Should I consider buying the freehold of my home?

What is a freehold property?

Before making any decisions on buying and selling your home, it’s vital that you know whether it is a freehold or leasehold property, because this will inform whatever steps you might take next.

Freehold houses or flats are those where the owner of the property has complete legal ownership of the building and its land and can sell it without any restrictions. That contrasts with leasehold homes, which are typically flats that you would rent from a freeholder for a specified period of between 99 and 999 years in exchange for a monthly payment to them. Once the lease agreement expires, ownership of the home returns to the freeholder.

Is it a good idea to buy my home’s freehold?

Houses are generally freehold, so if your house is a leasehold property then it is highly recommended that you try to buy the freehold outright. In order to make an offer to the freeholder you must have owned the home as a leaseholder for a period of time.

But typically the vast majority of leasehold homes are flats, meaning that your property will be just one of potentially very many inside the same building. And that creates a series of hurdles that you must overcome before you’re able to make an offer to buy your freehold.

It might be a good idea buy the freehold in certain circumstances, including when you are having problems with the freeholder and want to own the home outright; if you think your rent payments and other leasehold agreement charges are too high; if you have talked to your neighbours and they are willing to buy a share of the freehold; and if there are roughly 85 years left on your lease, as it’s more expensive to buy the freehold on shorter leaseholds.

What are the eligibility requirements for buying the freehold on my home?

First, you should know that not everyone can make an offer to buy the freehold.

There are several requirements that you must meet before you can attempt to buy the freehold of your property, starting with the fact that you need to have the funds in place to buy the freehold. Be sure to calculate not only the price of buying the home, but also additional costs such as fees you’ll have to pay solicitors, and possibly having to pay Stamp Duty Land Tax depending on the value of your home.

Specific criteria for buying include the fact that 25 percent or less of the building must be in use for offices, shops, or other non-residential uses; 50 percent or more of the flats have to be in the ownership of leaseholders that have expressed an interest in purchasing part of the freehold; two thirds or more of the flats in the building have to be in the ownership of leaseholders that have long-term leases; and the property must contain two flats or more.

Note that if there are only two flats in the building, in order to buy the freehold both of the leaseholders must agree to want to make the purchase.

Are there any alternatives to buying the freehold on my property?

Because it can be a long and complicated process to buy the freehold on your flat, you might want to consider as an alternative extending the lease. This can be a much simpler and quicker process than buying the freehold, although it will also cost you money to do so and the amount that you have to pay for this could be similar to purchasing the freehold. Once you have an extended lease in place your flat will be more enticing to prospective buyers, so if you ultimately decide to sell the property and move elsewhere you might get more money for it.