Midweek Money: Free to own your flat

Buying your freehold is now easier with the help of LVTs
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flat owners who have ongoing problems with their landlord may want to club together to buy the freehold of the property by applying to a Leasehold Valuation Tribunal (LVT). If certain criteria are satisfied then purchasing the freehold is a genuine route to ousting a nightmare landlord even if he does not wish to sell.

The landlord may try to put a spoke in your plans by asking an extortionate price for the freehold, but taking the case to an LVT may force him to drop the price considerably.

A new report published by Timothy Curran, of Leasehold Enfranchisement Limited, reveals that in many hearings LVTs are rejecting the high purchase prices put forward by a landlord and determining the price at a level much closer to the lessees' valuation.

LVTs are independent bodies, funded by the Government, which have the power to decide the purchase price of a freehold and typically consist of three members, including a valuer. Before leaseholders apply to an LVT they need to think about how the property will be run when the "landlord from hell" has been removed, otherwise their imagined collective Nirvana could be replaced by a nightmare of a different kind.

Careful preparation will help prevent the horrendous battles that can break out if a few newly appointed directors of a collectively owned company set up to take over the freehold seize power and take little notice of legislation they are required to comply with.

It is worth remembering that although you will own part of the freehold company, you will still be a leaseholder. This half-way house can give rise to new problems, so it is worth appointing a solicitor who specialises in this area of law to help you and the other leaseholders negotiate these hurdles well before the freehold has been purchased.

Leaseholders who have jointly bought their freehold over the past year have been encouraged by the way LVTs are handling the process. Two flat owners in north-west London with leases of 67 years put a price of pounds 20,000 on the freehold, less than one-tenth of the landlord's valuation of pounds 203,500. The LVT valued the freehold at pounds 67,650, a cost of pounds 33,825 for each flat owner.

Six flat owners in Hounslow, London with 91-year leases also found the LVT ruling closer to their valuation of pounds 6,667 than the price of pounds 40,000 put forward by the landlord. The LVT rejected the freeholder's claim for development value and decided on a price of pounds 7,075.

However, where landlords have put forward less extortionate valuations the outcome has proved a genuine compromise on both sides. Four flat owners in Cardiff, for example, found the LVT determined a price of pounds 5,800, which was a little closer to the landlord's valuation of pounds 8,900 than their own, which was pounds 1,800.

These outcomes indicate that LVTs are achieving their objective in establishing a fair cost for purchasing a freehold. If you want to buy the freehold as a group, known in property-speak as the right to "collectively enfranchise", the first step will be to find out whether other leaseholders in the block want to participate and if the building qualifies for enfranchisement.

To satisfy the criteria, flat owners must have a lease that was originally granted for more than 21 years, regardless of how many years are left on it. The lease may also have to be what is called a "low rent", which means that no rent was payable during the initial year and should not exceed pounds 1,000 if the flat is in Greater London or pounds 250 elsewhere. You must also check that you do not fall into the exclusion category, including those who have a business lease.

Flat owners must also have occupied the flat as their only or principal residence over the past 12 months or for periods amounting to three years over the past 10. The building must not be a cathedral precinct, a National Trust or a Crown property, must contain a minimum of two flats and no more than 10 per cent of the internal floor area can be in non-residential or commercial use. In addition, you must ensure two-thirds of the leaseholders satisfy the criteria before proceeding to the next step. At least two- thirds of the qualifying flat owners must agree to participate in buying the freehold and the total number taking part must own at least half of the flats in the building.

It is worth contacting the Leasehold Advisory Service for advice and for their A-Z booklet on collective enfranchisement before initiating the process.

'The Cost of Buying your Freehold or Extending your Lease' is available from Leasehold Enfranchisement Limited, 33 St George's Drive, Pimlico, London SW1V 4DG, at a cost of pounds 25. You are welcome to write to Karen Woolfson, Homebattles, c/o Nick Cicutti, The Independent, One Canada Square, Canary Wharf, London E14 5DL. Karen regrets that she is not able to reply personally to all letters.