Many council leaseholders could become freeholders

Often council leaseholders write to me about the bewildering and excessive charges imposed on them by Hammersmith and Fulham Council. It is a matter I am doing my best to pursue.

There are some Council leaseholders, however, who are lucky enough to have the means of their own salvation. Where the leaseholders own at least two thirds of the block they have a chance to buy the freehold.

Often this situation applies to smaller council blocks – perhaps those where there are a dozen flats or fewer. Sometimes they might be street properties – perhaps a Victorian terraced house that bought up by the Council in the 1970s and was converted into three or four flats.

When leaseholders buy the freehold it is helpful for the Council who – believe it or not – find the management of these small properties so problematic that their costs exceed their revenue from the leaseholder charges which are considered so exorbitant.

But it is also a good deal for leaseholders. The owner of each flat might have to pay two or three thousand pounds to buy their share of freehold. It would usually be a modest some of that scale as most of the leases are for over 90 years. Owning the freehold would add perhaps ten per cent to the value of their property – say £30,000 or £40,000 for a typical flat.

Furthermore their annual costs will be much lower. They will be able to take responsibility for the repairs and invariably be able to get the work done better and cheaper and not have scaffolding up for months on end.

Freeholders have greater freedom.

Toby Graves, the Council’s Head of Housing Advice & Assessment, has offered me this helpful briefing:

There are two options to buying the Freehold (Freehold Enfranchisement and Collective Enfranchisement) .

Freehold Enfranchisement.

This requires:

All flats in the block must be sold on long leases
Building must comprise only flats and common parts
All leaseholders must jointly apply to buy the freehold
There must be at least two separate leaseholders and a leaseholder can not hold more than two flats in the block
Flats can not be on multi-purpose block estates
The property must not be affected by any council development proposal

For an application form and more information, please see the Home Buy page on the Council’s website using the following link: http://www.lbhf.gov.uk/Directory/Housing/Home_ownership/Home_Buy_products/167806_Freehold_Enfranchisement.asp

Collective Enfranchisement

To qualify for this:

There must be a minimum of two flats
At least two thirds are leaseholders with a long lease term in excess of 21 years.

If the criteria is met and where there are social tenants in the building, it is still possible to progress with the sale. However the social tenant becomes the tenant of the new enfranchisement company. Any terms agreed will include a lease back of the tenanted property to the Council for a term of 999 years.

Further information on this process and details of  how to submit an application to the Council can be found on the Lease Hold Advisory Service, using the following link and contact telephone number:

http://www.lease-advice.org/publications/documents/document.asp?item=11#2

020 7832 2500

One thought on “Many council leaseholders could become freeholders

  1. Council leaseholders need to move fast to buy their freehold, when their leases are transferred to a housing association under the current council plan they will find that their annual service charges go up (the typical local difference is 50-100% higher), the costs of getting freeholder consent for improvements like extensions or loft conversions will be extortionate (typically local housing associations charge 50% of the increase in market value resulting from the improvement, the council just charges a flat fee), and although purchase of freehold can still be forced through the costs and administrative effort will be much higher.

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