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Avoid Paying A King’s Ransom For The Freehold Of Your Building


Imagine if you will a freehold mid terrace Victorian house arranged as 4 self-contained flats. The flats have been sold off on long leases with the freehold interest of the building owned by a limited company with each leaseholder owning a share of the company. The company is dissolved for not filing annual returns at Companies House and the freehold interest passes to the Crown as bona vacantia.

It turns out the Crown will “generously” allow you (the leaseholders) to buy back the freehold interest of your building on the condition you pay them a “King’s ransom” for it. In this case, the figure quoted was £495,000. This is a take it or leave it offer as in this situation the leaseholders have no right to serve notice on the Crown or apply to the First-Tier Tribunal where matters of this nature are usually dealt with. Needless to say, the leaseholders were shocked at the amount they were being asked to pay for the freehold.

Task At Hand

Newman Webb were instructed by the leaseholder’s appointed solicitor to provide valuation advice on what the reasonable purchase price for the freehold should be. To provide our valuation, we inspected the entire property, reviewed leases of the flats and thereon provided our valuation in accordance with Schedule 6 of the Leasehold Reform, Housing and Urban Development Act 1993. We reported a figure of £335,000 as being the reasonable purchase price for the freehold. Following our valuation advice, we were retained by the leaseholders to negotiate with the District Valuer who was appointed to act on behalf of the Crown.


After lengthy negotiations with the District Valuer, we successfully negotiated and agreed a purchase price £331,500 for the freehold interest of the building. A saving of £163,500 on the initial proposed purchase price of £495,000. Our leaseholder clients were delighted with the outcome.


We would strongly recommend that leaseholders and freeholders who own property in a limited company keep up to date with filing returns at Company House to avoid their companies being dissolved and assets transferred to the Crown. There are several accountancy firms who provide this service.

We often come across situations where freeholders routinely offer their leaseholders the opportunity to buy the freehold of their building or a lease extension without being compelled to do so. More often than not, it transpires that the purchase price or premium being sought by the freeholder is substantially higher that what would be paid if the leaseholder(s) exercised their right to a lease extension or collective enfranchisement. Where a leaseholder(s) is being offered an informal lease extension or first right of refusal to buy the freehold of their building, we would strongly recommend leaseholder(s) get professional valuation advice to ascertain whether the premium or purchase price being sought is reasonable.

Newman Webb provides valuation advice to leaseholders and freeholders in respect of lease extensions and collective enfranchisement including dealing with subsequent negotiations and attending Tribunal. If you would like to discuss any matters with us or arrange a valuation of your property you are welcome to give us a call on 020 8945 5474 or drop us an email at

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