Buying the freehold - worth it or not?

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Our flat has 165 years left on the lease and we pay a lot of ground rent. Our leaseholder is retiring and is offering us the purchase of the freehold.

I don't know what it will cost yet so obviously that is a factor but in principle is it worth doing this?

It would make your property more valuable and give you the ability to do work without getting the freeholders permission
I would ask an estate agent to value your property as though to market it and ask what the difference would be from leasehold to freehold

We can't really tell you if it's worth it without having all the figures.

Its current value is 365k - I know this as we had it done recently as were planning to sell in the next couple of years

The ground rent is about 1200 a year I think

How much will the freehold cost to buy?

Absolutely no idea yet, waiting to find out the cost. Online calculator suggests about 20k but apparently they are pretty inaccurate.

Are you sure the 1200 is ground rent and not service charge? And would you then become the freeholder of other properties, or is yours a freestanding house which could easily be parcelled off?

We did it, though largely because a supposedly absentee freeholder had caused all sorts of problems with the purchase. In fact he wasn’t absent, just hiding a few miles away under another name because of debts attached to the FH.

It’s one of just 2 period maisonettes - owner of the other didn’t want to buy hers so we bought the whole.

There’s a formula for working out the price, based IIRC on ground rent, if any, length of lease, current value of the property. The FHolder can’t just name their own price. Plus solicitors’ fees. We eventually used a specialist, found via google, since the High St sol we used for the purchase turned out to be utterly clueless about this sort of thing.

It took about a year, but that was mostly because of Mr Supposedly-Absent pissing about for months, pretending he wasn’t there.

I’m glad we did it. It wasn’t cheap, but I think it’ll make the property more desirable, if only because any future owner wanting to convert the loft (next door’s is fantastic) can just do it, without having to ask the Fh’s permission or pay him anything.

IIRC you can find the formula via google.
Your GR sounds high! Ours was only about £150, though it was some years ago now.

That GR is not unusual in parts of London.

How many flats are there in the building? I would for maisonettes but bigger than that seems like too much hassle re repairs and maintenance.

If your ground rent is £1200 a year, you really ought to buy the freehold because this is going to cause you huge problems. At the moment, you only have an Assured Shorthold Tenancy because of the high ground rent you pay. You are therefore in a pretty precarious position - I am surprised that your mortgage company didn’t pick this up? You should take specialist advice from a solicitor who does leasehold enfranchisement work.

It would make it easier to sell.

It wouldn't make it easier to sell as many lenders won't give you a mortgage on a freehold flat.

Eh, louty? The flat would remain leasehold. OP would also own the freehold, or a share of it if she bought with the other flat owners.

It wouldn't make it easier to sell as many lenders won't give you a mortgage on a freehold flat.

That is nonsense.

Sorry all - the ground rent is peppercorn. Service charge is approx £1200 per year though this year it was more because of one of the other flat's fences blew down during a storm.

There are 7 flats in the building.

You'd be responsible for organising repairs and maintenance for all those flats. You could ask the other flat owners if they'd like to buy it too. If you all own it as a company, you'd have control but share the responsibility.

Are you buying the freehold on the whole building? Purchasing the freehold on a flat is a complex situation. Some lenders won’t lend on freehold flats in certain situations, so you could be restricting the options for lenders that future purchasers have. How many flats are in the building and how will you make arrangements for the maintenance of the building as this should be costed for a sinking fund maintained.

It sounds like your freeholder is a (reasonably decent?) actual person rather than a dodgy company, so you may well find your service charge is much of a muchness even if you do go ahead and buy the freehold (presumably with the other flats??? What do they want to do? Do you all get on?). Share of freehold is a good way to own a flat, but sorting out building management, insurance, repairs, etc is a hassle and costs money, which is what the service charge is.
In your shoes I'd want to buy it though, as you really don't want one of the big freehold companies swooping in to buy it instead.

I'm sorry I have been totally unclear about this. All the other owners of the flats have also been offered the freehold, so we'd be buying it jointly.

We bought the freehold in similar circumstances (owner retiring) a few years ago. I think you have to go for it as you want someone who will look after the property and make sensible decisions about what needs to be done, and there are no guarantees that anyone else who buys it will do so.

There are 5 flats in our building, 4 of us bought into the freehold. We employ a property management company, so pay them a small fee and they arrange work, collect money, deal with companies house and HMRC. We decide each year what needs to be done/how much of a reserve we want to build up, this year we are paying about 2k (split into quarters) as it includes building a reserve for external redecoration works. We get on quite well with all the other shared freeholders, but it can sometimes be a bit awkward as not everyone will always agree what needs to be done/how it should be done. However overall I think it’s better than if someone completely separate bought the freehold, or if we didn’t opt in to buying it and our neighbours did and became our freeholder but we didn’t agree with the way they were managing things.

In terms of value, we have recently had our flat on the market and have gone under offer. Agents have said it doesn’t necessarily add much to the price (assuming lease is a decent length) but might make it more easy to sell.

We all decided to buy the freehold and now pay a company to manage it for us.

I bought a new build leasehold house once and my solicitor said that in about 50 years it would become unsellable as the ground rent charges were going to double in 20 something.

Thanks all. I think we've decided not to for now as we are going to look at selling soon and it's a lot of money to pay out for not a lot of increase in value. If we were staying here long term I think we would go for it though.

Yes, it's easier to sell.
My ds1 owns freehold to lots of streets of terraces round here.
It's a great additional income if you fancy buying some more.

I would buy the freehold. X

If you are selling then I'd say it's doubly worthwhile- a notoriously bad freeholder can make a flat very hard to sell, and will find lots of things to charge you for during the process.