What is enfranchisement?
Enfranchisement is the process with which leaseholders buy the freehold of their residential rental property, or they can extend their lease for an extended amount of time (e.g. enough to cover a lifetime). The experienced commercial solicitors at Leon Kaye can help our clients extend their leases and purchase their freeholds.
You may believe that there is no point in buying the freehold of your block. If you own the lease, you still do not own the flat. Leaseholds and freeholds hold different rights. When you buy a flat, you are also purchasing a lease. You are buying the right to reside in a part of another individual’s freehold property. A freeholder owns the building. Once the lease has expired, the flats revert to the freehold owner. The owner can then create a new lease and redevelop. If the remaining time of the lease is under 80 years, high street lenders can refuse to grant a mortgage on the property resulting in a decline of the property value.
How will owning a freehold benefit me?
Owning a freehold is beneficial because leaseholders can extend their leases and decide to reduce the ground rent to as low as they like on their own accord without needing approval from a third party. Ultimately, owning a freehold is beneficial because it gives you control of the management of that building.
How much does it cost to pay for a freehold?
The cost of a freehold depends on whether the lease has more or less than 80 years to run or if all the qualifying tenants can participate in the proceedings. There are many things to consider, like capitalising on the collective rents and other factors in a similar light. The overall figures vary, and an experienced surveyor will advise you more accurately on the costs and your average spend. A proper valuation is essential to have an adequate valuation; the proposed price in your initial notice needs to be realistic, i.e., you can’t simply put a nominal figure forward and then negotiate later.
What is the procedure of obtaining a freehold?
The active leaseholders will form a company to hold the title. The company will then serve the freeholder’s notice to specify the proposed premium. The freeholder then has up to two months to accept or reject the right to the lease extension.
Negotiations will then take place between the parties on the premium to be paid, the rights to be granted and the provisions to be contained in the conveyancing process. The statute allows for up to six months for the terms to be agreed upon, or either party will apply to the Tribunal to determine the terms.
Following the conveyancing procedure, the freehold transfer is done in the name of the leaseholders’ company and registered at Land Registry.
How can Leon Kaye Solicitors help you?
Are you a freehold owner who has been served with a collective enfranchisement? If so, we can assist you in making sure the procedure has been appropriately followed and that the claim is valid or advise you if you are looking to dispute the claim.
Are you part of a group of leaseholders looking to extend your lease? We can assist you in making your claim and represent you in extending your lease once you have purchased the freehold. We will inform you of your legal rights, tell you of the different elements you need to qualify, show you the calculations required and guide you through the process of serving notice on the landlord.
Our commercial conveyancing lawyers keep our clients updated throughout the sale or purchase and strive to minimise delays so that the sale or purchase goes through smoothly.
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