Freehold Valuation
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Obtaining collective enfranchisement means you and your neighbours can secure the freehold of your shared building, a monumental legal step that gets you pretty close to the kind of ownership enjoyed by wealthy landlords living in Canterbury.
The relevant Act (the Leasehold Reform, Housing and Urban Development Act of 1993, as amended) is fairly straightforward—it entitles leaseholders the right to join together to purchase the freehold from the freeholder.
Do you live in a block of flats in Canterbury, London?
Would you like to free your property from an oppressive leasehold? Enfranchisement can help, but it’s a long and often complex process. Using advice from professional enfranchisement experts considerably increases the odds of your success. So, what do you, as leaseholders of the flat, stand to gain by purchasing the freehold of our block of flats?
What are the Benefits of attaining Freehold Ownership?
An alternative to leasehold extension is “collective enfranchisement,” which allows a group of residents to buy the freehold. This process lets the residents basically buy the property from the landlord.
A longer lease: once the group owns the freehold, it’s in their interest to ensure the sale of individual flats is as easy as possible because their property will be collectively and individually easier to sell if the lessees become the freeholder.
Management control: once enfranchised, you are able to manage the property or appoint a property manager. So, you can self-manage, choose a managing agent, and/or use contractors for tasks communal to all the individuals living in the flats.
Requirements for being eligible for Freehold Enfranchisement
All businesses need to have some form of management to control the company and keep it running properly. Owning the freehold means you own both the land and building in a legal sense with the other participants. This gives you more freedom and control in the day-to-day operations. You can choose your own management company and make decisions about contractors for common area maintenance and jobs like cleaning and gardening. To be eligible to apply for freehold enfranchisement, you must meet these requirements:
- own two to three flats that qualify as residential;
- own self-contained flats;
- not own more than three properties in total as a leaseholder;
- at least 75% of your building must be used for residential purposes;
- at least 50% of the participants who have a say must agree;
- the freeholder must not be occupying the property
Freehold Acquisition: an Overview of the Process
To buy the freehold of a property, leaseholders must first establish a company. The members of this company are the leaseholders, and together they must designate a member as the “nominee purchaser” who will represent them in the purchase. At this stage, leaseholders must serve an Initial Notice on the freeholder. This Notice must set forth several components clearly and correctly.
First is the part that relates to the flat owners—they must accurately and clearly describe who the flat owners are and tie them to the property.
Next is a part that involves the building itself: they must describe the building and its entitlements.
Then comes the part where they name an independent surveyor of their choosing.
Finally, they must set forth the price they are offering for the freehold in a way that sounds reasonable and justifiable.
Once the Initial Notice has been served and the freeholder has had time to think about it (the standard time is 2 months), the freeholder responds with a counter-notice. If no price has been set and agreed upon, the next step is to seek a ruling from the Leasehold Valuation Tribunal.
What is the cost of a Share of Freehold?
The price paid for the freehold is affected by many factors—primarily, the value of the component parts (the flats) of the building and how many years are left on the leases.
The Leasehold Reform, Housing and Urban Development Act 1993 provides a formula that freehold valuation surveyors can use to come up with an indicative premium that the leaseholders can use in negotiations.
A full understanding of what the freehold comprises is essential. For example, if the building has a basement or underground parking, that has to be factored into the valuation process.
Also, if any of the leases has less than 80 years left to run, that purchase price will have to be higher than the price for a lease with 100 years left on it.
Valuation for Divorce (Matrimonial)
A Divorce Settlement Valuation is a service that will enable you to split them appropriately in the divorce settlement. It guarantees that no matter what the terms of the settlement are, the equity is divided proportionately.
