Freehold Purchase – more desirable but often less practical?
Although Freehold Purchase, also known as Collective or Leasehold Enfranchisement, offers more control to the Leaseholder in a building than Lease Extension alone, the practicalities are often prohibitive, such as having to join the board of the Nominee Purchaser company.
With Collective Enfranchisement comes the challenge of participation, whereby in order to issue the Claim Notice required to commence the process, a high proportion of Leaseholders (flat owners) must buy-in and sign up. This can result in each participant paying up to twice the cost of an equivalent Leasehold Extension and although special ‘gap’ funding of non-participants exists, it can be complex and lead to conflicts of interest. Exercising the freehold right to buy can be costlier again if the Freeholder of the building (landlord or managing agent) is compensated for lost development potential, e.g. spare land, roof spaces or mobile phone mast sites.
Extending your lease – an easier alternative?
A more appealing alternative is often ‘bulk’ UK Lease Extension –where a number of individual leaseholders come together to apply for their lease extensions at the same time. One of the main advantages of bulk leasehold extensions is that the difficulty in reaching the required participation level is largely diminished – as bulk lease extension can proceed with any number of Leaseholders who, in acting together, will be able to leverage better negotiation and there is an additional cost saving potential. Additionally, if negotiation with the Freeholder can be done informally or ‘outside the Act’ this may prove cheaper and is also more likely to go ahead than buying the freehold . The Freeholder benefits from an increase in ground rent and the Leaseholders from a lower and possibly an extension of less than the statutory 90 years, which would also include those in the building who have owned flats for less than two years.
Whatever the collectively agreed way forward, open and honest negotiation should enable any group of Leaseholders to obtain the right result for their circumstances when they are presented with a straight Freehold Purchase or bulk Lease Extensions.
However, whichever way you decide to progress, do make sure you appoint specialist lease extension solicitors to deal with the legal side, as lease extension is a tricky area of law and one very few property solicitors come across more than very rarely. You can rest assured that our team has the experience to provide you with the lease extension advice you need – contact our experts today who will guide you through the process.
Thinking of freehold purchase or lease extension? We can help
Our lease enfranchisement and lease extension specialist solicitors can help extend your lease or purchase the freehold of your block. So, if you are looking for expert legal advice:
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