House Purchase – Freehold
Right Of A Tenant To Acquire The Freehold Of Their House, Procedure To Be Followed Where The Landlord Can Be Located
The following provides you with additional information as to the stages involved if you decide to exercise your right to purchase the freehold. Please note that it is only meant as a guide and does not cover every part of the process.
1. The Beginning – Valuation
We are able to provide you with an in-house valuation of the freehold interest in your house at the price quoted in the schedule of fees. This will give you an estimated purchase price and will be the purchase price that is proposed in the Notice of Claim.
With an estimation of the amount of money you will need to purchase your freehold, you will be in a position to make an early decision as to whether or not you wish to proceed with the transaction.
2. Tenant’s Notice of Claim
After we have conducted the necessary preliminary enquiries to ensure that you are eligible to acquire the right to purchase the freehold, we must serve a Notice on the landlord. The enforcement process is triggered when the notice is served. The notice must be in a prescribed form and contain certain required information.
We will make the necessary investigations for the purpose of acquiring any of the required information we do not already have. We will then draft and serve the notice for you and ensure that the relevant conditions are met.
The effect of serving the notice is that a contract is made on statutory terms and the usual remedies will follow for breach of contract if the landlord fails to cooperate, which are enforceable in the County Court.
3. Registration of the Notice
As soon as the notice is served, we will register the notice at the Land Registry or as a land charge if the landlord’s title is unregistered. This protects your interest because if the landlord tries to sell the freehold, the purchaser will be alerted to the fact that you have served a notice on the landlord to exercise your right to purchase the freehold.
4. Landlord’s Initial Response
When the landlord receives the notice, he will undertake enquiries to ensure that you have the right to purchase the freehold. The landlord is entitled to request from us:
4.1 evidence that you own the leasehold interest – this can be confirmed by sending a copy of the Official Copy of Register Entries for the title. We will have 21 days to comply after receiving the request; and
4.2 a deposit – this can be £25.00 or three times the annual rent, whichever is the greater and we have 14 days to pay after receiving the request.
5. Landlord’s Notice in Reply
The landlord must serve a notice in reply to your notice which must state whether or not he admits your claim and if not, he must give his reasons for disputing it.
If the claim is admitted then the conveyance of the freehold from the landlord to you, is governed by statutory conditions of sale.
If the claim is not admitted, then you must apply to the court to enforce your claim, assuming that the landlord’s basis of objection is ill founded. If no notice in reply is served by the landlord, you will need to apply to the court to assert your right. The application to the court can be done any time after two months from the date when the notice in reply should have been served.
6. Agreeing the Purchase Price and Terms of Acquisition
The Landlord will carry out his own valuation at a later stage and may well suggest a higher figure for the purchase price. We will then have to enter into negotiations with the Landlord before agreeing a final sum.
If may also be necessary to negotiate the provisions to be included in the Transfer, which can be extensive, depending on the nature of the property, the landlord and the terms of the original lease. These will include rights of way and other rights benefiting the property and rights to which the property is subject; and covenants (obligations) which bind the purchaser and the seller following the sale.
If the purchase price or the terms of acquisition cannot be agreed, either party may submit an application to the Leasehold Valuation Tribunal to determine the same.
7. Can you withdraw?
You may withdraw one month after the purchase price has been agreed or ascertained by giving notice to the landlord. If you do not exercise your right to withdraw within the one month time period then you will be bound to complete the purchase in accordance with the terms of the statutory contact.
8. Consequences of Withdrawal
The following are the consequences of withdrawing:
8.1 Your claim ceases to have effect;
8.2 You are liable to compensate the landlord for interference with the landlord’s right to dispose of or deal with the house or any neighbouring premises;
8.3 You are barred for 10 months from serving another notice to acquire the freehold; and
8.4 Any notice or land charge that has been registered to protect your notice must be removed.
9. How much will I have to pay to purchase the freehold?
Your decision to purchase the freehold may be dependent on how much it will cost. You will be expected to pay the following:
9.1 the purchase price for the freehold (to be determined by a valuer or by the LVT in the absence of agreement);
9.2 the landlord’s reasonable costs whether or not the matter proceeds to completion, this includes:
9.2.1 legal fees;
9.2.2 valuation fees, but not the landlord’s negotiation costs for agreeing the purchase price; and
9.3 your own legal fees; and
9.4 your own valuation fees and negotiation fees.
The landlord’s costs payable by you must be reasonable. In the event of a dispute the Leasehold Valuation Tribunal can determine as to whether any element of the landlord’s costs should be included and, if so, what is a reasonable amount.
We will scrutinise carefully any bill submitted by the landlord for payment by you to ensure that any costs relating to negotiations are not included. The Leasehold Valuation Tribunal tends to take a fairly conservative approach to the assessment of costs which is of help to a tenant.