Buying property in the UK can feel complicated, especially when it comes to leasehold and freehold ownership. Freehold houses are common, but most flats are sold as leaseholds because multiple owners share the building. So, can you actually buy a flat as a freehold? In this guide, we break down your options, the process of buying the freehold for a flat, and whether it’s the right choice for you.
Can you buy the freehold to a flat?
Yes, but with limitations. Freehold ownership of a flat is complex because of the shared nature of the building. Rather than buying outright freehold ownership, you can acquire a share of the freehold. This involves purchasing the freehold jointly with other flat owners in the same building.
What does it mean to own a ‘share of freehold’?
Owning a share of freehold means that instead of one person holding freehold ownership of an entire property, it's shared among flat owners. For example, if there are four flats in a building, each flat owner might hold 25% of the freehold.
Key responsibilities:
Collective decision-making for maintenance and repairs
Often managing the property through a management company set up by freeholders
Benefits:
Greater control over service charges and property management
The ability to extend leases at minimal cost or remove ground rent obligations
What’s the process for buying the freehold to a flat?
The process of buying the freehold for flats is governed by the Leasehold Reform, Housing and Urban Development Act 1993. This legislation gives leaseholders the right to collectively buy the freehold of their building. The process involves several key steps:
1. Check eligibility
To begin the process, at least half of the leaseholders in a building must participate in the purchase. There are some conditions:
The building must have at least two flats.
No more than 25% of the building’s floor area can be used for non-residential purposes (like shops).
At least 50% of leaseholders must agree to take part.
2. Valuation
A professional chartered surveyor or valuer assesses the cost of buying the freehold. Factors affecting the valuation include:
The remaining length of the lease (shorter leases cost more to buy out).
The annual ground rent and any future increases.
The market value of the flats.
Valuation ensures you understand how much to offer and what additional legal costs you might face.
3. Form a group of participating leaseholders
To simplify decision-making, many leaseholders form a Right to Manage (RTM) company or a similar structure to handle the freehold purchase. This creates a formal legal entity that represents the buyers.
4. Serve the initial notice
The leaseholders must send a Section 13 notice to the freeholder, which outlines:
The intent to buy the freehold.
The proposed price.
The list of participating leaseholders.
The freeholder has two months to respond with a counter-notice either accepting the offer or rejecting it with a counterproposal.
5. Negotiation
If the freeholder rejects the initial offer, both sides negotiate. If no agreement is reached, the matter can be referred to the First-tier Tribunal (Property Chamber), where an independent decision will be made.
6. Legal transfer
Once a price is agreed, contracts are exchanged, and the freehold is legally transferred to the participating leaseholders or their management company.
Advantages of buying the freehold
No ground rent: Freehold ownership eliminates ongoing ground rent payments.
Lease control: Extending leases becomes simpler and far less expensive.
Better management: You and other freeholders gain full control over maintenance decisions and service charges.
Increased property value: A flat with a share of freehold is generally more attractive to buyers.
Disadvantages of buying the freehold
Shared responsibilities: Decision-making can be difficult if freeholders disagree on expenses or maintenance.
Initial cost: Purchasing the freehold requires a significant upfront investment.
Ongoing management: You may need to handle building insurance and regulatory compliance, which can be time-consuming.
How much does it cost?
The cost of buying a freehold depends on several factors:
Remaining lease length: Shorter leases increase the purchase price.
Ground rent: Higher ground rent typically increases costs.
Property location: Prime areas like London command higher prices.
A rough estimate can range from £5,000 to £50,000 per flat, depending on these variables. However, a professional valuation is essential for accuracy.
Should you opt for a lease extension instead?
If buying the freehold feels too complicated or costly, extending the lease is an alternative worth considering. When in doubt, get in touch with a lease extension lawyer to help you work out your best course of action.
Pros ✅ | Cons ❌ |
|---|---|
Extending your lease by 90 years gives you longer tenure without ongoing negotiations. | If your lease has fewer than 80 years left, the cost of extending it rises significantly due to marriage value. |
A lease extension typically reduces future ground rent to a peppercorn rent (essentially zero). | Unlike buying the freehold, extending a lease doesn’t give you control over service charges, building insurance, or management decisions. |
Flats with longer leases are easier to sell and more attractive to lenders, increasing marketability. |
When is a lease extension preferable?
If your primary goal is to secure a longer lease at a fixed cost, without taking on management responsibilities.
If you do not have the majority support of other leaseholders needed to buy the freehold.
In summary, lease extension can be simpler and faster, while buying a share of freehold offers greater control but involves collective ownership complexities. A professional surveyor or solicitor specialising in leasehold law can guide your choice based on your individual circumstances.
FAQs
Can you buy a freehold flat outright (not a share of freehold)?
Yes, though buying a flat as sole freehold is very rare and often problematic. Freehold flats create legal issues because there’s no mechanism for managing shared responsibilities, such as repairs and common areas. This is why leasehold or share-of-freehold structures are preferred.
Are there any freehold flats in the UK?
Yes, but they are uncommon. Some older properties, especially those converted from houses, may be registered as freehold flats. However, many lenders are cautious about offering mortgages for such properties due to the legal complexities.
Is it difficult to get a mortgage on a freehold flat?
Yes, obtaining a mortgage on a freehold flat can be challenging. Lenders prefer leasehold flats because lease terms clearly define maintenance obligations. Freehold flats lack this structure, increasing risk for mortgage providers.
Is it hard to sell a freehold flat?
Selling a freehold flat can be more difficult because:
Many buyers are unfamiliar with the concept.
Mortgage restrictions can limit the pool of potential purchasers.
However, flats with a share of freehold are generally more desirable and sell more easily.
Final thoughts
While freehold ownership is highly desirable for houses, buying a freehold flat is more complex. Most buyers opt for a share of the freehold to gain greater control over their property without the pitfalls of outright freehold. Before making a decision, consult legal and financial experts to understand the full implications and ensure your investment is sound.
Looking for legal advice? Get in touch today for a free quote and to see how our property law lawyers can help.
References
Leasehold property from Gov.UK
Disclaimer: Please note this article is intended for informational purposes only. This article does not advise on a specific situation, and we do not accept any liability for errors, omissions or misstatements. Always seek advice from a professional.
