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Why buy the freehold - the Leaseholder's reasons
The purchase of the freehold by the leaseholder is the best way of preventing an independent freeholder profiteering from a stake in your home!
As to the specific reasons, they largely prevent an avaricious landlord or freehold owner doing the things outlined here.
If you as part of a group of leaseholders have managed to purchase the freehold, you are able to:
- Grant each other extremely long leases
- Review the ground rent, how much it should be, how it is spent
- Unless you manage it already, take control of the building's management / maintenance
- Research the best priced buildings insurance, potentially saving a considerable amount of money
- Increase the value of your flat
- Have a greater stake in your property
- Be nice to each other
A flat that has ownership of the freehold associated with it is certainly more saleable than one that doesn't. Why? Whoever buys it knows that they will not at some point in the future have to purchase additional lease years or worry about the freehold being sold on.
If your flat has less than the magic number of years requested by the mortgage company you must pay to increase your lease years.
if you have left this late and are in the process of selling and have to move quckly, the freeholder can effectively ask for any amount of money in order to increase the lease years and permit the sale. You must also pay the freeholders legal costs!
But surely there's a legal limit, some kind of regulation?
Of course there is, you can go to the Leasehold Valuation Tribunal for a judgement as to what you should pay to extend your lease. But this can take 6 months, possibly longer. You wil almost certainly need a survey and will need to pay for all legal costs associated with going to the LVT.
On a flat that is for sale at say £130,000 with say 75 lease years, you might be asked to pay £10,000 to extend the lease! Whether that is a fair amount might be largely irrelevant if you have your sight set on a new house and are some way down the process of selling and buying. To go to the LVT everything else must stop, even then, an overpriced lease might be less than the process of working out a fair cost of a lease extension!
Funding the purchase of the freehold
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