Is it Worth Buying the Freehold of a Flat? The Experts Opinion
As a leasehold property owner, you may be wondering if it is worth buying the freehold of your flat. After all, owning the freehold gives you a greater sense of security and control over your property.
However, if you’re not sure about the process and if it’s worth it, our experts have put together this handy guide to help you make a decision. By the end of this guide, you should have a good idea of whether or not buying the freehold of your flat is worth it for you.
What Does it Mean to Buy Your Freehold?
Buying the freehold of an apartment block means that the residents will collectively own the building outright, rather than continuing to rent a long leasehold flat from a landlord.
This is often done through a process called collective enfranchisement, where the tenants of a building come together to collectively purchase the freehold from the current owner. To buy the freehold of a flat by collective enfranchisement, you will need to get the support of at least 50% of the other leasehold owners in your building and ensure that you are qualifying tenants.
Once you have the support of the majority of leaseholders, you can then register your collective enfranchisement and start the process of buying your freehold together. By doing this, you will own a share of the freehold, along with the other flat owners involved in the process.
This can be a lengthy and complicated process, so we recommend working with a freehold purchase agent to make sure the whole thing goes off without a hitch. Once you collectively own your freehold, you will have more control over your building and how it runs.
As collective owners of the freehold, you will take on the responsibilities of a freeholder, which include:
- Maintaining the building and common areas
- Collecting service charges and maintenance costs from tenants
- Paying ground rents, legal fees and buildings insurance
- Dealing with any planning permission or redevelopment applications.
Eligibility Requirements for Buying Your Freehold
The next question you might have been asking yourself is are you eligible to buy the freehold of your building? Well, to qualify for a freehold purchase, the eligibility requirements are:
- The building must contain at least two flats or apartments
- No more than 25% of the freehold building can be being used for commercial or non-residential purposes, i.e: offices or shops
- Two-thirds of all flats or apartments in the building must be owned by leaseholders with long leases
- Half of all flats or apartments in the building must be owned by leaseholders willing to purchase a share of the freehold.
If your building meets all of the above criteria, then you should be able to buy the freehold through collective enfranchisement, with the value of the freehold being determined by a specialist surveyor. Sometimes, a leasehold valuation tribunal may be needed to determine the price of the freehold, but this is rare. As you can see from the above, purchasing your freehold can be a handy solution for buildings and blocks of all sizes.
I’m Eligible – Should I Buy the Freehold?
Now that you know the process and eligibility requirements for buying the freehold of an apartment block, it’s time to ask yourself if it’s worth doing. Here are some things to consider:
What are the benefits of buying the freehold?
There are many benefits that come with owning the freehold of your building, such as:
- You will have control over how your building is run, maintained and managed
- You won’t have to pay ground rent to a landlord
- You will take control of the freehold from the current owner, which means you will have more say in any future redevelopment plans
- The value of your flat is likely to increase as a result of owning the freehold.
With these benefits, many tenants feel that buying the freehold is a no-brainer. It provides more security and peace of mind than leasehold properties and can even increase your property value.
However, it’s important to keep in mind the additional responsibilities you will be taking on and make sure they can be managed effectively before deciding to buy your freehold.
How can I make the process easier?
As we mentioned earlier, the process of buying the freehold can be long and complicated without the right support. However, there are a couple of key things you can do to make it go more smoothly:
- Work with an expert freehold purchase agent – they will have experience in dealing with freehold purchases and will be able to guide you through the entire process with ease. From the initial stages of getting support from fellow leaseholders to negotiating with the freeholder, a good agent will make sure everything goes off without a hitch.
- Get professional valuations – it’s important to have an accurate idea of how much your building is worth before you start the process of buying the freehold. This will help you determine how much you need to offer the freeholder and will give you a good starting point for negotiations.
How Much Is the Purchase Price for a Freehold?
The purchase price for a freehold will vary depending on a number of factors, such as the size of the building and its location. However, you can expect to pay anything from £5,000 to £50,000 for a freehold, with the average price being around £15,000.
If you’re wanting a more accurate estimate of your freehold costs, you can use our Freehold Purchase Calculator. Simply enter in a few details about your building and we’ll give you an instant estimation of the value of your freehold.
Purchasing the freehold of your building can be a great way to take control of your property and add value to it in the long run. With the right support, the process can be relatively straightforward! So if you’re thinking of buying the freehold, make sure to get in touch with an experienced agent who can guide you through every step of the way.
Other Options: Right to Manage?
If you’re not looking to purchase the freehold of your building, there are still other options available to you for taking control of how your property is run. One option is to set up a Right to Manage (RTM) company, which gives leaseholders the power to manage their building without having to buy the share of a freehold.
This option can make a great alternative if you’re not looking to take on all of the responsibilities that come with owning the freehold, or if you can’t afford the purchase price.
For more information on RTMs and how they work, check out our dedicated Right to Manage guide.
Purchasing the freehold of your building can be a great way to take control of your property and add value to it in the long run.
At The Freehold Collective, we have years of experience helping leaseholders purchase the freehold of their building, so if you’re thinking of taking this step, we can help make the process as smooth and stress-free as possible.