Collective Enfranchisement Solicitors

The Leasehold Reform Housing and Urban Development Act 1993 (“the Act”), in specified circumstances, gives eligible lessees the right to purchase the freehold of their building. The benefits of doing this are that the participating lessees then have control over the management of the building, potentially saving costs. They can also grant themselves new long leases.

The Collective Enfranchisement Process

It is usual for a company to be formed to act as the nominated purchaser and also a participation agreement to be entered into between the lessees. A valuer will also be instructed to calculate the premium to be offered to the landlord.

Once a valuation has been carried out the statutory process starts by service of an “Initial Notice” in a form prescribed under the Act (“the Notice”) in which the offer is put forward to the landlord.

At this stage you should be aware that the lessees will become liable, not only for their own valuation, legal costs, VAT and any disbursements (payments to a third party ie the Land Registry for copies of your titles and current leases), but also the reasonable valuation fees and legal costs plus VAT incurred by your landlord whether or not the matter proceeds to completion.

Issuing a counter notice

The landlord must issue a counter notice within 2 months from the date of receiving the Notice either accepting the premium offered or alternatively rejecting this and making a counter offer.

If a counter notice is not served by the landlord within the prescribed time the lessees may apply to the court within 6 months of the date when a counter notice should have been received, for a vesting order which the court will grant on the terms proposed in the Notice.

If a counter notice has been received your valuer will negotiate with the landlord’s valuer to agree a premium with you and the landlord. You or the landlord can apply to the Tribunal for a decision but the application must be made no sooner than 2 months from, but within 6 months of, the date the counter notice is served.

For further useful information you may wish to visit the government funded independent lease advice website.

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