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
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