Freehold Enfranchisement of Houses

What is a freehold enfranchisement claim?

A freehold enfranchisement claim is when an individual makes a claim to acquire the freehold interest in their leasehold house from their freeholder. The claim is not fault-based, which means that the claim can be made against the freeholder whether or not they are carrying out their obligations under the lease and consequently there are very limited ways that the freeholder can dispute a freehold enfranchisement claim. On completion of the freehold enfranchisement claim, the tenant will own the freehold interest in the house.

Why should I buy the freehold to my house?

Most houses in England and Wales are held under freehold title, rather than leasehold title. This is because, generally there is no good reason for a house to be held under a leasehold title as there are no internal or structural parts of a house that are used in common with other properties which require the regulation of having a lease.

If you hold the freehold title to your house, then you will own your house in perpetuity rather than for the time period granted by the lease, and you will have complete control over the management of the house with no restrictions imposed by a third party freeholder.

In addition, a house with freehold title is much more marketable than a house with leasehold title and it will therefore be much easier to sell. It can also be trickier to obtain mortgage finance over a leasehold house with a short lease.

How does my property qualify to make a claim to buy the freehold?

To qualify for a claim to buy the freehold of your house the following conditions must be fulfilled:-

  1. the claim must be made in respect of a building which is reasonably considered a house and divided vertically from any adjoining house; and
  2. the lease must be a long lease which was originally granted for a term of 21 years or more; and
  3. you must have owned the property for at least two years before you serve the initial notice (but you do not necessarily have to have lived in the property for the last two years).

What is the cost of purchasing my freehold?

The total cost of the claim to purchase your freehold will be comprised of the following:-

  1. Premium – this is the payment that will be made to the freeholder in consideration for the transfer of the freehold interest. You will need to instruct a specialist enfranchisement valuer at the outset of the matter to advise you of the estimated cost of buying the freehold and to negotiate the premium on your behalf to ensure that it is the lowest possible premium payable.
  2. Your costs – this will include the cost of your solicitor and your valuer, plus any disbursements, for example, Land Registry fees, Tribunal fees, bank charges, stamp duty, etc.
  3. Your freeholder’s reasonable costs – this will include the reasonable costs of the freeholder’s solicitor and valuer, plus any of the freeholder’s disbursements in connection with the freehold enfranchisement procedure. It is important to note that you are not responsible for any of the freeholder’s costs in connection with negotiating the premium or any protracted negotiations in respect of the terms of the Transfer Deed. If the matter ends up being determined by the Tribunal then you will not be responsible for the freeholder’s costs in connection with any preparation or attendance at the Tribunal hearing.

The freeholder can also ask for a deposit of three times the yearly rent of the property once you serve the formal offer notice.

How long will it take to purchase the freehold?

We usually estimate that the procedure will take 6-12 months from the service of the initial notice to completion of the claim, however, there are no strict statutory time limits for progressing the claim, so please do be prepared for it to take considerably longer.

What is the procedure for a claim to buy the freehold of my house?

The freehold enfranchisement procedure is commenced when the tenant serves a formal notice on the freeholder (in the prescribed form). The formal notice does not need to include a proposed premium for the freehold interest.

The freeholder may then serve a notice in reply which must be served within two months of the date of the tenant’s notice. This notice should state whether the freeholder admits the claim and if they do not admit the claim they must provide their reason why they do not admit the claim. If the freeholder does not admit the claim, then the tenant must apply to the court for the court to determine if the tenant is entitled to buy the freehold.

Provided that the freeholder admits the claim, the parties’ valuers will enter negotiations with a view to agreeing the premium and the parties’ solicitors will enter negotiations with a view to agreeing the terms of the Transfer Deed (the legal document that will transfer the freehold interest to the tenant). If the premium cannot be agreed then the parties can apply to the Tribunal to determine the premium.

In accordance with the regulations, completion of the sale should take place at least four weeks after the premium is agreed and either party can serve a completion notice on the other setting a completion date on the first working day four weeks after giving the notice.

Following completion of the transfer, we will deal with all the post-completion formalities, including paying stamp duty (if any) and registering the transfer at HM Land Registry.

How can LEASE Law help me with my claim to buy my freehold house?

LEASE Law are specialist solicitors who can act on your behalf in respect of the legal requirements for making a freehold enfranchisement claim. In the vast majority of cases, we are able to offer a fixed fee for acting on your behalf.

The work that we will carry out for you includes investigating the title and lease to your property, investigating the title to the freeholders interest (and any intermediate landlords’ interests), preparing and serving the initial notice on the freeholder, receiving any notice of reply from the freeholder, negotiating the terms of the Transfer Deed, completing the transaction and registering the transfer at HM Land Registry. We will also liaise with your valuer in respect of the premium as and when necessary.

We can also recommend specialist enfranchisement valuers who have extensive experience and expertise in this area to ensure that the premium that you pay for the freehold interest is as low as possible. Your valuer will provide you with an initial report which will advise you on the premium that you can expect to pay following negotiations. Your valuer will also negotiate the premium with the freeholder’s valuer on your behalf following the service of the initial notice.

Please contact Jade Wilson (jade@leaselaw.co.uk or 0204 511 9100) or Joanna Botley (joanna@leaselaw.co.uk or 0204 511 9101) for a no obligation discussion about your potential freehold enfranchisement claim.