BUYING YOUR FREEHOLD


People power:ifyou wish youcan club together to buy your blockfrom the landlord


If the residents in your block have ever thought about buying your freehold, here is Flat Living’s guidetothe bestwaytogoabout it,howmuch it couldcostandwhereto go for advice. Nicholas KisseN starts with the pros and cons of freehold acquisition


of thefreeholdoftheir building.Thisprocess is called “CollectiveEnfranchisement”and applies to all kinds of buildings fromlarge centralLondon blocks tosmallconversions in thesuburbs.Aswithall things in life,there areadvantagesand drawbackswhenusing the1993Act processtosay goodbyetoyour freeholder.


Right toBu ?Y *


itwas NotuNtil thepassing of theLeaseholdReformAct 1993 that flat owners were given the power to club together to forcethe sale


flat more attractive to mortgage lenders is a keyadvantage of buying thefreehold.When thefreeholdispurchased,the leases can be extended to 999 yearsandmodernised wherenecessary so enhancingthe valueand marketability of the flats in question.


Plus Points Once youhaveacquiredyourfreehold, fullownership of thebuilding goes to the participatingleaseholders,often viaa companyformedespeciallyfor this purpose. This has particular attractionswhere themanagementofyourbuilding leaves something to be desired. Once in the driving seatthe leaseholders canselectmanaging agents directly accountabletothemordecide to self-manage. Either way, problemssuch as excessive insurancecommissions or awarding contractswhichmaynot give best valuecan be reduced. Forflat owners,asthe yearsgobythe


timeremainingontheir leasereduces.This means thevalue of theflat decreasing to a pointwhere it becomes difficulttosellto anyone other than a cash buyer.Making a


Flat Living Winter 2011


What’s thedoWnside? Buyingyourfreeholdisnotacure-allsolution. Managingabuildingisacomplex taskwitha host of lawsandregulations to learn, ranging fromasbestos to firesafety. Foraleaseholder takingontheroleofacompanydirector, familiaritywiththenumerous dutiesand responsibilities this involves is essential. Engagingaprofessionalandexperienced managingagent to dealwith the day-to-day runningof thebuildingdoesnotabsolve leaseholder-freeholdersfromultimate responsibility formakingsure it is doneproperly. Disputes betweenco-freeholdersare a common source of tension-and thereisof


Thereareadvantages anddrawbackswhen usingthe 1993Act process


course thedelicatetaskofchasinglatepayers who are also your neighbours. Getting as far as achieving the freehold


purchasecan be fraughtwithproblems. The initialnoticeisnot easy to draftand the valuation formula for the purchase price is dependentonanumberofcomplicated variable factors. Buildings with, say, a commercial elementorthe presenceofa caretaker’sflat,developmentvalue on the roof or a confusing title structure with intermediate/head-landlordscan add to the complexity of the process. If the freehold acquisitionmeets with strong


resistance,maintainingthe interest and enthusiasmof participating leaseholders is oftena daunting task. The temptation to pull outshouldthe processdragonand thecosts increase is astrongone.There is alsoaneed to ensuremoney is produced and documents signedingood time.Withbuy-to-letowners, perhapslivingabroad, such co-ordinationskills are particularlyimportant. Howeverthedrawbacksarenotimpossible


to overcome.Workinghand-in-handwith pro-active, resourcefulandexpert solicitorsand valuers skilledinanticipatingproblemsfromthe outsetandcomingupwitheffectivesolutions shouldsmooth the path to reachingyour goal.●


NicholasKissenisaSeniorAdviseratthe Leasehold Advisory Service Formore information go towww.lease-advice.org


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