If you’re the owner of a flat or apartment, then it’s unlikely you own the freehold to the property. Along with your mortgage and bills, you’re probably also paying ground rent to the owner of the freehold. Sometimes, the ownership of the freehold is available to purchase - but what are the pros and cons when it comes to buying the freehold?
First things first, it’s important to fully understand what the freehold of a property is. In simple terms, it’s basically the permanent and absolute ownership of property or land. If you’re the owner of the freehold, it means that you own the building along with the land that it has been built on.
Most flats and apartments are leasehold properties, and if your property is a leasehold then it means you own the property, but not the land, for the length of your lease agreement with the freeholder. This lease agreement is put in place so that you can own and use the property for a set number of years until the lease expires. These leaseholds are usually set over a long term - often 90+ years, but they can be as high as 999 years.
If you’re a leaseholder, you’re entitled to ask the landlord to sell you the freehold at any time. Law dictates that if a landlord wishes to sell the freehold, they must offer all leaseholders first refusal to purchase it.
Buying the freehold isn’t quite as straight forward as just agreeing a price and paying it, though - in order to qualify you must get your neighbours on board as well. By law, at least 50% of the leaseholders within the building must come together to purchase the freehold.
At the end of the freehold-buying process, all purchasing owners would:
Jointly owning the freehold with your neighbours will mean that you have the power to collectively set the ground rents, take out the best insurance deals and generally be in control of your own destiny. You can also extend your lease with the only cost incurred being the legal fees.
There are a few requirements that need to be met for a group of leaseholders to be able to buy the freehold of a property. There are outlined below:
Just like the price of a property, the price of a freehold can vary. However, the shorter your lease then the pricier your freehold will be.
To buy your share of the freehold, you will incur costs such as:
Here at CPS Homes we’re proud to be Cardiff’s largest lettings and estate agent, so whether you’re a landlord, tenant, buyer or seller, we have the expertise to deliver exactly what you’re looking for from the property market. Get in touch with us today by calling 02920 6668585, e-mailing email@example.com or by popping into one of our three Cardiff branches.