Depending on how much lease is left on the property, the amount that it costs to purchase the freehold will vary considerably.
Landlords who are prepared to sell their leasehold must be compensated for the following value:
- Loss of value when leasehold reverts to freehold
- Loss of income from ground rents
- The marriage value of the property
The marriage value is the key part of the compensation owed to the owner of the property. Marriage value regards the potential for the property to increase in value between time purchased and the date the lease expires.
The Leasehold Reform Act stipulates that in the event of a leasehold being sold, this value should be split half and half between owner and purchaser.
However, if the length of unexpired time left on the lease is greater than eighty years, the marriage value is ignored under the act. The owner of the property may also make a case for development potential and money owed regarding this.
Chartered Surveyors specialise in determining the potential costs of buying a freehold. When you have purchased a freehold, you have complete ownership of the land and buildings.
Freehold provides the buyer with the right to do as they like with their home, subject to legal and planning controls.