Q. Why should I enfranchise?
A: Residents who own the freehold can grant themselves long leases at no charge or for a nominal price and can in addition reduce or remove ground rents. In many cases the control of the management will be taken over by the tenants or a company run by tenants or nominated by them. Finally it is often a good selling point with buyers.
What are the requirements?
In order to qualify the building must be a self contained block of flats (which includes a converted building as well as a purpose built one) and:
• must have no more than 25% non residential use
• two thirds of flats must be let to qualifying tenants A qualifying tenant must hold their flat under a long lease, ie for a term of more than 21 years. 50% of qualifying tenants of flats in the building must participate Please note that it is no longer necessary for a qualifying tenant to have owned a flat for a minimum period or to have lived in it.
Q. Do I need a formal valuation?
A: It is almost always advisable to do so. The formulae for calculating the valuation are complex. You will need to know the valuation even if only for the purposes of negotiating with the freeholder. The notice served on the freeholder must state the proposed price. If it is unrealistic it could invalidate the notice. The freeholder will undoubtedly employ a specialist valuer and the tenants will almost certainly need one to negotiate on their behalf. This sort of valuation is a specialist area of surveying practice. We can put you in touch with a firm with the right expertise.
Q. I have heard that I have to pay the freeholder’s costs. Is this true?
The residents’ nominee company pay the reasonable costs of the freeholder (and any intermediate landlord) in:
• assessing the right of the tenants to enfranchise
• dealing with the tenants notice and statutory procedure and
• handling the valuation and conveyancing work. These costs comprise solicitors and surveyors fees. Costs must still be paid even if the tenants withdraw from the process.