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Guidance: Apply to buy a freehold reversion (BVC4)

Bona Vacantia

April 12
10:46 2023

Overview

If you own a leasehold flat or house there will be a freehold interest, known as a freehold reversion, out of which your lease was granted. Your lease will include a requirement to pay rent to the owner of the freehold reversion, although the rent may only be a small amount.

Freehold reversions are often owned by companies. If one of these companies dissolves, the freehold that it owns may vest in the Crown as bona vacantia.

The Bona Vacantia division (BVD) of the Government Legal Department (GLD) deals with freehold reversions that belonged to a dissolved company and now belong to the Crown.

They may be prepared to sell the freehold reversion jointly to all of the lessees who want to buy it.

If the lessees are not interested in buying the freehold BVD usually disclaim their interest in it.

BVD will normally sell to all participating lessees jointly or to a management company where they are members.

BVD do not:

  • sell the freehold reversion for less than 1,000 plus costs
  • undertake maintenance work on the property
  • grant an extension to your lease
  • enforce covenants against other lessees
  • manage or insure the property

BVC4 Online Referral Form - Freehold Leasehold Reversions

Please ensure that you read these guidelines fully before completing the mandatory referral form below, which should be sent to us at bvcompanies@governmentlegal.gov.uk together with PDF attachments as stipulated in the attached form.

BVC4 Online Referral Form - Freehold Leasehold Reversions v01

This file is in an OpenDocument format

This file may not be suitable for users of assistive technology.

Request an accessible format.
If you use assistive technology (such as a screen reader) and need aversion of this document in a more accessible format, please email bvinfo@governmentlegal.gov.uk.Please tell us what format you need. It will help us if you say what assistive technology you use.

What you will have to pay

This depends on

  • the value of the leasehold flats
  • the time left on the leases
  • what the ground rent is

If any of the flats are valued over 250,000 or if any of the leases have less than 80 years remaining, BVD will instruct the District Valuer to value the freehold. The sale price will be the value recommended by the District Valuer.

If none of the flats are valued over 250,000 and all of the leases have more than 80 years remaining, the sale price of the freehold will be calculated as 15 times the combined ground rent of all of the flats.

For example, if there are four flats valued under 250,000, each have more than 80 years remaining on the lease and the ground rent is 50 the total ground rent will be 4 x 50 = 200 and the freehold price will be 15 x 200 = 3,000

If the calculated freehold price is less than 1,000 you will still have to pay BVDs minimum price of 1,000.

In all cases you will also have to pay BVDs legal costs of 500 plus VAT and any disbursements they have incurred including the District Valuers fees.

Leasehold reversions

A leasehold reversion will occur when a freeholder grants a lease to someone who then grants further long residential leases to the flat owners.

If any of the flats are valued over 250,000 or if any of the leases have less than 80 years remaining, BVD will instruct the District Valuer to value the leasehold reversion. The sale price will be the value recommended by the District Valuer.

If none of the flats are valued over 250,000 and all of the leases have more than 80 years remaining, the sale price of the leasehold reversion will be calculated as 15 times the total ground rent payable under the flat leases, less any rent payable to the freeholder under the headlease.

For example, if there are four flats with ground rent of 50 per year, but the headlease pays rent of 80 per year, the ground rent will be 4 x 50 = 200, less 80 headlease ground rent=120 and the price will be 15 x 120 = 1,800

You may need to obtain the freeholders consent for a transfer of a leasehold reversion, which you may have to pay for.

If the lease was granted before 1 January 1996 you must also obtain a release and indemnity from the freeholder for the breach of any covenants under the headlease. A copy of the form of release and indemnity will be supplied. You will have to pay any costs incurred by the freeholder.

The rest of this guidance refers to whats involved in buying a freehold reversion but it also applies to buying leasehold reversions.

People you must consult before referring a case to BVD

The first thing you should do is discuss the freehold with the other leaseholders in your building. You should get their agreement to make an application to purchase the freehold jointly with you or if one or more of them do not wish to participate they should sign an Offer Declined form to say they do not wish to do so.

Offer declined form

This file may not be suitable for users of assistive technology.

Request an accessible format.
If you use assistive technology (such as a screen reader) and need aversion of this document in a more accessible format, please email bvinfo@governmentlegal.gov.uk.Please tell us what format you need. It will help us if you say what assistive technology you use.

You must establish who does and does not want to participate in the purchas

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