Housing – guidance

Apply to buy a freehold reversion (BVC4)

How to refer or buy the freehold reversion of your flat that belonged to a dissolved company and now belongs to the Crown.

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 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 the freehold.

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

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 BVD’s minimum price of £1,000.

In all cases you will also have to pay BVD’s legal costs of £500 plus VAT and any disbursements they have incurred including the District Valuer’s 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 freeholder’s 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 what’s 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

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You must establish who does and does not want to participate in the purchase before you contact BVD. This is because BVD aim to dispose of freehold reversions by sale or disclaimer within 12 months of being approached. If you make an application without having the agreement of your fellow leaseholders, or when some of them may not be available to deal with the transaction, you risk delays. This increases the possibility that BVD will disclaim the freehold because quick and cost effective progress cannot be made.

You may like to consider whether the dissolved company can be restored. If this is possible the freehold will revert to the company and any bona vacantia interest will cease. BVD cannot advise you about restoration and you should take your own advice about the position of your freehold generally.

BVD strongly advise you to make your application through a solicitor who can advise you in full throughout the transaction.

How to make an application to buy a freehold reversion

When you are ready and have the agreement of your fellow leaseholders please complete the following:

  1. check that BVD is the correct office by reading BVC1 on jurisdiction
  2. write to BVD at

Bona Vacantia - Companies

Government Legal Department
PO Box 70165

London
WC1A 9HG

Please use this email address for all enquiries relating to the non cash assets of dissolved companies (eg, land, shares, intellectual property, chattels, etc).

You must include:

  • the name, company number and last registered office of the dissolved company that owned the land. You can get this information from Companies House
  • the names and addresses for all the leaseholders whose freehold is the one you want to purchase
  • an Offer Declined form for each leaseholder who does not want to participate in the purchase
  • Official Copy Entries (OCE) and a title plan from the Land Registry for the freehold that you are interested in purchasing. You can get this information from the Land Registry If the land is not registered you will need to make further investigations
  • Official Copy Entries (OCE) and a title plan from the Land Registry for your leasehold flat and all other leasehold flats in the freehold that you are interested in purchasing (including those of people who do not want to participate in the purchase). You can get this information from the Land Registry If the land is not registered you will need to make further investigations
  • a copy of your lease and other other leases in the freehold
  • details of any past or current disputes relating to the freehold
  • details of anyone who is currently collecting ground rents (if anyone)
  • if the property is subject to a mortgage or charge, details of any enquiries you have made to the lender. Please get a copy of the mortgage or charge from the Land Registry
  • if any of the leases has less than 80 years left to run, or if any of the leaseholds are worth £250,000 or more, a cheque payable to The Treasury Solicitor for the following non refundable amount depending on the circumstances on account of the District Valuer’s fees:
    • If the leases have more than 80 years left to run and there are no more than 3 flats - £660 (if the property is in London (within the M25)) or £540 (if the property is outside London)
    • If the leases have less than 80 years to run and/or there are more than 3 flats -£900 (if the property is in London (within the M25)) or £720 (if the property is outside London)
  • if all the leases have more than 80 years left, and all the leases are worth less than £250,000 a valuation of each of the leasehold flats (including any flats where the leaseholder is not participating in the purchase) by a qualified surveyor. The valuation must be less than three months old
  • details of any solicitors who are acting for you

Please answer all of the above questions and send copies of all the documents requested as BVD will not normally be able to progress your case without the above information and documentation.

Please send your application either by post/DX or email but not both. Please do not send multiple copies.

Further details

When BVD receive your application they will first check that the evidence you have provided demonstrates that the dissolved company owned the freehold reversion.

If BVD are not satisfied with the evidence provided they may ask you to make further enquiries.

If BVD agree that the freehold or leasehold is bona vacantia they will decide how to dispose of it. BVD will consider disclaiming it and may disclaim without reference or prior notice to you. This is to ensure that they proceed in a cost effective manner that represents good value for the taxpayer and protects the taxpayer from possible liability.

If BVD request further information from you or anyone else, it must be provided quickly otherwise the risk of disclaimer will increase. Please therefore make sure you send all the documents and information quickly.

The absence of or problems contacting a fellow leaseholder is not a sufficient reason for BVD to allow delays and you should make sure all parties are available and can be contacted before making an application.

If the company was dissolved recently BVD may contact the former directors to ask whether they want to restore the company to the register. If they indicate that they intend to restore the company it is unlikely that BVD will be prepared to deal with the freehold or leasehold.

BVD will write to any lessees who are not participating and ask them to confirm whether they want to participate in the purchase. If they do not reply BVD will normally continue the sale without them.

If a management company is to be incorporated to buy the freehold or leasehold you will need to provide BVD with

  • a copy of the certificate of incorporation
  • certified copies of the register of members for the company or certified copies of the share certificates.

All the participating leaseholders should be members of the purchasing company, including co-owners of leasehold flats. So if a husband and wife own a flat jointly they should both be members of the management company, or one of them should sign an Offer Declined form.

Offer declined form

This file may not be suitable for users of assistive technology. Request an accessible format.

If you use assistive technology (eg a screen reader) and need a version 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.

If the total cost of the transaction is £10,000 or more BVD will ask for proof of identity and address in accordance with anti-money laundering procedures.