Can You Buy the Freehold Reversion of a House?
Much land in England is still leasehold. In addition to the ground rent payable there can be other costs for tenants of long leases: for example, if they have to obtain a landlord’s consent to alterations.
There is a procedure that allows a tenant who has a lease of more than 21 years and has owned the house for more than 2 years to force a landlord to sell the freehold reversion to them. If you want to buy your freehold reversion you need advice from specialist property solicitors to ensure you
- do not pay more than you should
- are not left with restrictive covenants that should no longer apply
Read the Case Study at the end of this page to see how our Property Team can protect your interests.
What price should I pay?
That is a complex process with conflicting approaches adopted by some landlords but we can advise you about this having assessed the position in your case. You will also be expected to pay the landlord’s "reasonable" legal and surveyor’s costs. However, landlords will often seek to charge more for their freehold reversion. Our Case Study shows how landlords will often try to charge far more than is reasonable making a reference to a Tribunal inevitable.
If you are considering purchasing the freehold of your house contact us and we will assess your situation and advise as to what is your best option.
Is it worth it?
The longer the term the less benefit you will gain. One consideration is whether you or a previous owner has made any unauthorised alterations to the property or whether you want to make any alterations to the property which landlord’s consent will be required for. Depending on your landlord they may charge a fee for providing consent. In such cases you may prefer to buy the freehold.
You may receive an unsolicited offer from a landlord to buy the freehold reversion of your property or, you may have contacted them. Some landlord’s or their agents will send the transfer documentation and ask you to pay a deposit to them. Do not pay any money to the landlord before you have instructed a solicitor to advise you on the documentation and act for you in your purchase. It is important that
- the documents contain the correct provisions
- the transfer of the freehold to you is registered properly at the Land Registry
- covenants that are no longer appropriate are removed. In our Case Study the removal of restrictive covenants was the main bone of contention
Our Property Team will be happy to help guide you throughout the process, from making your decision to registering your title.
Freehold Purchase – what are the benefits?
- your home may become more desirable and so will be easier to sell
- you will no longer have to pay ground rent to a freeholder
- you gain greater security and reduce the risk of falling foul of breaching covenants affecting your property
- you no longer have to risk dealing with an obstructive freehold owner
- by buying the freehold, flat owners gain the power to extend their lease up to 999 years with no ground rent at minimal cost
Case Study - Mr & Mrs R from Lancashire
The clients owned a leasehold property in Lancashire and served notice on the freehold owner of their wish to buy the freehold reversion. Agreement was reached for the sale of the freehold but disputes arose as to
- the price to be paid
- the costs to be paid by the clients
- what covenants should remain restricting their use of the property
The parties could not reach agreement and instructed Brown Turner Ross to represent them before the First Tier Tribunal Property Chamber.
When you give notice of your wish to own the freehold you have to accept responsibility for the landlord's reasonable costs relating to
- investigating your right to acquire the freehold
- the conveyance of the freehold reversion
- investigating the title to the property
- valuing the property
A covenant exists to restrict how land can be used. Under certain limited circumstances the covenants may have to remain even when the freehold is purchased.
The covenants in question here included the following:
- not to build another house on the land
- not to run a business from the property
- not to make alterations without prior written consent
- not to do anything that annoyed or caused danger to owners of adjoining properties
The freehold owner offered to sell the reversion on terms that included the retention of ALL the restrictive covenants in the lease. The price quotes was excessive as were the fees for the surveyor & legal work.
We argued on behalf of our clients that
- the price was too high based on case law
- costs must be proportionate to the price paid & that in this case the legal fees as well as the costs quoted for the surveyor were excessive
- the freehold owner had not established any proper reason for the covenants to remain on the property
- the price to be paid for the freehold was significantly reduced
- the legal fees to be paid were significantly reduced
- the surveyor's fees were disallowed in full and crucially
- the covenants should no longer apply to the property
Suffice to say our clients were thrilled with the outcome we achieved for them!
So if you are interested in buying your freehold reversion make sure you instruct a solicitor who specialises in this process - call Kevin Ross on 0800 195 7517