Solicitors specialising in the Leasehold Enfranchisement of Houses
If you own a leasehold house, buying the freehold will usually increase the value, as well as giving you much more control. Leasehold houses can be less attractive to buyers than freehold properties. What’s more, some mortgage lenders do not like this arrangement, so they may refuse to lend. You may be wondering; How do I buy the freehold of my house? We answer that question and explain some of the benefits of doing so.
Most houses are freehold, meaning you own everything outright, subject to any mortgage. If your house is leasehold, another party, known as the freeholder or freeholder, owns the property and you lease it from them. The lease is usually a long lease, often 99 years or more.
Some older houses are leasehold and recently, a number of national house builders have also often sold leasehold houses, although many have now stopped doing so after receiving heavy criticism.
Selling leasehold rather than freehold houses allows the builders to charge ground rent and potentially to produce further income by selling the freehold to you as a leaseholder, or to another organisation that will profit from collecting the ground rent.
N.B. This page is all about enfranchisement of leasehold houses. Click here, if you want to know more about collective enfranchisement – buying the freehold of a maisonette or block of flats.
Got a query about how to buy the freehold of your house? Call our specialist on FREEPHONE 0800 1404544 for FREE initial phone advice – with no strings attached
The Leasehold and Freehold Reform Act 2024 – the current position ?
The sale of leasehold houses has recently become so controversial, that it led to an investigation by the Competition and Markets Authority – particularly as some leases allowed ground rents to double every few years. This meant that rents quickly became extortionate, making homes difficult to sell.
The Leasehold and Freehold Reform Act 2024 was passed by the UK Parliament on 24 May 2024 and included a ban on house builders from creating new leasehold houses in the future. And in addition, the act itself includes an explanation that does intend “to amend the rights of tenants under long residential leases to acquire the freeholds of their house”. However, the details have not yet been announced and in any event no actual changes to freehold purchase will come into until the Act is implemented which may could be as far off as 2025 or 2026.
And what’s more, in February 2025, the Labour government announced plans for more radical change to the whole freehold and leasehold system.But currently we have no real details of exactly how this may or may not affect the freehold purchase of leasehold houses.
Keep up-to-date with the proposed changes – click here to read our Leasehold Reform Latest News.
And, in the meantime, if you are a leasehold property owner, you probably have the right to buy the freehold.
You can check the legal title to discover whether your house is freehold. Major housebuilders who have sold leasehold houses include Persimmon, Barratt Developments, Countryside Properties, David Wilson Homes, Bellway, Redrow and Taylor Wimpey.
What are the benefits of buying the freehold of my house?
There are several really good reasons to buy the freehold of your house, including:
· Increased value and easier to sell. Leasehold houses are becoming increasingly difficult to sell, particularly those where the ground rent increases significantly over time. Lenders may not always be prepared to lend and this can make it almost impossible to sell a leasehold house in some circumstances. And the shorter your lease gets, the less your house is worth the more it will cost to buy your freehold and the harder it will be for anyone to get a mortgage.
· Fewer regulations. The lease may contain restrictions over what you can do with your property. For example, you may have to pay for the freeholder’s permission to carry out alterations or add an extension – or they may simply refuse to allow you to make changes. Other clauses in your lease may may prevent you running a business from your home, for example. Once you own the freehold, we will eliminate the lease – that means its terms will no longer bind you.
· No ground rent to pay. If your ground rent is substantial and increases over time, you could end up paying thousands each year. Once you own the freehold, there will be nothing further to pay.
· Security of owning your own home. As a leaseholder, you will never own your home outright; it will always belong to the freeholder. Failure to pay the ground rent could mean your freeholder could evict you without compensation. Buying your freehold will give you the peace of mind of knowing this can never happen.
How do I buy the freehold of my house and what representation do I need?
There is a precise process to go through if you want to buy the freehold of a leasehold house, known as enfranchisement. It is important to check that you have the right to buy the freehold and to follow the steps carefully. If you make mistakes, you might have to wait and start the procedure again.
The process is not straightforward and you will generally need the help of a specialist enfranchisement solicitor. You need to check that your solicitor routinely deal with enfranchisement. Bearing mind that the vast majority of conveyancing solicitors are largely unfamiliar with the process and rarely, if ever, get involved in buying the freehold of leasehold property. And even those who do deal with enfranchisement, handle the freehold purchase of houses rarely, if at all.
Your solicitor is there to draw up the documents for you, serve them on your freeholder, agree a price and make sure your freeholder keeps to the timetable. They will also register your ownership of the freehold at the Land Registry and eliminate the leasehold title
Here at Bonallack & Bishop we have a five-strong leasehold team that deals solely with lease extension and freehold purchase – including many leasehold houses. In fact, in the last 25 years, we have helped something like 10,000 people buy their freeholds or extend their leases.
We are longstanding members of the Association of Leasehold Enfranchisement Practitioners (ALEP). And we are also the only law firm in England and Wales that the HomeOwners Alliance recommends for the freehold purchase of houses and enfranchisement of larger blocks.
Informal house freehold purchase
As an alternative to the formal freehold purchase route, your freeholder might be willing to sell the freehold of your house to you informally.
This can sometimes work but carries risks. Broadly, unlike exercising your legal right using the formal process, they can set whatever price they want or simply decide to pull out at any stage – and there’s nothing you can do about it, short of starting from scratch and making a formal application.
Alternatively, they may try to increase the price during the transaction.
As a result, it often sensible to use the formal route to make sure your freeholder does not have this option.
Am I eligible to buy the freehold of my house?
To qualify to purchase the freehold of a house, you need to have owned the lease for two years or more. If the previous owners started the freehold purchase process and have started the formal process, they can assign their right to buy and the application over to you when you buy the property. Your solicitor needs to be aware of the situation and ensure they transfer the benefit of that application to you.
You do not need to live in the property to have the right to buy the freehold, provided the lease includes the whole house.
The lease must be a long lease, i.e. one granted originally for at least 21 years.
How do I buy the freehold of my house? The house enfranchisement process
STEP 1 – Instructing experts and obtaining the leasehold details
As well as using a solicitor with plenty of enfranchisement experience, you will also need to find a surveyor. Again, you need one with experience in valuing freehold and leasehold interests rather than just a standard surveyor who deals solely with surveying properties during the conveyancing process. Our leasehold team have developed an informal panel of surveyors who specialise in this kind of valuation work. We are happy to introduce one to you and instruct them on your behalf as part of our one-stop shop service.
When you instruct us to deal with your freehold purchase, we will take your details, including the property address. We can then find out the rest of the information needed if you do not have it to hand.
Details we will obtain include:
· A copy of your legal title
· A copy of the lease
· The freeholder’s name and address
STEP 2 – Serving the initial notice on your freeholder
The first official step in the formal process is to serve a notice on your freeholder. There is a standard way to set out the notice so that it includes all necessary information.
You do not need to include a proposed price as it will be negotiated later.
STEP 3 – Freeholder’s response
The freeholder can respond formally if they wish by serving a counternotice. They have two months in which to do this. The notice will state whether or not they agrees to the sale. If they do not, they will have to set out the legal grounds on which they object.
They may ask for a deposit and can request up to three times the annual ground rent.
STEP 4 – Valuing your freehold
The valuer needs to give you a figure or range for the value of the freehold. This is the amount the freehold would be worth on the open market, assuming it was available to buy and a buyer was available.
The calculations made by the valuer are particularly complex and will take into account a range of points, including:
· The ground rent
· Any future increases in ground rent
· How much the ground rent payments plus interest would be worth over the term of the lease, referred to as the yield
· The property’s rateable value
· The term of the lease
· How many years are remaining on the lease
· How much the property would be worth if it was freehold
· What alterations or improvements have been made
· The potential for future improvements
If the number of years left on your lease has fallen below 80 years, you also need to pay an extra sum, known as the ‘marriage value’. This is the increase in value of the property as a result of it becoming freehold. You and the freeholder will share the marriage value equally, so you will only be required to pay half.
It can still be a sizeable sum, however. That’s why, if at all possible, it’s important that you stop process of buying your freehold before your remaining lease term falls below 80 years.
STEP 5 – Agreeing on the freehold purchase price
The next stage is to agree on the purchase price. The valuation provided by your expert valuer will be a starting point.
We can negotiate robustly on your behalf to secure the best possible deal regarding both the price and any other terms needing agreement.
If you and the freeholder disagree over the price, we can ask the First-tier Tribunal (Property Chamber) to decide how much you need to pay. This is a court that specialises in this type of case. Fortunately, not least because both parties need to pay their own legal and surveying costs at the first-tier Tribunal, very few cases actually make it to Tribunal. The vast majority are concluded by negotiation.
Once you agree on a price, you have four weeks to complete the purchase. We will arrange for the money to be transferred to the freeholder and deal with the registration of the freehold into your name.
