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Buying Your Freehold
Overview
A lease is a wasting asset. Although a flat owner may have spent hundreds of thousands of pounds acquiring their lease, in fact it becomes less valuable each year. This is because the term of the lease expires by one year annually. To remedy this inherent unfairness, individual flat owners have the right to ask the building owner to extend their lease. In addition, a group of flat owners acting together can collectively ask to purchase the freehold from the building owner. This process is called enfranchisement. After enfranchising, each participating flat owner owns a share in the freehold and will usually receive a lease extension at no extra cost. Purchasing the freehold or extending a lease will come at a cost, but also serves to protect the value of the property.
This section is packed full of useful hints, tips, how to's and explanations of the concepts behind enfranchisement and lease extensions, the processes involved, the likely costs and the latest legal decisions on the topic. If you still have questions or require further clarification, don't forget to contact us, comment on an article or leave a comment in our forum.
- Although tempting for some, Jo Rengger highlights the risks parties take. Negotiating an 'arms length' lease outside the Leasehold Reform Housing and Urban Development Act 1993 (the "Act") might initially appear a cheaper, quicker option but there are potential pitfalls. Parties ultimately have to make a pragmatic decision on global costs but should always consider the following:
- A landmark Tribunal decision about a Birmingham block. Just as we thought it was safe that deferment rates were fixed, a coach and horses has come crashing through the door. The story so far: in Sportelli the Upper Tribunal (Lands Chamber) set the rates at 5% for flats and 4.75% for houses.
- The recent case of Hosebay Limited v Hugo Benjamin Day and Lady Hilary Maureen Greenslade Day (2009) is the latest judicial offering on the thorny issue of what constitutes house under the Leasehold Reform Act 1967 (the Act).
- Alex Greenslade says there is safety in numbers in begotiating a lease extension instead of a freehold acquisition. What is the better option – freehold acquisition or lease extension? In principle, freehold acquisition makes sense since it gives more control of the property to the flat owners than lease extension alone and may add more value.
- Yashmin Mistry asks when you should extend your lease? The UK is officially in recession and property prices have reached an all time low; this is not great news. However, this grey cloud may have a silver lining for flats owners with long leases. With a stabilisation of property prices still to come, long leaseholders should seriously consider taking advantage of the slump in property values now and get their leases extended.
- Is it time to get extending? Yashmin Mistry asks when you should extend your lease? The UK is officially in recession and property prices have reached an all time low; this is not great news. However, this grey cloud may have a silver lining for flats owners with long leases. With a stabilisation of property prices still to come, long leaseholders should seriously consider taking advantage of the slump in property values now and get their leases extended.
- I am thinking of buying the freehold of my house, do I have to pay the service charges and ground rent while I am negotiating with the landlord?
- Selwyn Langley explains what to expect from an expert witness. When the LVT was set up these were intended to be user friendly for both Landlords and Tenants and as a result to keep costs to a minimum, and the principal matters where the Surveyor/Valuer may be called on to give evidence are either in the case of enfranchisement or lease extension or in connection with service charge disputes for blocks of flats.
- Elaine Dobson recalls the decisions which developed enfranchisement law.
- Andrew Channer considers when to serve a Notice of Claim to extend or enfranchise.Depending on future market changes, the timing of instigating statutory lease extensions, or enfranchisements, may affect the premium payable.
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- 4site consulting explains the importance of health and safety. It is not surprising that we question the sanity of Health & Safety when it seems to impinge on activities we all enjoy by enforcing what appears to be unreasonable and bureaucratic restrictions.
- Although tempting for some, Jo Rengger highlights the risks parties take. Negotiating an 'arms length' lease outside the Leasehold Reform Housing and Urban Development Act 1993 (the "Act") might initially appear a cheaper, quicker option but there are potential pitfalls. Parties ultimately have to make a pragmatic decision on global costs but should always consider the following:
- A landmark Tribunal decision about a Birmingham block. Just as we thought it was safe that deferment rates were fixed, a coach and horses has come crashing through the door. The story so far: in Sportelli the Upper Tribunal (Lands Chamber) set the rates at 5% for flats and 4.75% for houses.
- In this podcast Nicolas Shulman meets with Siobhan McGrath, Senior President of the Leasehold Valuation Tribunal
- The recent case of Hosebay Limited v Hugo Benjamin Day and Lady Hilary Maureen Greenslade Day (2009) is the latest judicial offering on the thorny issue of what constitutes house under the Leasehold Reform Act 1967 (the Act).
- Communal heating systems are very common within older blocks and it is inevitable that at some point the Residents Association will consider abandoning the system in favour of installing independent boilers and heating systems to each flat.Whilst the idea of each resident having their own heating system is desirable for all sorts of reasons, making it happen is not as straight forward as you would imagine, so in order to save you time and money on consultants and surveys let us first look at the practical issues.
- Over the past 10 years it has become a cliché for residential developers to hire famous architects. And in Liverpool Grosvenor didn't spare a penny by hiring international architect Cesar Pelli (famous for the Petronas Towers in Kuala Lumpur) to design their landmark city centre block, One Park West.
- Leading national property management company Peverel OM has relaunched as OM Property Management. Andrew Billson, Managing Director of Operations at OM Property Management, comments:
- As membership of pressure group CARLEX swells, News on the Block interviews co-founder Melissa Briggs, about the Campaign for the Abolishment of Retirement Leasehold Exploitation.
- Dr. David channon explains why winter is the busiest period for rodent control. As we all shiver and long for the warmth of our comfy houses whilst commuting to work in the freezing weather, rodents share our sentiments and are also looking for cosy hideouts during the cold snaps.
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