Flats – Freehold Purchase
BUYING THE FREEHOLD
If you have a flat with a short lease, that is one with less than 70 years remaining, you are probably concerned that the flat has become difficult to mortgage and harder to sell, and are looking for advice on buying the freehold to see how you can sort out your position.
Buying the freehold of a house is a relatively straightforward procedure, and if this is the topic you are interested in finding out more about, please have a look at our page specifically on how to Buy the Freehold which will give you further information.
But if you’re looking at a leasehold flat that you want to buy freehold, then this could be difficult.
When you own the freehold you own from “the center of the earth to the highest heavens”. So if there is a flat above you or below then such flat is trespassing in your space.
The law gets round this problem by creating what is known as “flying freeholds” which means that you own the freehold in a predefined space. It is not something that anyone would recommend though as there are numerous legal problems like what happens if the foundations of the block settle at a rate of half a millimeter every 5 years? If they do then is your flat trespassing?
To avoid these problems you are usually advised to simply extend your lease and you can read about the process involved in lease extensions here.
The other alternative allows for the tenants in a block of flats to demand that the freeholder sell the freehold to the tenants. If enough tenants are willing then they form their own management company and buy the freehold. This is known as Collective Enfranchisement and you can read more about it by going to the page called Collective Enfranchisement.
Using this route you still have a lease but the freehold is owned by a company in which you hold shares. Then you can extend your own lease and ensure that the value of your flat does not decrease.
For more information on buying the freehold of your flat or extending your lease please call us now on 0121 427 2800
“I have very much appreciated your advice at every stage, not to mention your recommendations on solicitors. You’ve certainly smoothed the way in an impossibly arcane process.”
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100 Years unexpired – No issues at this stage with the lease and the saleability of the property.
90 Years unexpired – Still no major issues at this stage with the lease and the saleability of the property.
80 Years unexpired – This is where the real problems start – “Marriage Value” becomes a factor and the market price of the property is affected
70 Years unexpired – The property now becomes difficult to mortgage as lenders become nervous about the situation. The cost of extending the lease is significant. Potential purchasers are deterred by the length of the lease and seek alternative properties.
60 Years unexpired – The situation is similar to that at 70 years, but somewhat worse. You will probably have lost many £1,000s in the market value of your flat.
50 Years unexpired – You are unlikely to sell the flat with such a short lease and may be limited to cash buyers and property investors only. By nowmany more £1,000s have been wiped off the true market value.