Blocks of Flat Cover Insurance for Freehold Property |  | |||
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How to Buy a Freehold
Most leaseholders in blocks of flats, choose to buy the freehold of their building as it gives them more control over the running costs of the property. As well as this, knowing you own the property 'freehold' rather than for a specific period of time, psychologically, provides a good deal of peace of mind. Almost everyone that has owned a leasehold flat has worried about the lease being run down and the perceived reduction in value & saleability of the property.
It should be mentioned that, leaseholders do not own the 'bricks & mortar' containing their flat. Neither do they own any part of the land on which the building stands, they merely own the right to occupy a part or all of the building for a set period of time, at the end of this time, they may remain in the building but only as a tenant of the Freeholder. Of course, the lease can be transferred at anytime to a Third Party but there is a direct correlation between the length of the lease and the value of the property.
The process of actually buying the freehold of a building is called enfranchisement and we have other articles on this site dealing with the process leading up to the decision to purchase which are more detailed. In essence, once you have decided to purchase the freehold of your building, you will need to obtain certain information, this includes checking the ownership of the freehold and making sure the landlord is actually permitted to sell the freehold to you.( The information relating to the landlord can be obtained from the Land Registry) The leasehold ownership of the individual flat owners must also be established and their rights to participate in the purchase. A solicitor will be required to prepare the necessary paperwork and a surveyor to help you with the valuation of the freehold. The following is a basic outline of the steps needed to be followed.
- You will have to set up a new limited company to act as nominee purchaser. It is not essential to set up a limited company, but it is the preferred option.
- All flat owners will need to complete a questionnaire with regard to length of occupancy at the property.
- A participation agreement should be signed by all flat owners. On this agreement it should state the dates and the amounts of money that will be required.
- You will need to confirm that the qualification conditions have been met ( Please read our other articles).
- A bank account will have to be set up to hold all the funds, this will also be used to manage the block.
You will need to appoint a solicitor that is familiar with the sale process and it is probably better if you can use a solicitor that everyone agrees on. The solicitor will draw up a document called the 'Initial Notice'. This document is passed to the freeholder and will contain certain information including:
- A basic statement outlining the grounds as to why the tenants claim the right to enfranchisement under the 1993Act
- A plan of the building to be included in the sale, showing how it is divided on a unit basis. This plan should also include any additional parts of the building or land that the freeholder will have to grant rights over.
- Details of any Intermediate leasehold interest that will have to be acquired It should also state if any flats are protected tenancies.
- Details of the proposed purchase price.
- A list of the qualifying tenants including their names & addresses
- The nominee purchasers details
- A date specified by which, the freeholder must serve any counter notice, this must be at least two months ahead.