purchase of the freehold by a group of leaseholders

The Leaseholders' rights

The Leasehold Reform, Housing and Urban Development Act 1993, amended by the Commonhold and Leasehold Reform Act 2002 entitles a group of Leaseholders to purchase the Freehold of their building subject to the following:

a) the building must have a minimum of two flats

b) purchase is not possible if the Freeholder lives in the building, which was originally converted by him and there are less than 5 flats.

c) the original lease terms must be greater than 21 years

d) there is no minimum ownership period

e) Leaseholders need not be resident

f) at least 50% of Leaseholders must participate

g) up to 25% of the building floor area may be non-residential

The cost of the Freehold

This is assessed in three parts:

a) the value of the ground rent income

b) the value of the Freeholder's reversion at the end of the leases

c) 50% of the 'marriage value', i.e. the increase in the value when the Freehold and Leasehold interests are combined or 'married together'

Leaseholders pay the Freeholder's legal costs, valuation costs and Stamp Duty.

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How do you agree the price?

The Leaseholders form a 'right to enfranchise company' and their solicitor serves notice making a monetary offer for the freehold.  The Freeholder either accepts the offer or serves a counter-notice giving his asking price.

The parties then negotiate a price, but if they fail, either may make an application to the Leasehold Valuation Tribunal which determines the price.

Calculating price

We can assess the price for either party following an inspection and perusal of documents including leases.

Negotiating the price

We can negotiate the price on for either party.

Valuation and negotiation fees?

Fees vary from case to case. We provide fee quotations if given basic details.  Applications to the Leasehold Valuation Tribunal, expert witness reports and representation at hearings are charged at an hourly rate.

Further information?

These notes provide general information.  Please telephone us for details in specific cases.

Lloyd Davies Surveyors?

Ours is an independent firm of surveyors established in 1996 providing advice on the value and condition of residential and commercial property in the London, Surrey, Hampshire, Sussex and Kent area.

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To contact us please select from the appropriate area link below:

London | Surrey | Sussex | Hampshire | Kent

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