freehold reversion
📖 What is freehold reversion? Meaning and definition
In the context of UK property law, particularly for self-represented litigants, 'freehold reversion' describes the landlord's underlying ownership of a property that is currently subject to a lease. While a tenant holds a leasehold interest for a specific period (which can be very long, such as 999 years or 500 years), the freeholder retains the 'reversionary' interest, meaning the property will revert to their full control once the lease ends.
This term often comes into play when a leaseholder wishes to purchase the freehold of their property, a process enabled by legislation like the Leasehold Reform Act 1967. In such cases, the leaseholder (referred to as the 'Applicant') applies to acquire the freehold reversion from the landlord (the 'Respondent'). The First-tier Tribunal (Property Chamber) is frequently involved in assessing and determining the 'price payable' for this freehold reversion.
The Tribunal's role is to calculate the appropriate sum the leaseholder must pay to acquire the landlord's freehold interest. This valuation process considers factors outlined in the relevant Act and may involve valuation reports prepared by experts. Once the price is determined, and any outstanding pecuniary rent is settled, the freehold reversion can be conveyed to the leaseholder, effectively merging the leasehold and freehold interests and giving the former leaseholder outright ownership.
📋 Requirements
- An existing leasehold property where a tenant wishes to acquire the freehold.
- The application is typically made under the Leasehold Reform Act 1967.
- A valuation of the freehold reversion is required to determine the purchase price.
- The First-tier Tribunal (Property Chamber) assesses the appropriate sum payable.
📝 Procedure
- A District Judge in a County Court makes an order directing the First-tier Tribunal (Property Chamber) to assess the appropriate sum.
- An application is made to the Tribunal, often accompanied by a valuation report.
- The Tribunal determines the price payable by the applicant for the freehold reversion.
- The Tribunal also determines any unpaid pecuniary rent payable for the property.
💡 Examples
- A leaseholder living in a property with a 999-year lease from 1973 decides to purchase the freehold reversion, and the Tribunal determines the price to be £333.
- A tenant of a property with a 500-year lease from 1557 applies to buy the freehold, and the Tribunal assesses the value of the freehold reversion at £3,435.
- A leaseholder seeks to acquire the freehold of their property, and the Tribunal sets the price for the freehold reversion at £40.00, with no unpaid rent due.
- After a County Court order, the First-tier Tribunal assesses the sum for a leaseholder to buy the freehold reversion, approving the conveyance form.
📚 Legal basis
- Leasehold Reform Act 1967
❓ Frequently asked questions
What does 'freehold reversion' mean in simple terms?
It's the landlord's right to own the property outright once a lease, no matter how long, comes to an end. It's their ultimate ownership interest that will 'revert' to them.
Why would someone want to buy the freehold reversion?
Leaseholders often want to buy the freehold reversion to gain full ownership of their property, removing ground rent obligations and having more control over their home without the restrictions of a lease.
How is the price of a freehold reversion decided?
The price is assessed by the First-tier Tribunal (Property Chamber) in accordance with the Leasehold Reform Act 1967, often based on expert valuation reports submitted by the parties involved.
Does buying the freehold reversion mean I no longer pay ground rent?
Yes, typically, once you acquire the freehold reversion, you become the outright owner of the property, and any obligations to pay ground rent under the former lease cease.
What is the role of the First-tier Tribunal in this process?
The Tribunal's main role is to determine the fair price a leaseholder must pay to acquire the freehold reversion and to assess any outstanding rent, ensuring the process follows the Leasehold Reform Act 1967.
Can I buy the freehold reversion if my landlord is missing?
Yes, the Leasehold Reform Act 1967 includes provisions for situations where the landlord is missing, allowing the Tribunal to still determine the price payable for the freehold reversion.