What Is The Process Of Purchasing The Freehold To My Leasehold Property?
Posted on 8th June 2020
If you own a leasehold property, you, essentially, are the legal owner, however, actually lease the building from the freeholder or, indeed, landlord, who owns the land upon which the property is built. See our blog, in which our Preston solicitors discuss all things leasehold, here.
The Leasehold Reform Act 1967, makes provision for the right of leasehold property owners to purchase the freehold. Owning the freehold, in contrast to the leasehold, means that you are not only the registered owner of the property, but the land that the property sits on, in addition.
This can bring about a number of benefits, which is resulting in more and more leasehold property owners electing to purchase the freehold.
So, what are the benefits?
There are a number of benefits that can arise when purchasing the freehold, to your leasehold property. These can include, however, are not limited to, the following:
- Ground Rent
As discussed above, the land upon which the property is situated is, essentially, rented from the individual who holds the freehold. This is where the term ‘ground rent’ stems from which, as it says on the tin, is a payment of rent, to the freeholder, stipulated by the lease. For more on ground rent, and why it is required, see our blog here. Purchasing the freehold rids the need for this additional payment which could amount to large savings on an annual basis.
- Service Charge
In addition, leasehold properties can also bring about high service charge payments, that are required to contribute to the upkeep and maintenance of communal areas of a development, for example. The amount of service charge payable is accounted for within the lease and is, usually, demanded by the managing agents. Purchasing the freehold can mean that no such service charge payments are required and, again, can result in large savings. It is, however, important to check the terms of the freehold purchase in this regard, which your conveyancing solicitor will be able to advise on. For more on service charge payments, and why they are payable, see our here.
- Relaxed Conditions
Certain conditions within the Lease can also become much more relaxed. This is because, the granting of the original lease is, usually, part of a large development. There is, therefore, the need for uniformity of the leases across the development which can, often, mean that the same are somewhat restrictive. Purchasing the freehold, in a way, frees you from the terms of the Lease, and the restrictions therewith. The Transfer of the freehold title will, of course, make provision for its own terms, and restrictions. Your conveyancing solicitor will be able to advise you accordingly in this regard.
Purchasing the freehold can, additionally, add value to the property and, in some cases, can make it a more attractive purchase, to some, as opposed to a leasehold purchase. This may make purchasing the freehold a beneficial move, should you have plans to market the property for sale.
So, if you like the sound of purchasing the freehold to your leasehold property, what do you need to do to get the ball rolling? Our Preston solicitors have formed a step-by-step guide, outlining the main stages of a freehold purchase transaction.
What is the process?
Important information on freehold purchases can be found via the GOV.uk website, here. Our Preston solicitors are, however, here to explain the process, and what the freehold purchase entails in terms of conveyancing.
Firstly, it is important to ensure that the freeholder is willing to sell the freehold to you. In some cases, they may approach you this regard, however, if you have not received any such offer, you are able to contact the freeholder directly and ask the question.
In many cases, a condition of offering the freehold to the leaseholder, is that they must cover the cost of the freeholder’s legal fees. The freeholder is not, in all cases, legally obliged to sell the freehold and, covering their legal fees often makes this an incentive for them to do so. You can, however, ask for them to sell to you at any time, and there is usually provision within the lease itself, which makes provision for the right to first refusal, and whether this applies.
The freehold purchase price is calculated in accordance with the annual ground rent payment amount, together with any specific provisions for the same, stipulated within the lease.
Once the freeholder has agreed to sell the freehold to you, you should be instructing the expertise of a property conveyancing solicitor. At MG Legal, our residential property conveyancing solicitors offer fixed fee conveyancing services, with no hidden extras. Contact our team of local solicitors today, at firstname.lastname@example.org, for your no-obligation quote. Our reviews speak for themselves, see for yourself here and MG Legal’s property experts your first port of call.
Once you have our team of Preston solicitors on board, your conveyancer will contact the freeholder’s solicitor, and provide them with the relevant tile documentation, pertaining to the property. This includes the Official Copy Entries, the Title Plan and the lease. These documents are required in order that the freeholder’s solicitor can appropriately prepare the Transfer Deed, to transfer ownership of the freehold upon Completion.
The draft Transfer is then forwarded to your property solicitor, who will review the Deed, ensuring all details noted thereon are accurate and correct. The Transfer will be forwarded to you, together with a report on the Deed, advising you of what each clause means, and the implications the same may place upon you, following Completion.
Once you are happy with the Deed, and understand the contents, a Completion date can be agreed. Upon proceeding to Completion, it is important to ensure that all current demands for ground rent and service charge have been paid up to date, and are not in arrears. The freeholder can refuse to Complete the matter should there be payments outstanding. Their solicitor, usually, forwards a completion statement, advising of the amount required to Complete the matter, accounting for any apportionments of ground rent and service charge that may have been paid.
The funds should be lodged in the client account of your conveyancing solicitor, where they are, subsequently, transferred to the freeholder’s solicitor, accordingly. Once the funds have been received, the Transfer of the freehold can be dated, and the matter deemed as Complete.
Following Completion, your conveyancing solicitor will arrange to the have the freehold title registered into your name, at HM Land Registry, as the new owner of the same. For more information of the registration process, see our blog, here.
So, if you want to purchase the freehold to your leasehold property, get in touch with our team today, by submitting an online enquiry, and our local solicitors will be on hand to assist you.
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