George Pope has been acting for clients looking to purchase the freehold of their property in central London for over 30 years. Click here to find out about the service he offers or call 020 7730 6615 to speak to him directly.
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Additional Information
Leasehold enfranchisement refers initially to the Leasehold Reform Act 1967, when this whole process commenced. At that time, leasehold enfranchisement/the Act referred only to small houses with low Rateable Values, the Community Charge having taken the place of this local tax raised via Rateable Values.
Subsequent to 1967, leasehold enfranchisement extended through 1974 to include larger houses and thereafter to include almost every house in the UK, subject to the leasehold interest being for over 21 years at the commencement of the lease.
In 1993, leasehold enfranchisement was extended via Leasehold Reform, Housing and Urban Development Act 1993 to include flats and maisonettes, providing an opportunity to purchase an additional 90 years to be aggregated to the unexpired term. Further, leasehold enfranchisement provides the opportunity for the lessees/tenants to purchase the freehold interest in buildings in multiple occupation ie. blocks of flats, subject to certain criteria. Leaseholders contemplating this more complicated course should seek the advice of an experienced solicitor in the leasehold enfranchisement legislation.
To conclude, from the early days when leasehold enfranchisement included only small houses, it now provides the opportunity for almost every leaseholder of houses or flats/maisonettes to purchase the freehold or 90 year lease extension to flats/maisonettes. To take full advantage of leasehold enfranchisement, it is most advantageous to acquire the freehold/lease extension when there is still 80 year unexpired on the existing lease.
The method of calculating the freehold/lease extension price is well tested; if disputed, freeholder or tenant may seek redress through the Leasehold Valuation Tribunal.
Since the Leasehold Reform Act 1967, freehold purchase has been available to owners of certain properties. Initially, freehold purchase only concerned the owners of small leasehold houses, but subsequent legislation has extended freehold purchase to almost all leasehold houses in the UK, subject to the leasehold interest being over 21 years at the commencement of the lease.
Freehold purchase is now also an option for leaseholders of flats/maisonettes in converted houses/blocks of flats, subject to certain criteria. However, Collective Enfranchisement, as it is called, requires a majority of leaseholders to participate in the purchase of the freehold of the building/block of flats. These participating tenants will also be required to purchase that element of the price attributed to the whole building, to include those tenants who are non-participating. For the freeholder, freehold purchase means that he will receive full compensation even for those non-participating, otherwise it would not be fair. Freehold purchase/collective enfranchisement is not easy to orchestrate in blocks of flats, not only because the non-participating element must be paid for but because the enthusiasm often wanes when the cost of the whole freehold purchase is established. In my experience, collective enfranchisement/freehold purchase often takes too long to achieve regarding flats/maisonettes, tenants perhaps missing the opportunity to purchase an extended lease of an additional 90 years to be aggregated to the current unexpired term at an attractive price, in a rising market. The opportunity still remains to join in the freehold purchase of the collective enfranchisement with the benefit of an extended lease, the cost being relatively small having acquired the 90 year lease extension.
Whenever possible, it is important to commence the process of the freehold purchase when the lease is over 80 year; it reduces the cost dramatically.
Since 1993, the Leasehold Reform, Housing and Urban Development Act has given leaseholders of flats/maisonettes the opportunity to purchase lease extensions of 90 years to be aggregated to their present unexpired terms. To acquire this lease extension, the original term of the lease must have been for over 21 years.
When accepting a tenant’s Claim (Section 42 Notice of Claim) the freeholder will quote lease extension terms not only valuing his interest, any intermediate leaseholders too, but also marriage value which will be shared between freeholder and the tenant. The cost will include the value of the freeholder’s interest (Stage 1 of the valuation) plus 50% of the marriage value which is best described as the value of the freehold interest less the sum of the freeholder’s interest together with the value of the leasehold interest. The resultant sum is shared equally between freeholder and tenant, the sum being aggregated to the freeholder’s interest (Stage 1 of the valuation) to determine the total cost of the lease extension.
Some leaseholders/tenants are not satisfied with the lease extension of 90 years, under which circumstances freehold purchase may be an option.
Often vendors, where they have been registered owners for over 2 years will agree to commence the lease extension process by serving the Notice of Claim (Section 42 Notice) on the freeholder, which Claim may be assigned to a purchaser, thus preventing the purchaser from having to wait the statutory period of two years before commencing the process of lease extension