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The right to collectively buy the freehold of your block - Collective Freehold Enfranchisement

Why can there be a problem with a long leasehold property?

Flat ownership in England and Wales is a very popular form of owner-occupation, especially with all the maintenance and building insurance taken care-of. Most flats are owned on a leasehold tenure and there can be problems due the nature of leasehold, particularly a 'short' lease.

What is a short lease?

All long leases are granted for a fixed term of years (commonly 99 or 125 years) from a specific date, usually with the payment of a small annual 'ground rent'. At the outset, a 99-year lease is regarded as being the same value as a freehold. Obviously, it will grow shorter as the years pass, hence a lease is known as a 'wasting asset'. However, this means it will also gradually lose value. Buyers and mortgage lenders know this. Flats with around 85-years or less to run should be long enough for most of us, but they are increasingly regarded by buyers and their legal advisors as 'short'. Mortgage lenders often refuse to lend on leases with less than 75-years left. Additionally, the ground rents are often set to increase periodically, sometimes to high levels.

The Collective Enfranchisement Solution:-

Known as the Right to Collective Freehold Enfranchisement, since 1993 flat leaseholders have a legal right to band together to buy their freehold.

Most blocks of flats will be able and there is no minimum period of ownership, but this option has a few qualifications including that at least half of the flat owners participate. All of the freehold buyers will then be able to grant themselves new long leases of up to 999 years, and to abolish the ground rent. They will also be able to take control of the management. 'Share of Freehold' - often abbreviated to 'SOF' - stated on the sales particulars of a flat will instantly banish prospective buyer's worries about short leases and mortgageability.

The leaseholder pays a price to compensate the landlord for the compulsory sale of the freehold, and pays the landlord's reasonable legal and valuation costs.

Benefits of a Collective Freehold Enfranchisement include:
Restore saleability
Increase Value
'Share of Freehold' (SOF) acceptable to buyers and mortgage lenders
Abolish Ground Rent
Control management/destiny

Leases with more than 80-years to run POP UP LINK

How much should you offer your Landlord?
Howard Gross can provide detailed qualification and valuation advice for Collective Enfranchisement - phone for a free ten minute initial consultation and fee quote on 01202 716611.