There are two rights for long leaseholders both of which are contained within Part 1 of the Leasehold Reform, Housing and Urban Development Act 1993 as amended by the Housing Act 1996 and the Commonhold and Leasehold Reform Act 2002.
The first right is a group right for leaseholders of flats to purchase the freehold interest of the building in which they reside subject to certain qualifications. The second right, is for the individual lessees to renew their lease which, in effect, adds 90 years to the unexpired term of the existing lease.
With respect to enfranchisement, a group of leaseholders have the right to purchase the freehold of their property as long as certain conditions are met. The building must contain at least 2 flats, the original lease has to be greater than 21 years and at least half the leaseholders must participate. Purchase is not possible if the freeholder lives in the building which was originally converted by the freeholder and if there are less than 5 flats. The leaseholder does not have to be a resident to participate and up to 25% of the building floor area may be for non-residential use.
The cost of buying the freehold is based on an assessment made in three parts:
- Capitalised value of the ground rent
- The value of the freeholder's reversion at the end of the lease
- Half the marriage value
Marriage value is the increase in value when the freehold and leasehold interests are combined or married together.
To go about buying the freehold, leaseholders form a right to enfranchise company and notice is served on the freeholder making a monetary offer for the freehold. We can serve that notice for you. The freeholder either accepts or serves a counter notice giving his asking price. The two parties then negotiate the price. If this fails then either side can apply to the Leasehold Valuation Tribunal who will determine a price.
At Aspect Surveyors Ltd, we specialise in helping leaseholders in the purchase of their freehold, by providing advice, a professional valuation, negotiation with the freeholder and expert witness if required at the LVT.