Claiming the freehold of your house
What is the right?
If you own the lease of a house the Leasehold Reform Act 1967 gives you the right to acquire the freehold from your landlord, subject to certain qualifying criteria being satisfied, and on payment of a price.
How do I qualify?
There are three basic questions that need to be answered. First, does the building qualify? Secondly, does the lease qualify? Thirdly, does the tenant qualify?
In order for the building to qualify, it must be a “house”. This has developed a wide definition and can include a shop with a flat above, or a building converted into flats. There must however be no material over/under-hang with an adjoining building.
The lease must be of the whole house and it must be a long lease, which means a lease originally granted for a term of more than 21 years. There are different rules if you have a business tenancy (which, for example, might be the case if the premises are a shop with a flat above).
You must have owned your lease for a period of at least two years before you make your claim. Except in certain limited circumstances, you no longer need to satisfy a residence test.
The price is calculated by valuation methods prescribed by the Act, of which there are three. Which one applies to your claim will depend on when your house qualified under the Act (amendments having been made to the Act to make it easier for a house to qualify). In every case, the valuation date is the date of the claim.
How do I claim?
The procedure for a claim is relatively straightforward. You will serve a notice of claim, in a prescribed form, on your landlord.
The Act requires the landlord to state, within two months of the notice of claim being served, whether or not the claim is admitted. If the landlord admits the claim, he should inform you of the price he is seeking. If the landlord rejects your claim, you will need to decide if you wish to dispute the rejection through the courts.
In addition to the freehold price and your own legal and valuation fees, you will be required to reimburse your landlord for his reasonable legal and valuations fees.
If the claim is admitted and either the terms of the conveyance or the price are disputed, either party can apply to the First-tier Tribunal (Property Chamber) for the matter in dispute to be determined. Most claims are settled by negotiation. However, if a First-tier Tribunal is required to make a determination, an application can be made for permission to appeal that decision to the Upper Tribunal (Lands Chamber).
Once the terms of the conveyance and the purchase price have been agreed or determined by a tribunal, the matter reverts to a conveyancing transaction with the parties proceeding to completion.
Your notice can be transferred with your lease, which can be a useful marketing incentive if you are selling your house.