Collective Freehold Purchases

and

Lease Extensions

Partner at JPC Law

Specialist in Leasehold Law

NOTB Awards – “Solicitor of the Year”

BUYING THE FREEHOLDCollectively

Collective Enfranchisement• Legislation is in place

– right to compel landlord to sell freehold at a fair price– Leasehold Reform Act 1967 – leaseholders of houses in England and Wales – Leasehold Reform Housing and Urban Development Act 1993 – leaseholders of flats in

England and Wales – Commonhold and Leasehold Reform Act 2002 – expanded the right

• Legislation is complex

Qualifying to Enfranchise

Not every building qualifies

Even if building qualifies – not every tenant may qualify

Important: ensure from the start the building and all potential

tenants are eligible to claim

Building Qualification• Self contained separate structure

• Two or more flats

• At least 2 thirds of all flats in building are held by qualifying tenants – leases over 21 years when first granted

• Not more than 25% of building floor space is commercial

• 50% of the flats in the building are participating

• Landlord is not a charitable housing trust, local authority or Crown

• Has not been converted into 4 or fewer flats with the same person having owned the freehold since before conversion with a resident landlord

7 Main Stages:1. Preparatory Stage

2. Notice of Claim

3. Landlord’s Counternotice

4. Application to the First Tier Tribunal

5. Hearing and Decision

6. Completion

7. Post Completion Leases

1. Preparatory • Ensure the building qualifies

• Ensure tenants qualify

• Sufficient numbers on board

• Understand what purchasing the freehold will mean

• Participation Agreement

• Nominee Purchaser

• Valuation

2. Notice of Claim

• Formal process begins

• Clock starts to tick - strict deadline / timetable to follow

• Landlord has the right to:– Request title documentation

– Access for valuation purposes

3. Counter Notice

• Admit or deny the right • Counter offer to items not accepted in claim notice • Negotiation • Agree terms of acquisition

4. First Tier Tribunal • Any party may apply

• Between 2 - 6 months after counternotice is served

• Usually do not proceed to full hearing

5. Hearing & Decision • Unusual to go all the way to a full hearing

• Each party responsible for their own costs of Tribunal proceedings

6. Completion

• Pay the money!

• Landlord’s “reasonable” costs

7. Post-Completion Leases• 999 years

• Ground rent – usually reduced to “peppercorn”

• Modernise existing leases

• Opportunity to rectify any defects in existing leases

Non-Participating Flats• Whole of the freehold that will need to be purchased

• Internal investors

• External investors

• Overriding Lease

Extending Your Lease

2 Ways To Extend

1. Voluntary

2. Statutory – formal route

Legislation • Leasehold Reform Housing and Urban Development Act 1993

• Right to extend flat lease

• 90 years at a fair price

Qualification • Not a business or commercial property • Landlord is not a charitable housing trust, National Trust or Crown • Long lease – originally granted for more than 21 years • Registered at Land Registry as owner for more than 2 years

Valuation • Specialist valuation

• Not an estate agents valuation

• Ballpark figure – lease extension calculator on website:

http://www.jpclaw.co.uk/areas-of-law/leasehold- enfranchisement/lease-extension-calculator/

Notice of Claim • “Section 42 Notice”• Formal process begins • Served on the landlord and all third parties to the lease • Propose a price• Propose apportionment between landlords • Landlord entitled to request:

– Deposit – 10% or £250 – Title documents – Access for valuation purposes

Counternotice

1. Admit or deny the claim

2. State counter-proposals

First Tier Tribunal

• Any party may apply

• Between month 2 and 6 after counternotice is served

• Unusual to go all the way to full hearing

• Each party responsible for own costs of Tribunal proceedings

Lease Extension & Collective

Lease Extension will be “frozen” or “stayed”

Any Questions?

Thank You For Listening

Contact Information

YASHMIN MISTRY

• Tel: +44 (0)207 644 7294 • Email: ymistry@jpclaw.co.uk • Twitter: @yashminmistry• LinkedIn: http://www.linkedin.com/pub/yashmin-

mistry/15/85a/b09