Why buy the freehold - the Developer's reasons

Bought at the right time and for the right price, a freehold investment is a really good way of making money!

As a freehold owner with many leaseholders I can make money in a variety of ways, in some circumstances it is almost an excuse to print money!

As the lease years decline - this is a fact of life - the potential to make money increases, in particular when the leaseholder comes to sell their flat. Mortgage companies don't mind lending on leasehold properties, but they do want to see sufficient years left on the lease so that their investment is relatively safe. They will normally aim for 80 years, some will accept as low as 70 years left on the lease.

Where a leaseholder wishes to sell up and move, though there are rules and regulations that are administered through the Leasehold Valuation Tribunal, if the leaseholder needs to go through the sales process quckly, they will almost certainly bypass this in order to go for a rapid transaction.

While the leasehold valuation tribunal might decide a price of say £3,000. A starting price of £10,000 might well be accepted in order to secure a sale!

The Freeholder also gets the ongoing ground rent and potentially - depending on their associated companies and interests - service charges associated with insurance and maintenance.

Over time, and with ever declining lease years held by the leaseholders, the freehold becomes ever more valuable and can be sold on for a premium

Funding the purchase of the freehold

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