Buying the lease

Required Reading


Buying the lease

The first option is to get the other leaseholders of your block together to buy the lease. The most sensible way of doing this is to form a limited company as the body that will actually hold the freehold and then grant yourselves as occupiers of the flats fresh, long leases.

The formation costs of the company are likely to be upwards of £1150. Most firms of solicitors will undertake the job for you -some more or less specialise in this sort of business. The Memorandum and Articles of such a company have to be carefully written so that there are provisions, for example, for every leaseholder to have an equal share in the freehold. They should also compel leaseholders to sell their share when they sell their flat.

There will be no other costs apart from those incurred in forming the company. The freehold has to be conveyed (more legal costs); the management accounts of the company have to be audited and annual returns produced (auditor's fees and a £120 charge for filing the annual returns); and of course there is the price of the freehold.

Freeholders will be looking for a sum large enough to compensate them for the loss of the annual ground rent: the size of the sum will partly depend on the level of interest rates at the time you are negotiating. Apart from this, at some point the capital value of the property will begin to make itself felt and the sum requested will rise accordingly. You may find it wise to employ a professional valuer, in which case his fees will have to be met as well.

The special problems of flat-owners

In England and Wales (though not in Scotland) flats are nearly always leasehold. Building societies are in fact unwilling to lend on freehold flats in England and Wales because of problems over maintenance and squabbles about 'who should pay for what'.

Leasehold flats are not, however, necessarily a bed of roses. There are two main problems a leaseholder faces. Firstly, there may well be difficulties with the managing agents of the block, who may not be carrying out their duties properly according to the lease, or who are charging too much for what they do.

The second problem is that of a declining lease, which at some point will begin to affect its saleability and value, as leases near the cut-off point at 50 to 55 years, . . .... see: The special problems of flat-owners

Current Mortgage Offers

  • At Commercialise Yourself you can compare mortgages using our repayment calculator, look for special offers for first time buyers or for 95% loan to value mortgages and see the most popular choices, Nationwide, Accord etc, we now even have a buy to let section for the brave or heart or strong of pocket! You can send us an email if you want to know more about mortgages and what we do and we will get back to you as soon as we are able.


    Finding the right mortgage can be stressful, but we’re here to help you every step of the way.

    Even if you have no proof of income, poor credit rating or facing repossession of your home, we can normally say YES (even if the high street lenders have said NO)!

    Think carefully before securing other debts against your home. Your home may be repossessed if you do not keep up repayments on your mortgage. The overall cost for comparison is 7.9% APR. The actual rate available will depend upon your circumstances. Ask for a personalised illustration. There will be a fee for mortgage advice. The precise amount will depend upon your circumstances but our average fee is 2.36% of the loan value. We are authorised and regulated by the Financial Services Authority for regulated mortgage and non-investment insurance contracts.