THE HOME OF NEWCASTLE'S LEGAL EAGLES
Buying the freehold to my leased house– what are my rights?
11 Jan 2018 Answered by Terri Leigh
You can ask the landlord informally to sell you the freehold at any time.
However, under the Housing Act 1980, a secure tenant of a house where the freeholder is the council or one of a number of other public bodies, has the legal right to buy the freehold.
In addition, The Leasehold Reform Act 1967 (LRA 1967) gives leasehold tenants of houses the right to buy the freehold. The right to compulsorily purchase the freehold (and any intermediate leasehold interest, e.g. head lease) is termed enfranchisement and a purchase price is payable.
The right to enfranchise is dependent upon a number of qualifications for the house, the lease and the leaseholder. Whilst there are some exemptions to the standard qualifications, the following criteria should be met;
The House – This must be a building reasonably considered a house, divided vertically from any adjoining house. It does not matter if it has been divided into flats so long as you have the lease of the whole house. Certain buildings containing commercial premises can qualify as a house within this definition. A lease of a building comprising a shop with a flat above may qualify for enfranchisement. The right is to acquire the freehold of “the house and premises”. The definition of “premises” under the Act includes any garage, outhouse, garden, yard and appurtenances let to the tenant with the house. The premises must be let with the house but this could be by a supplemental lease or deed.
The Lease - A lease will qualify for the right to buy or for a lease extension if it comes within the definition of qualifying lease in section 1 of the LRA 1967. This means there must be a long lease, originally for a term of more than 21 years or with a right to renewal. There are some exceptions to this and other types of leases may constitute a qualifying lease.
The Leaseholder - There is an ownership test, which must be complied with if the tenant is to qualify for the right to buy. The test is that the tenant must be the leaseholder of the house at the time of application and must have held the lease for the past two years. Ownership is dependent on a transfer of the legal title so in the case of a registered lease (or a lease that requires first registration following an assignment) the two years is calculated from the date the tenant is registered as the proprietor of the lease at the Land Registry (not the date that the lease was actually granted or the date of assignment). In addition, where a leaseholder who is eligible for the right to the freehold dies, his personal representatives can serve a notice for purchase within two years of the grant of probate or letters of administration.
In brief, a notice requesting to buy the freehold must be served, the right is then registrable as a notice or land charge and the lease can be assigned together with the benefit of the notice. The service of the notice has the effect of creating a contract between the parties to grant and accept the freehold. If the landlord wishes to serve a “notice in reply”, he should do so within two months of the date of service of the notice of tenant’s claim. The landlord can admit the tenant`s claim if he wishes to agree to accept the tenant’s notice. If he does not the grounds for disputing it should be included in the notice in reply. However, the tenant can apply to the County Court to assert his right.
If the claim is accepted, the landlord will put forward a proposed purchase price and, if accepted by the tenant, a specific statutory procedure is followed to carry the transaction through to completion.
The landlord can also require a deposit to be paid of three times the annual rent of the property.
As previously mentioned, a purchase price is payable by the tenant to the landlord. If the landlord and the tenant cannot agree, the purchase price is determined by the Residential Property division of the First-tier Tribunal (Property Chamber) in England, or a leasehold valuation tribunal in Wales, according to valuation criteria set out in the LRA 1967.
For more advice on qualification requirements for a tenant to buy the freehold of their leasehold house and/or the procedure for doing so, please do not hesitate to contact Amy-Louise Ions - at or Claire Devapal respectively.