Should You Purchase The Freehold On Your New Build Property?
Dealing with New Build transactions on a daily basis, we are seeing an increase in the number of Leasehold sites, which has attracted media attention over the past few years.
Under the Leasehold Reform Act 1967, the Leaseholder is given the right in certain circumstances to purchase the Freehold of their property. One of these conditions is that you must have owned the property for at least 2 years.
There is the possibility of purchasing the Freehold title when buying your plot, usually following completion of the purchase of Leasehold. Alternatively, developers may allow you to purchase the Freehold title at the point of reservation. If you are interested in purchasing the Freehold, we strongly recommend that you make enquiries about this before exchanging contracts.
It is important to note that, once the developers have finished construction on site, they will look to sell on the Freehold title. They are unable to confirm whether the new owners will agree to sell the Freehold, and at what cost.
The Freehold is usually available at a cost of multiple times the ground rent, plus legal costs of both the developers and your solicitors.
Freehold v Leasehold
Before making the leap to purchase the Freehold it is important to consider whether it is beneficial to you. Although you would no longer be required to pay ground rent, on most new developments there would still be the obligation to contribute towards estate costs to maintain the amenity areas on the site. Additionally, the covenants contained in the Lease are transposed onto the Freehold title as a means of keeping uniformity across the site.
If you want further advice, please contact our New Build team.