The Enfranchisement Process

What will it cost?

Obviously the landlord is not going to give the freehold away for nothing and indeed legislation provides him with compensation for the loss which the leaseholders must pay. The cost will be made up of the following:

1. Loss to the freeholder of his ground rent income from the flats.
2. 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).
3. 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.

Leases that were originally granted of more than 21 years. There is now no minimum ownership period and no residency requirement.

How do I get started?

Initially then you will want a professional report that gives a valuation of the cost of the purchase and that can be used as a basis in subsequent negotiations with the landlord. The same report can also be used if the matter goes to tribunal.

What is the procedure under the Act?

The formal procedure for Collective Enfranchisement is started by the service of the Initial Notice on the landlord: it then follows a prescribed route. Although this is the beginning of the statutory procedure the service of the notice should follow a period of preparation to ensure that the participating leaseholders are fully equipped and advised to complete their action. There is a substantial amount of work to be completed if the application is to be successful. In simple terms the tasks that need to be undertaken will include:

• Checking Eligibility
• Organising for Enfranchisement
• Establishing the Finance and Cost Fund
• Selecting and Instructing Professional Advisers
• Assessing the Purchase Price Gathering the Information
• Setting up the Right to Enfranchise Company
• Serving the Participation Notice Serving the Initial Notice
• Preparing for the subsequent Procedures

What will South East Leasehold do?

South East Leasehold are professional valuers and we will carry out a valuation of the premium to be paid for the purchase as required by legislation. This will take the form of an initial appraisal or full valuation report depending on your requirements.

The figure we can provide comes from our experience of acting on behalf of leaseholders under the 1993 Act. It also comes from cases that have been brought before the Leasehold Valuation Tribunal.

We will also advise as to the procedures for applying for the purchase under the Leasehold Reform Act and carry out all negotiations throughout this procedure.

In our experience, there are four possible principal stages in advising clients.

1. Initial Appraisal in cases where clients need to decide whether or not it is worth proceeding further.
2. Full Report and Valuation which would be in two parts and includes No. 1 above. The first is advice as to the parameters of total costs and procedures and other matters for the benefit of lessees and their advisers only. The second being the detailed argued case for the figure we recommend be put in the notice and which would eventually form the basis of any experts report.
3. Negotiations with the freeholder or freeholder’s representatives in the hope of establishing a negotiated settlement and any further advice required in respect to the initial or counter notices.
4. Reference to the Leasehold Valuation Tribunal which will include the preparation of an Expert’s Report providing counter submissions after exchange of Experts Reports and attendance at the Tribunal.