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The Leasehold Reform, Housing and Urban Development Act 1993 gives leaseholders (also known as the tenants), the right to join forces to buy the freehold of their building. Collective enfranchisement can seem like a complex process to both landlords and tenants but as long as certain criteria is met, the collective enfranchisement process can begin.
To help you gain a better understanding of the process we’ve outlined the key steps that take place below. For even more information to help de-mystify the topic, view our ‘leaseholders guide to collective enfranchisement‘ or ‘a freeholders guide to collective enfranchisement’ articles.
1) Talk to the other flat owners. At least 50% of the tenants need to participate in order to qualify for collective enfranchisement. Some very large blocks will appoint a representative to handle this task.
2) Find a solicitor. The Leasehold Advisory Service and the Association of Leasehold Enfranchisement Practitioners have lists of solicitors who are specialists in collective enfranchisement. Costs can vary, so it’s important to do your research beforehand – check whether the fee is fixed or an estimate.
3) Value the freehold. You will need a surveyor to value your property and determine the likely premium. The cost of the valuation will vary depending on the size and value of your block. To receive a formal quote, call Kempton Carr Croft on 01628 771221.
4) Set up a vehicle in order to purchase the freehold. You will need a nominee purchaser who will buy the freehold – this can be a person or a group of people, but it’s usually a limited company set up by the group of leaseholders. Your solicitor can help with all of this – Companies House provides advice on starting and running a company.
5) Initiate negotiations. Once you have read your surveyor’s report, you can start negotiating with your landlord. This can be done informally through written correspondence, but it is recommended to negotiate formally by sending a ‘tenant’s notice of claim’ to the landlord. Every participating leaseholder must sign this notice.
6) Your landlord will then serve a Counter Notice which will include their counter premium proposal. This must be served within two months from the date you served your initial notice.
7) Once the Counter Notice has been served, negotiations will take place between the surveyors of the two parties. If all goes well and both parties can agree on the premium, the new lease form will be agreed by the solicitors and completed.
8) If the surveyors are unable to agree on a premium, you can apply to the First-tier Tribunal to have the matter settled. The applications must be made within six months of when the freeholder’s Counter Notice was due. Once you apply, you will be notified of the hearing date and timescales for producing reports. Your surveyor and solicitor will work together in order to submit any reports and attend the tribunal on your behalf, if necessary. The Tribunal will then consider both parties’ evidence and determine the final premium.