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.
Some owners of leasehold properties might get the opportunity to buy the freehold of their home. This can be an appealing option because freehold homes are often seen as more valuable to buyers, as they offer more certainty about ownership and legal rights over them.
But as with any purchase, buying the freehold of your house or flat will necessarily involve an expense, along with an uncertain amount of time to complete the required steps. And that might not work for owners who want to sell their home without any more costs, or as fast as possible, or both. So you should carefully consider the pros and cons before making a decision.
In this guide, you will learn all you need to know about whether you might be eligible to purchase the freehold on your property, and the steps involved with achieving that goal.
Not all leasehold homeowners will have the ability to purchase the freehold on their property, whether due to restrictions on the building, financial constraints, or other considerations. But you should still be able to sell the house or flat as leasehold, and in the following sections you can also read about your various options available to secure a buyer for the property.
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.
Just be aware that there can be complications, a lot of time, and some expense involved with trying to extend the least at your property. Costs involved can include legal fees, potentially stamp duty and more, as Tollers Solicitors explains. This might not be a suitable option if you are trying to cut selling charges.
For those sellers that aren’t able, or don’t want to, extend their lease agreement before selling, another choice is getting in touch with a quick home buyer like LDN Properties. These companies are well known for making fast and fair offers to purchase almost any type of leasehold home, regardless of its age, condition, location, shape or size.
Sellers get to enjoy a speedy process this way as it should take just a few weeks to exchange contract and to receive the full sale proceeds. And quick buyers promise to never charge homeowners any commission when purchasing their properties. By contrast, you’ll have to pay fees when selling with an auctioneer or an estate agent, and this will add to your expenses.
You can learn more about what’s involved with selling to a quick buyer, along with the benefits and drawbacks of this and other ways to sell your property, in the next section.
Deciding how to find a buyer for your freehold or leasehold home
If you opt for buying the freehold of your property, or keeping it as leasehold, and are still looking to sell it, you will eventually need to pick a method for finding a buyer.
You can often select from selling at an auction, selling to a quick buyer, selling with an estate agent or selling on your own. There are distinct advantages and disadvantages associated with each of these strategies in terms of whether or not they will make you pay commission, how long they take to complete, and other factors. For example, auctioneers and estate agents charge commission, whereas legitimate quick buyers like LDN Properties do not.
It may help to make a note of your top goals with selling, such as your ideal sale price, if you can accept paying a fee on the sale to a third party, and how fast you want to find a buyer. Then read through the details of all four methods below and compare them against the priorities you have for selling your home, and this should assist in identifying the best match to these aims.
Selling at an auction
You could alternatively try your luck with a property auction, where people can place bids of increasing value on your home, with the top at the end of the auction being the winner and therefore the person buying the property. But you might get no bids, in which case your home does not sell and you’d have to start over with seeking a buyer, delaying a sale longer.
Or you may get just one bid at the reserve price – the lowest value at which you accept your flat or house can sell. A bid at this amount is a binding legal agreement to sell your home, so ensure that you pick a price that is calculated to produce a profit from the sale, even after paying the auctioneer’s fees, or you risk only just breaking even on the sale or possibly selling at a loss.
As a guide, many auctioneers charge commission at 2.5 percent of a home’s sale price, and this is taken out of the sale proceeds instantly, which will add to your fees. If you are determined to avoid paying any commission when selling your home, consider selling without any assistance or selling to an honest no-fee quick buyer like LDN Properties.
You will have to pay the commissioner for their work in selling the property, which starts with creating a listing that includes photographs of the interior and exterior along with a description of the home’s many features, and then advertising the listing to get buyers interested ahead of the auction. They’ll host the auction itself and also oversee completion of a successful sale.
Auctions are not the swiftest way to sell a home, and you’ll have plenty of waiting, including many weeks or more after you decide to use this method and before the auction is held. If your manage to sell your property at the auction, the winning bidder then has about a month to finalise the sale by signing the mandatory legal documents and taking various other steps.
Selling to a quick buyer
Quick buyers don’t have to wait weeks or longer to get approved for a mortgage to purchase your home, as they already have the funds to do so. This cuts the selling schedule to just a few weeks, with the extra advantage for sellers of not having to pay any fees to the quick buyer.
If you accept that offer, a representative from the quick buyer will visit your home to assess the exterior and interior before they make a final offer. You’ll only need to agree to this one viewing, compared to possibly dozens or more viewings when selling through other methods.
The last step, if you accept the final offer, is when the quick buyer works with your solicitor or other legal representation to quickly complete all of the legal documents and other final actions. The entire timeline should only be a handful of weeks, and that includes the time needed for the exchange of contracts and paying you the full proceeds from the sale.
If you are uncertain about selling to a quick buyer, you should ask individual companies to prove that they are registered with The Property Ombudsman (TPO). This is an independent entity that issues policies to protect owners against fraud in the quick buying sector. All true TPO members, like LDN Properties, must commit to these rules, which gives you peace of mind.
You can quickly and easily verify a quick buyer’s TPO registration status for free by visiting the organisation’s website, clicking the “Find a Member” tab on the main page, then when prompted typing in the name of a specific company. If they are registered with TPO you will see their full membership details, whereas you will get zero results if they are not a legitimate member. Never sell your flat or house to a non-TPO member quick buyer because it could be a scam.
Selling with an estate agent
The commission pays for the work that an estate agent puts in to selling a home, which begins with producing a listing for the property that they will promote in their office, online and in local newspapers to attract buyers. Estate agents also handle scheduling for viewings where they’ll give anyone interested a tour of the inside and outside of your property. And they will hear offers, with the aim of guiding a serious offer to the last stage of exchanging contracts.
Although you will get to avoid having to put in much effort for the sale of your home because of the estate agent’s work, they will charge you commission if they find a buyer for the property. This fee would add to your expenses because it is deducted from the final sale proceeds right away. The exact rate of commission varies among estate agents, as the website Agreed notes, but is often within a range from 1.15 percent to 1.40 percent of a home’s eventual selling price.
Don’t expect a rapid sale either when you use an estate agent, as it’s common for homes sold this way to remain on the market for a number of months or even more than an entire year in certain cases. If you want a speedier sale then you could consider selling to a quick buyer, where the entire schedule from beginning to end should only be a few short weeks.
And there’s also the danger that someone makes an honest offer on your house or flat, only to decide against it later and rescind the offer. They can do this without penalty if you have not exchanged contracts, and it will make the sale fall apart. That would then require to begin again with seeking a buyer, possibly delaying a final sale by much more time.
Selling on your own
Lastly, you could try selling your flat or house without any help, but this will be a lot of work and take up much of your time because you will have to handle all of the actions involved. It could more than a full year to sell this way, and possibly even longer in some cases.
You will first need to create and advertise a listing for the property, then organise viewings, hear offers and aim to convert one to the final exchange of contracts. Given the time, effort and potential stress involved, you should only pursue this approach if you have previously succeeded with selling a property, or if you have a suitably experienced family member or friend that might be open to assisting you with the selling process without charging any fees.
The clearest benefit of selling without any assistance is that you’ll avoid having to pay commission to an auctioneer or an estate agent for finding a buyer, so this will help with reducing your expenses upfront. But you could discover that any saving you make this way is eliminated by the funds you will need to spend on tasks like advertising your listing.
For a stress-free but still zero-commission alternative, contact LDN Properties or another honest quick buyer. You’ll achieve your goal of avoiding to have to pay any fees on the sale, and you will get the extra perk of completing the sale within just a few short weeks – and that covers the time needed for exchanging contracts and paying you the full sale proceeds.
Buying the freehold of your home: seven popular queries and responses
Over the many years we’ve been in business, we’ve heard countless questions about buying the freehold of a property. Here’s a sample of seven popular queries that we’ve received:
It depends on your type of leasehold property. If you live in a leasehold house, which is not typical, then you should strongly consider making an offer to buy the freehold outright. If you live in a leasehold flat, which is far more common, then it could be a complicated process and you might want to simply extend the lease instead.
The precise cost for buying the freehold of your leasehold house or flat will be specific to your home, as the price payable will be unique to that property. But you’ll also have to consider additional costs involved in buying a home, including fees for surveyors and solicitors, and possibly having to pay Stamp Duty Land Tax depending on the value of the home.
The current qualifications for buying the freehold on a leasehold flat include: only 25 percent or less of the building can be for non-residential use like shops, the building must have two flats or more, and 50 percent or more of the building’s total number of flats must be in the ownership of leaseholders who also want to purchase part of the freehold.
Whether you buy the freehold for your home or keep it as leasehold, the four standard ways that you can sell it are at an auction, to a quick buyer such as LDN Properties, with an estate agent, or on your own. All of these approaches have differences in terms of issues like their typical timeline to reach the exchange of contracts and whether or not they charge sellers commission.
Selling a flat or house using the services of an auctioneer or an estate agent will require that you pay them commission if they are able to finalise the sale of the property. This fee is deducted right away from the sale proceeds, causing your total costs to rise. But you won’t pay any fees by selling without any help or selling to a zero-commission quick home buyer.
If one of your main goals with selling your home is securing the fastest sale possible, you should get in contact with a quick buyer. These companies, like LDN Properties, can often complete all the steps needed to purchase your house or flat in a handful of weeks. It can take at least a number of months to instead sell via an auctioneer, an estate agent, or on your own.
To protect the sale of your home, ask a quick buyer to prove that they are registered with an independent entity known as The Property Ombudsman (TPO), which sets rules to guard owners against fraud in the quick buying industry. All true TPO members such as LDN Properties must follow these rules, giving you peace of mind when selling to them.
