Under the Leasehold Reform Act 1993 (as amended) the qualifying majority of leaseholders can compel their Landlord to sell the Freehold to them. Once completed they will own their Leasehold property and a share of the freehold from which they are formed.
In effect they become their own landlords usually meaning that:
- No Ground Rent will be paid
- The Tenants decide such issues as the level of repairs, service charge etc.
- The Leasehold Property is usually more valuable when sold with a share of freehold.
What are the Requirements?
There are separate requirements for both the building and the tenants.
The Building
- Must have 75% or more of the floor area used for residential purpose, and
- At least two-thirds of the flats must be let to qualifying leaseholders'
What is a Qualifying Leaseholder?
To be a Qualifying leaseholder you must own a ‘long lease’, and not be a business or commercial tenant. (There is no longer any requirement that you must live at the property.)
What is a Long Lease?
A ‘long lease’, by definition, is:
- A lease of a term of years absolute in excess of 21 years when originally granted
- A shorter lease which contains a clause providing a right of perpetual renewal
- A lease terminable on death or marriage or an unknown date (including the so-called "Prince of Wales" clauses)
- A leaseholder having held over at the expiry of a long lease, and the landlord has not served a notice terminating the tenancy
- A shared ownership lease where the leaseholders' share is 100%
Who will be registered at the Land Registry as owning the Freehold?
Under English Law only 4 individuals may be registered on the Land Registry as owning the freehold property. It is therefore common (for buildings with more than 2 flats) to form a Freehold Management Company. The Freehold will be transferred to the Company and each tenant will own a share in the company and have the same rights as the other owners.
Do we all have to Agree?
Provided that over half of the qualifying Leaseholders wish to partake in the purchase the action can go ahead.
Are there any Restrictions?
There is no right to purchase the Freehold in the following situations. (But you may be able to extend your Lease):
- Buildings within a cathedral precinct
- National Trust properties
- Crown properties
To discuss your requirements or to find out more contact us on 01483 408780 or email info@setfords.co.uk
