The process involves lengthening the term of a residential leasehold agreement while simultaneously acquiring a portion of ownership in the building’s freehold. This typically occurs in apartment buildings or blocks of flats where residents collectively purchase the underlying land and building. For example, leaseholders in a building nearing the end of their lease terms might join together to buy the freehold and extend their individual leases, thereby becoming both leaseholders and shareholders in the freehold company.
This action holds substantial value for leaseholders as it safeguards their property investment and secures their long-term residency. A longer lease term typically increases property value, making it easier to sell or mortgage. Historically, this practice evolved to grant leaseholders greater control over their living situations and protect them from potential exploitation by freeholders charging exorbitant fees or neglecting building maintenance. The collaborative nature of this transaction also fosters a sense of community and shared responsibility among residents.
