Collective Enfranchisement

Leaseholders acting together may be able to require the Freeholder to sell the Freehold of the Property to the Leaseholders under the Leasehold Reform Housing and Urban Development Act 1993.

Purchasing the Freehold offers a number of advantages:

  • The Leaseholders can extend the length of their leases to increase the value of their property.
  • New leases can resolve any discrepancies within the old leases e.g. poor drafting, non compliance with the requirements of the Council of Mortgage Lenders.
  • It gives the Leaseholders control of the management of the Building and who the Managing Agent is.

Do the Leaseholders & Building qualify for enfranchisement?

  • There must be at least two flats in the Building containing qualifying tenants i.e. a Leaseholder who was originally granted a lease of over 21 years.
  • At lease two thirds of the total number of flats in the Building must be owned by qualifying tenants.
  • At least 50% of the qualifying tenants must want to proceed with enfranchisement.
  • The Freeholder must not be a resident landlord i.e. a block of four or fewer flats where the Freeholder or an adult member of his family lives there.
  • Is the Building or part of the Building self-contained i.e. structurally detached from other buildings or parts of buildings?
  • No more than 25% of the Building can be used for non-residential purposes e.g. commercial leases.

Enfranchisement key steps:

  • Initial Review & Valuation - A valuation should be carried out at the outset to get an idea of the price of the Freehold.
  • Participation Agreement - An agreement should be entered into between the Leaseholders so that they know what their rights and responsibilities are during the enfranchisement process.
  • Create a Nominee Purchaser - A Company should be incorporated to act as the entity purchasing the Freehold. A Company enables ownership to remain constant whilst membership of the Company changes with the ownership of the flats.
  • Serve the Initial Notice - The notice sets out the proposed terms of purchase and a date at lease two months away by which the Freeholder must respond by, the “Response Date”.
  • Freeholder serves counter notice - The Freeholder has to serve their notice before the Response Date. This will either accept the right of the Leaseholders to claim enfranchisement, accepts the right and disputes the terms of sale, or disputes the right.
  • Negotiation - The parties then have period of at least two months to negotiate any outstanding issues.
  • Application to Tribunal - If there are outstanding issues which cannot be resolved the parties can apply to the Tribunal within six months of the Counter Notice.

What is the price of purchasing the Freehold?

The price of the Freehold will depending upon several factors: location of the Property, length of the leases, redevelopment value etc. A qualified surveyor will be able to carry out an in depth survey and provide a realistic figure.

What is the cost of purchasing the Freehold?

In addition to the premium the Leaseholders are responsible to pay the Freeholder’s costs for the Enfranchisement process. This includes the cost of:

  • checking whether the participating Leaseholders have the right to acquire the freehold;
  • the conveyance of the freehold; and
  • the cost of a surveyor for advice on the value of the freehold.

The Freeholder cannot recover any costs from Leaseholders in connection with a Tribunal application.

These costs become liable once the Initial Notice is served.

How Attwells can help?

Attwells’ specialist legal team has experience with the enfranchisement process and making successful enfranchisement claims.  We can help you with:

  • Gathering and considering whether an enfranchisement claim is suitable.
  • Setting up the Company.
  • Serving the Initial Notice.
  • Responding to the Freeholder’s counter notice.
  • The conveyance of the Freehold.
  • Amending or extending leases after enfranchisement.
     

Fixed Fee Collective Enfranchisement Service Pricing

Checking your entitlement as lessees to join together, form a company and compel your freeholder to sell the freehold of your block to you.

Price:

1. Assessing Entitlement

We will undertake an initial review and establish your eligibility to purchase the freehold on a compulsory basis. Our fee for this initial advice stage is £250 + vat.

2. Set up fee

These projects entail a significant amount of administration because of the number clients involved. To address the associated cost we charge a fixed initial set up fee of £75 + vat per flat.

3. Negotiations

It’s worth producing a participation agreement which each flat owner will sign, this will set out the rights and obligations of each party and should ensure that you both understand what is required of you. My fee for the agreement is £360 + vat. You may decide that – if your flats are of materially different sizes and different values - that the costs of the process ought to be divided between you in ratios which reflect this. The participation agreement would record each person’s liability and commitment to the project, amongst other things.

4. Company Formation

Once all lessees are signed up and on board we would  form a company owned by the  participating lessees – this would be the nominee vehicle which would purchase and hold the freehold. Our fee for the formation of the company  is £950 + vat.

5. Notice of Claim

Once the company is formed the notice of claim can be served. My fee for the preparation and service of the notice is £465 + vat.

Once served the claim notice should be registered against the freehold title to protect the claim. My fee for this is £180 + vat plus a land registry fee of £40.

6. Counter Notice

The freeholder will then serve a counter notice setting out its proposed terms for the purchase. My fee for receipting the notice and advising on the same is £195 + vat.

7. Monitoring Dates and Supplying Information during negotiation stage

There would then be a period of negotiation between surveyors which would hopefully result in an agreement. My fees for this stage (monitoring dates and responding to requests for information) are usually £300 + vat.

8. Tribunal Application

If an application to the tribunal is required for a determination of the premium we would have to review fees for that stage of the process at the time. For indicative purposes however I can say that the costs would be between £1000 + vat and £3000 + vat. Most cases do not involve a tribunal hearing so these costs are usually avoided.

9. Completion

Finally once terms have been agreed or determined by the tribunal I will act for you in the transfer of the freehold to your company and the registration of that transfer at the land registry. My fees for that are £1200 + vat plus a land registry fee of £40.

What is included in the price:

  • Initial telephone conversation
  • Regular updates
  • Answering any questions as they arise

What is excluded from the price:

  • Meeting at your local office with a lawyer (can be arranged at additional cost)
  • Our fees for tribunal applications cover only the making of those applications and preparing the documents for them, representation at the hearing is not included and options will be discussed as and when the need arises
  • Your valuation costs which are payable to your professional valuer are not included
  • Your freeholder’s professional costs are not included within this quotation
  • Legal advice outside of the service requested

Disbursements:

Land Registry fees as stated above.

How long will it take?

From service of the notice to completion of the purchase on average takes about 6- 9  months.

When will I pay?

Attwells Solicitors will ask you for money on account in advance of the reviewing your documents and drafting the advice letter so that work can get underway on your matter immediately.

How to instruct Attwells Solicitors?

Instructing us is simple. You can either click on the instruct button below to register your interest or you can call your local office. We have offices in Ipswich, Colchester and London. When instructing us please inform us of the office you would like to use.

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