Category Archives: Collective enfranchisement – 1993 Act

Information specifically relating to the collective purchase of the freehold of a block of flats by its leasehold owners (collective enfranchisement).

What is Freehold? and How do I Buy My Freehold?

I recently recorded a podcast with the website Property Battlefield that looked at the question of ‘What is freehold?’ and also how flat owners can go about buying their freeholds.

To download a copy of the podcast click here: Podcast – “What is freehold?”

The discussion was about why we have freehold. It also looks at the two main ways in which leaseholders can buy their freeholds. This tends to be either under the Landlord and Tenant Act 1987 where the landlord serves a notice seeking to sell, or to obtain clearance for a sale, or under the the Leasehold Reform Housing and Urban Development Act 1993. In the second case, the flat owners serve notice on the landlord.

Both options present a range of issues that need to be considered, including pricing and timing.

Property Battlefield is a site run by John Savage that provides information for estate agents and other property professionals although the topics covered in the podcast will be of interest to property investors, managers and anyone looking to buy their freehold or find out more about buying the freehold to their block.

 

How do I find out who my freeholder is?

The first thing to do is to carry out a search at the Land Registry based on the address of the property.  Help from a solicitor will enable you to do this.

The Land Registry has a website which does also have public access facilities.

In the case of unregistered land, it may be more difficult to locate the freeholder by a search of publicly held information and it may be necessary to serve an information Notice under the leasehold reform legislation.

For further assistance with this please consult a professional.

Tip: Your freeholder’s address and detail should appear on the ground rent demands as this is a legal requirement in accordance with the provision of Section 47 and 48 of the Landlord and Tenant Act 1987.

Serving notice under the 1993 Act – “It’s just filling in a few forms, right?”

As I explained in my recent talk, “Take No Notice” with Andrew Pridell of APA Associates at the ALEP Autumn Conference on 18 October 2011, serving notice under the Leasehold Reform Housing and Urban Development Act 1993, is not as easy as it seems.

This was a talk to other professionals at the ALEP (Association of Leasehold Enfranchisement Practitioners) Autumn Conference and although that talk was aimed at professionals (a full set of notes appears at leaseholdreformnews.com) there are a few points that anyone looking to engage with this area should bear in mind.

  • The notice must be signed personally by the qualifying flat owner. For instance, someone holding a power of attorney cannot sign on behalf of someone else.
  • A UK company is going to need to execute the notice as a deed. An overseas company will present different issues.
  • Any offer figure must be made in ‘good faith.’ This has a specific technical meaning and ideally therefore (although it is not mandatory) specialist valuation advice needs to be obtained.
  • Allocating any offer figure must be done correctly. This will involve consideration of technical issues such as additional freeholds, or other leasehold areas to be included in the claim. If there are other leasehold interests or superior (head) leases then this too needs careful consideration. The valuation and legal advisor will need to liaise closely.
  • The notice needs to be addressed to the correct parties. Once again this is technical and any slips will make the notice void. The list to be served may include other landlords and other parties. The right addresses for service are not always readily apparent.
  • Multiple signatures of a single notice may present significant legal issues particularly, if this is done without proper advice and supervision. Using a solicitor will almost certainly assist in the event of a challenge.

Bear in mind that if the notice is not served correctly that you will be liable for the landlord’s costs of investigating your claim and serving counter notice (legal and valuation) and you will have to start all over again. If your lease has slipped below a critical point (e.g. below 80 years), then irreparable damage may be done.

Similarly, in a collective claim where a large number of people have to sign a notice, if there is an invalid notice, vital impetus will be lost and the claim may take a long time to start going again. This is to say nothing of the possible expense and inconvenience of a court case investigating the notice if invalidity is not conceded.

Likewise, without the benefit of specialist help, where difficulties have arisen, those qualifying may actually withdraw a perfectly good claim – leading to the position that they cannot bring a fresh claim for another year.

For all of these reasons (amongst others) specialist help should always be sought. As such you should always use a firm of legal or valuation advisors with a proven track record in this area, such as an ALEP member.

 

I want to develop the roof space – how might this impact on our plans to buy the freehold?

This can be a potential problem. Firstly you should check that you do not own the area already. A qualified person will need to read your lease and advise on this.

Once you have established who owns the area, the position needs to be considered with your fellow participants. If you are the only person with access to this area, then provided the other people purchasing the freehold with you agree, it should be possible to obtain rights over this area and also permission from the freeholder so that you can develop this area.

Please bear in mind the following:

1. If the roof space does not already belong to you then you will need to buy it from the eventual purchaser of the freehold.

Sometimes this issue can be resolved by allocating the part of the purchase price relating to the roof area to you – in effect increasing your share of the freehold purchase cost.

If you go down this route you may need a specialist valuer or surveyor to provide an opinion on the price to be paid.

2. Owning the area means being granted a lease of the roof area. The company / nominee purchaser will have to agree to do this.

3. Under the terms of the lease the consent of the freeholder may still be required (and most likely will be) before any work can be carried out.

4. There may well be other applicable restrictions outside the lease or the title that must also be overcome before any work can commence. e.g. planning permission or building regulations consent. If the property is listed or in a conservation area further constraints may apply.

5. If it is your intention to do this after the freehold purchase completes it is as well to sound out the views of your likely co-directors in the freehold owning company in advance. If there is going to be disagreement then there is the potential for a ‘conflict of interest’ to arise and the same legal advisor may not be able to act for all of you.