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Good advice on buying the freehold on your property

June 24th, 2012 · No Comments

If you own a leaseholdhouse and you want to buy the freehold, youcould possibly qualify for the right to buy it. Youmust meet certain conditions to qualify and there are legal processes and costs involved. You will need to find out how to buy the freehold and where to get advice.

To begin with, it is probably best to describe the difference between leasehold and freehold.
Having a leasehold means a person has the right to use a property for a specific period of time, commonly in return for a rent.
At the end of the term, the property reverts back to the freehold owner. In contrast, a freehold is where the property is owned for an unlimited period of time.
In this case, you will struggle to sell the property as a result of the short term remaining on the lease. The reason for this is that any prospective purchaser will have difficulty obtaining a mortgage to purchase the property. One way of overcoming this problem is to apply to your landlord for a lease extension on the property.

The Leasehold Reform Housing and Urban Development Act 1993 provides the framework to carry this out. While there are various exclusions, the vast majority of residential tenants who own leases granted for more than 21 years initially, and have owned the lease for not less than two years, will in most casesgenerally be entitled to make an application.
The legislation includes a procedure for applying for the new lease, as well as a protocol for calculating the premium. This must be followed meticulously. Based on the length of time remaining on your current lease, you will be entitled to a lease for a term of 125 years, while the terms will generally be the same as your current lease. You will also need to pay a “peppercorn” rent under the new lease, which in reality is no rent at all.

If however the decision has been made to buy freehold, rather than leasehold, a different set of rules will of course apply.
A freehold purchase of any property is governed by a completely different set of legal requirements. Approaching a specialist in conveyancing will be the way to go to ensure that all legalities are covered.

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