Services for Individuals
LEASEHOLD ENFRANCHISEMENT
Under the Leasehold Reform, Housing and Urban Development Act 1993, long leaseholders of flats have the right to buy the freehold of their building if they and their building qualify. This is known as the right to enfranchise. Leaseholders have the right even if the freeholder (“the landlord”) does not wish to sell. Once they have purchased the freehold, leaseholders can decide for themselves how to manage the building.
Do we qualify?
Leaseholders can only enfranchise if both they and their building qualify. Put simply, the building must contain two or more flats and at least two thirds of those flats must be held on long leases. At least 50% of leaseholders must participate in the enfranchisement. There are certain exceptions, however, and the legislation is complicated.
Why should we enfranchise?
If leaseholders do enfranchise, they will enjoy a number of advantages:
What will it cost?
In order to buy the freehold, leaseholders will need to pay a premium to their landlord. You will need to obtain a report from a surveyor in which they advise you upon the amount of the premium you should pay. The surveyor’s fee for the report is likely to be between £500 to £800.00 plus VAT for average size buildings, depending on the number of flats. We can put you in touch with local surveyors who specialise in enfranchisement valuations and with whom we have a good working relationship.
Our fee for advising upon qualification, preparing and serving the notice claiming the right to enfranchise (“the initial notice”) and dealing with the conveyancing formalities, will be between £250-£350.00 plus VAT per flat (depending on the number of leaseholders participating) plus Land Registry fees (approximately £150.00).
It is generally advisable to set up a company to purchase the freehold. The company can be limited by shares or guarantee. Each participating leaseholder will be a shareholder or member of the company and there must be a company secretary and at least one director. The fee for setting up the company will be around £150.00 plus VAT.
We will provide you, free of charge, with a summary of company formalities and the duties of directors and the company secretary. If any further advice is required upon company issues, however, our fee for such advice will be £195.00 plus VAT.
Do we have to pay the landlord’s costs?
Yes, in addition to our fees and those of your surveyor, you will also have to pay your landlord’s reasonable valuation and legal fees, which should be of a similar amount.
What happens if we cannot agree a price with the landlord?
If you cannot agree with your landlord the price to be paid or any other terms of the purchase, you will have to apply to the Leasehold Valuation Tribunal to determine any matters in dispute. There are strict time limits for making an application, which must be adhered to.
You will have to pay our fees and your surveyor’s fees for dealing with the application but not, in all but exceptional cases, those of your landlord.
Our fee for dealing with an application to the Leasehold Valuation Tribunal will be charged at an hourly rate of £195.00 plus VAT. We will, however, provide you with an estimate of our fees before issuing the application.
What should we do next?
Jonathan Everett, a partner in Coole+Haddock, has ten years experience in dealing with enfranchisement cases. He is therefore able to give you all the advice and assistance you require in order to exercise the right to enfranchise. Jonathan is on the Leasehold Advisory Service (LEASE) list of solicitors who specialise in enfranchisement claims.
If you and your fellow leaseholders are interested in the exercising the right to enfranchise, please contact Jonathan Everett on 01903 213511 for a free initial informal discussion.