Buying your Freehold is a fairly complex process, including both legal and valuation specialism. In order to deal with these two aspects, we have teamed up with selected specialist solicitors, who have experience in this freld. Together our aim is to help our clients to purchase their Freeholds, at the lowest possible cost to them. Our surveyors are professionally qualified and have had many years' experience in valuation matters.
The Leasehold Reform Act (1993) gives flat owners the right to purchase their Freehold, providing at least 50% of the flats' owners participate (the building must contain 2 or more flats hetd by qualifying tenants; the total number offlats held by those tenants should not be less than 2/3rd's of the total number offlats and the building must not contain more than 25% of commercial space).
However, the Freeholders are entitled to Compensation, which is known as the "Premium". This is made up of the following:
1) Capitalisation of the Ground Rent: this ground rent income will need to be replaced by an equivalent capital sum.
2) Reversion: the value of the right to have the flat back at the end of the term (is being removed by this process, so this loss needs to be compensated.
3) Marriage Value (this only applies where the lease length falls below 80 years): Marriage value is the additional value attributed to the combined assets i.e. the Short Lease Value combined with the Freehold Value, compared to the value of the individual assets when valued separately. The Freeholder is entitled to 50% of this sum.
In addition, the Freeholder is also entitled to claim reasonable costs for their Surveyor's Valuation Fee and their Solicitor's fee, for the relevant legal work. However, they are not entitled to claim for the costs of negotiations. These costs vary as each Freehold Purchase is different. However, the guiding principal in these matters is that costs have to be "reasonable".