Purchasing Freehold Before Completion

KatieDee

Final question, I promise!

The property we're buying is a leasehold property, a three bedroom house in the North West. Shortly before she decided to sell the house, she had an offer from the freeholder to purchase the freeholder for a set price, including their legal costs. She mentioned this to us after we had an offer accepted, and said she would be happy to apply for the freehold prior to the sale.

Fantastic news! And a much better outcome than we were expecting. She contacted the freeholder to see how long this would take and they said it's dependant on the land registry and respective solicitors, but as far as they were concerned - six to eight weeks.

Now, they also said that in the event that she did not want to deal with the hassle of purchasing the freehold, we (the new owners) would be able to purchase this three months in. My understanding is that in order to purchase the freehold, you must have owned the lease for a minimum of two years. Is this always the case, or can you bypass the two years if the offer is being made by the freeholder?

I plan to discuss this with my solicitor, as I know they're the ones who can clear this up, but I just wanted some clarification on the rules around purchasing the freehold. I am more than happy for the vendor to go through the process and purchase beforehand, but at the same time I would be happy to hold off for three months after we've moved in, as long as we can guarantee the same price for the freehold. I wouldn't want the goalposts to be moved after we've completed, then the freeholder get wind of how keen we are, only to increase the price.

I'd rather know a rough answer before we appoint our solicitor, as I want to make them aware of what we plan to do, so any quote will include reflect this.

So...should we purchase the freehold through our vendor, or investigate the option of purchasing three months after we've completed?

AdrianC

The two year minimum is only to qualify for the statutory right to purchase the freehold. If it's a negotiated purchase, as this is, it doesn't apply.


I'd make sure I get the offer from the freeholder in writing, addressed to you, if you want to hold off.

KatieDee

AdrianC wrote: »

The two year minimum is only to qualify for the statutory right to purchase the freehold. If it's a negotiated purchase, as this is, it doesn't apply.


I'd make sure I get the offer from the freeholder in writing, addressed to you, if you want to hold off.

Thank you so much, AdrianC. This is actually what I was looking for.

I see the "two year" criteria banded around so much, so just needed to clarify that this was only in the event that you wanted to apply for the freehold without it being offered. In our situation, the freeholder seems perfectly happy to sell and is apparently very easy to communicate.

My plan was to speak to them myself and ask for the price to be honoured, in writing, so we don't have any nasty surprises when we do come to buy it. If they couldn't provide this, I'd probably just stick with the arrangement of the vendor purchasing it for us. I know this can take an unspecified amount of time though, so I didn't want to cause them any hassle if possible.

Thanks again

eddddy

KatieDee wrote: »

I see the "two year" criteria banded around so much, so just needed to clarify that this was only in the event that you wanted to apply for the freehold without it being offered. In our situation, the freeholder seems perfectly happy to sell and is apparently very easy to communicate.

Just to be clear - you can agree with the freeholder at anytime to buy the freehold from them.

(It doesn't have to be the freeholder making an offer - you could make an offer, if you want.)

But you can force the freeholder to sell you the freehold, once you've owned the house for 2 years - at a price calculated by a statutory formula.


However, a letter from the freeholder offering to sell you the freehold is unlikely to be regarded as a legal binding agreement - so don't rely on that.

If you want a legally binding contract, discuss with your solicitor how that can be drawn up.

KatieDee

eddddy wrote: »

Just to be clear - you can agree with the freeholder at anytime to buy the freehold from them.

(It doesn't have to be the freeholder making an offer - you could make an offer, if you want.)

But you can force the freeholder to sell you the freehold, once you've owned the house for 2 years - at a price calculated by a statutory formula.


However, a letter from the freeholder offering to sell you the freehold is unlikely to be regarded as a legal binding agreement - so don't rely on that.

If you want a legally binding contract, discuss with your solicitor how that can be drawn up.

Thank you so much for your reply.

I was a bit worried about this myself, which is why we were leaning towards just asking the vendor to purchase it on our behalf. At least that way, we can guarantee the price. They've been quoted £1360 to buy the freehold, including legal costs, so I don't want to end up paying tenfold if we decide to go about it ourselves. I suppose asking a solicitor to draft us a legally binding letter will add to the cost as well :eek:

eddddy

KatieDee wrote: »

Thank you so much for your reply.

I was a bit worried about this myself, which is why we were leaning towards just asking the vendor to purchase it on our behalf. At least that way, we can guarantee the price. They've been quoted £1360 to buy the freehold, including legal costs, so I don't want to end up paying tenfold if we decide to go about it ourselves. I suppose asking a solicitor to draft us a legally binding letter will add to the cost as well :eek:

Another way of doing this is to sign two contracts - one to buy the leasehold from the seller, and another to buy the freehold from the freeholder - and tell your solicitor to exchange both contracts at the same time.


And your solicitor will ensure that the exchanges are synchronised - i.e. you can't end up exchanging one without exchanging the other.