Purchase of the freehold by a group of leaseholders
What are the Leaseholder's 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:
- The building must have a minimum of two flats
- Purchase is not possible if the Freeholder lives in the building, which was originally converted by him and there are less than 5 flats
- The Leaseholders' original lease terms must be greater than 21 years
- There is no minimum ownership period
- Leaseholders need not be resident
- At least 50% of Leaseholders must participate
- Up to 25% of the building floor area may be non-residential
What is the cost of Freehold?
This is assessed in three parts:
- The value of the ground rent income
- The value of the Freeholder's reversion at the end of the leases
- 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
How is the price agreed?
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 apply to the Leasehold Valuation Tribunal to determine the price.
Calculating price
We can assess the price for the either party following an inspection and perusal of documents including leases.
Negotiating the Price
We can negotiate the price for either party.
How much are valuations and negotiation fees?
Valuation fees and negotiation fees vary from case to case. We provide fee quotations if given basic details. Applications to the Leasehold Valuation Tribunal are charged at an hourly rate.
Risk of the sale falling through
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 apply to the Leasehold Valuation Tribunal to determine the price.
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