the landlord doesn't agree?
As a rule, though there are exceptions, you have a right to the freehold whether the landlord agrees or not, once you have owned your leasehold house for two years. We can handle the whole process for you - talk to us about what it will cost and how long it will take.
The first step is to give the landlord notice claiming the freehold. After that:
- The landlord may give a notice in reply indicating whether the claim is accepted,
- If the price cannot be agreed you can apply to the Leasehold Valuation Tribunal to fix the price, and
- You can apply to the court if necessary for a decision whether you are entitled to the freehold, or an order to force the landlord to transfer it to you.
If the landlord has disappeared and cannot be given a notice, you can apply to the court for an order saying that you are entitled to a new lease. The Tribunal can fix the price, and a judge can sign the transfer deed on the landlord's behalf when you pay the price into court. The court holds the money until the landlord re-appears and claims it.
Click here to go back to the main Residential Property page.