If you own a flat, you may have considered buying the freehold in your building, perhaps with the owners of the other flats through a purposely formed management company.So what are the pros and cons of doing this?
Flat owners now have the legal right to join forces to force the sale of the freehold of their building.This process is called “collective enfranchisement” and applies to all kinds of buildings from purpose built blocks to small conversions.
One of the plus points of doing this is that you will have full ownership and control over the building and the management of it – a potentially attractive proposition to a future buyer of your flat.This can avoid the paying of hefty managing agents’ fees and the hassle of challenging excessive service charges.It also means that repairs can be carried out when required rather than having to wait for a landlord to get around to it.At the same time as acquiring the freehold you are also free to decide to extend the terms of the leases if necessary, thereby adding value and saleability to the flats.
On the downside, owning the freehold carries its own responsibilities.Managing a building brings with it a number of health and safety obligations, for example relating to fire safety and asbestos.If a management company is formed you will need to be aware of the duties set down by Companies House relating to the filing of accounts and the role of directors, for example.Employing a firm of managing agents does not get you off the hook!Working so closely with your neighbours can also create its own frictions especially where late payers are concerned!
The process of buying the freehold can in itself seem onerous, expensive and occasionally off-putting.The costs will include your own legal fees and the cost of obtaining a professional valuation.You may also be required to meet the landlord’s costs.The procedure, which is set down in legislation, must be followed to the letter and the strict time limits adhered to.
Despite the drawbacks, the process is designed to ensure that flat owners can achieve greater control over the running of their properties and hopefully greater marketability in future.