Collective enfranchisement
Information on collective enfranchisement advice for leaseholders of flats.
Leaseholder's rights
Under the Leasehold Reform, Housing and Urban Development Act 1993, as amended by the Commonhold and Leasehold Reform Act 2002, a group of leaseholders are entitled to apply to the freeholder of their building to purchase the freehold provided they fulfil the following criteria:
- The building must have a minimum of two flats and if the building was originally a single house (and since converted) and there are less than five flats, the freeholder, provided he carried out the original conversion, must not live in the building if the leaseholders wish to qualify.
- Leaseholders who wish to participate must qualify by holding leases that were originally granted of more than 21 years. There is now no minimum ownership period and no residency requirement.
- The number of leaseholders who wish to participate must represent at least 50% of the number of flats in the building.
- There must not be more than 25% of the internal floor area of the building in non-residential use, for instance a shop or office.
- Resident's parking spaces are not included in calculating the floor areas.
This is not a fully comprehensive list of requirements but should cover most eventualities. If the leaseholders do not fulfil the above requirements they may still wish to apply to the freeholder but only outside the terms of the 1993 Act.
What will the cost be?
The cost of buying the freehold will be made up of the following:
- Loss to the freeholder of his ground rent income from the flats.
- Loss to him of his reversion, i.e. his entitlement to the building at the end of the existing leases, and any other loss to him (if any).
- 50% of the marriage value. The marriage value is best defined as the increase in the value of the property arising from the leasehold and freehold interests being combined. Marriage value is not payable when the applicants un-expired lease term is 80 years or more.
The leaseholders also have to pay the freeholder's valuation costs and his solicitor's costs. They will also have to pay stamp duty.
What if the freeholder and leaseholder are unable to agree a price?
To apply for the freehold the leaseholders should form a Right to Enfranchise Company and a solicitor needs to serve a notice on the freeholder under Section 13 of the 1993 Act making an offer.
The freeholder, if he accepts the right to enfranchisement (which he may check) will either accept the offer or respond in his counter notice with his own asking price following which the leaseholders may wish to enter into negotiations to settle the premium to be paid.
If this cannot be achieved then either the leaseholders or the freeholder may make an application to the Leasehold Valuation Tribunal who will determine the price payable.
How we can help?
We can provide advice on the price we believe should be fairly paid under the 1993 Act. The figure we can provide comes from our experience of acting on behalf of leaseholders and freeholders under the 1993 Act.
It also comes from cases that have been brought before the Leasehold Valuation Tribunal. These cases give the prices paid for lease extensions and freeholds of flats and buildings of various values and lease lengths in different areas.
These sources of information help build up a picture which we can apply to flats of all values and all lease lengths.
Our further role
Once you have received our report we would be very pleased to assist further with negotiations if required in an attempt to reach agreement.
To contact us or register for the service
If you would like to make use of our collective enfranchisement service please fill in our registration form by clicking on the "Register online" button above. If you would like us to contact you to carry out an inspection of the flat please email us at valdep@dng.co.uk
Terms & Conditions
For further information on our terms & conditions please
contact valdep@dng.co.uk or call 020 7591 8746
