Buying the freehold: What’s involved?

Hi Barry

There’s a completely different set of rules and regulations to follow. I purchased a freehold once and immediately contracted the management of it out.

Your solicitor should also be advising you that you cannot be the freeholder and the leaseholder. I have to set up a company to own the freehold I purchased.

There are a few Property118 regulars who specialise in this, hopefully they will offer to help you.

The Leasehold Advisory Service is very good and will give you correct advice. I have been dealing with them in regards to forming a Right to Manage Company to take over the management from a Housing Association and now to buying the freehold of the block of 8 flats where I own one, under Collective Enfranchisement. You can see the links to the legislation on their very good web site for background reading.

Hi Barry,

Mark is correct. There are a whole load of rules and regulations when you become a freeholder. If you fail to serve documentation in the correct manner ( including the font size!!) at the correct times then you cannot receive ground rent or service charges. If you are spending any amount in excess of £250 per flat you have to consult on the work otherwise – guess what- you cannot claim it back in the service charge. My advice is to contract this out unless you want to take a crash course in block management and spend hours poring over the Landlord and Tenant Act 1985 ( such an interesting read https://www.legislation.gov.uk/ukpga/1985/70) Choose a reputable agent who will work with you in the early days to set it up right.

Thanks for all your responses. You are correct in that I will be the leaseholder and freeholder. I did wonder who I will pay the services charges and ground rent to. Will I pay myself?

I certainly don’t want to spend my time in block management but it is only two flats in one house so not overly onerous. So maybe.

My main concern is the collecting the service charges and ground rent from the other leaseholder, and collecting it from myself, what do I do with it, where do I keep the money, how to do the accounts and so on. Setting up a company for two flats – is that needed/the best thing to do/feasible? Still waiting from my solicitor! Choosing an agent – is that a letting agent or another type of agent?
Many thanks for responses.

Who owns the second flat? Did they decline to share in the purchase? It would be better if each had half. If they were not offered it then you and the vendor are breaking the law.

There are extensive legal obligations and you may find it difficult to find an agent who will take on such a small property. You will have to register client money protection, public liability and data protection – not worth your while as you can’t claim any of that back.

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Does the same apply for leasehold purchases of houses?

Reply to the comment left by Bridget Price at 29/08/2017 – 10:44
You’ll have to let us know how you get on battling the HA.

Reply to the comment left by Kevin McLandlord at 29/08/2017 – 21:05
Slightly different, you can have the freehold and leasehold on a single dwelling in the same name. You really need a ltd company for flats.

No, you don’t need a limited company and for two flats it would be very onerous. You just need the titles not to be identical. You could buy the freehold jointly with someone else (partner?). IMHO, the best option would be to come to an arrangement with the owner of the other flat. There is not much value in a freehold on a lease of 999 years and you would get all the hassle. It sounds great at first sight to have the freehold but in your case I can’t see much advantage to you. If the other owner cannot afford to buy it (it should not really be very expensive for such a long lease) there are arrangements that can be made, e.g. you buy it on behalf of both of you and then when s/he can or when the other flat is sold you get their half paid. I think you need a specialist solicitor. Whereabouts are you?