Enfranchisement and Lease amendments?

by Readers Question

12:00 PM, 28th July 2020
About 4 months ago

Enfranchisement and Lease amendments?

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Enfranchisement and Lease amendments?

Value of Enfranchisement? I am a freeholder of a small block of flat (3 in total). I live on the first floor and there are two flats on the ground floor both rented out by the current leasehold owners. Leasehold owners have shown interest in purchasing their share of freehold.

One flat owner has 95 years left and the other flat owner has 121 years left on their respective leases.

The current market sale price is £200,000 and £220,000 respectively. The current ground rent is £150 and then going up in 2024 to £300 for each flat.

I occupy more than 50% of the property (because front gardens of the property belong to solely our flat) and the back garden is equally divided into 3 equal parts for 3 all flats. 6 Parking spaces – 1 per flat and 2 for the visitors and 1 emergency parking. Also, I pay 50% towards the building insurance costs, and they pay 25% each as their contribution and any excess is paid similarly. There are no service charges.

They intend to purchase the freehold in three equal parts i.e. 33.33% each, but my intension is to keep 50% of the share to myself and sell 25% each. Am I right in thinking the way I am thinking?

Frankly, I would not want to sell the freehold, but I understand that 2 flat owners want to purchase, and I can be pushed into a corner.

Please can someone advise what would be the freehold value I can offer to the respective leaseholders and any other advice/suggestions?

Lease Amendment specialist?
Since I have sole access to the loft and in the future, I want to add another floor on top of my flat. Last year my council has refused permission, but I think there may be a possibility in the future that I get permission. So, I would like to amend my flats lease to amend such restriction. So that no other leaseholder or future freeholder cannot object to such dwellings if we comply with all the regulations set out by local authorities. I need your help to explore this idea.

Can you please recommend a professional/s who can help me to deal with such queries?

Thank you

Mehar


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Comments

Freda Blogs

13:40 PM, 28th July 2020
About 4 months ago

You have a number of issues here and without seeing the documentation and knowing more about the property/ies I believe it would be unwise to offer valuation advice on the forum.
As you are not keen on selling the freehold, you need do nothing until you receive a S13 Notice (initial notice under the Leasehold Reform, Housing and Urban Development Act 1993) from the other leaseholders. If you do receive a notice, please ensure you get help to deal with the formalities of dealing with the claim.
A good starting point for professional advice is ALEP - Association of Lease Extension Practitioners - which has specialist valuer and solicitor members.

D. R. SHAH

10:26 AM, 29th July 2020
About 4 months ago

My nephew has a long leasehold first floor flat. There is a loft in this flat. The freeholder is Local Council. They do not allow
in the loft and the loft is the part of this flat. Nobody else can go into this loft. There are two flats in the building, ground fllor and the first floor. Is the loft not becoming the part of the firstfloor flat ?
D. R. Shah-07886533489

terry sullivan

12:13 PM, 29th July 2020
About 4 months ago

Reply to the comment left by D. R. SHAH at 29/07/2020 - 10:26
if the lease either states that loft is not included or is silent, then the loft is not part of the flat--imo

Mehar Kashyap

12:57 PM, 29th July 2020
About 4 months ago

Reply to the comment left by Freda Blogs at 28/07/2020 - 13:40
Hi Freda, thank you for your comments. Will it be possible for you to recommend an experienced professional who can help please – who has dealt with such queries? I am interested in someone to who I can tell my all listed issues with evidence i.e. 3 sets of leases and I would want to pay a one set fee. Thank you.

Mehar Kashyap

12:59 PM, 29th July 2020
About 4 months ago

Reply to the comment left by terry sullivan at 29/07/2020 - 12:13
Hi Terry, thank you for your comments. You are right, my leaseholder's owners do not have any right to the loft. I am also a leaseholder but then as a freeholder, I think I should be able to sell sole access rights to my flat. This is exactly what I want.

Freda Blogs

14:39 PM, 29th July 2020
About 4 months ago

Reply to the comment left by Mehar Kashyap at 29/07/2020 - 12:57
Hi Mehar, it depends where you are in the country. If you try the ALEP website they should have people in your area.

BernieW

17:31 PM, 29th July 2020
About 4 months ago

Hi Mehar. The value of the freehold depends on the specifics of the paperwork (the leases), the market value of the flats currently, any potential development value e.g. the loft, and things like yield rates and deferred income rates. The answer, therefore cannot be easily given via this forum.
However, you do not have to offer to sell. But if you do - you will need to serve the appropriate section 5 notices under the Landlord & Tenant Act 1987. You'll need specialist leasehold advice for that.
On the other hand - as mentioned above - the leaseholders might serve a notice on you, utilising their Right to Enfranchise. If they do that - get leasehold advice immediately. You'll need to serve a counter-notice.
A thought ...
Right to Enfranchise requires "more than 50%" of qualifying leaseholders to participate. You have three flats and three leases (see note below) so two leaseholders need to participate ... the two downstairs. There may be a way to reject such a claim, but that will require a detailed look at the paperwork and the building.
Note: If you do not have a lease and you own your flat 'freehold' then the value of the freehold will be far higher - and you can probably engineer a rejection of the leaseholders' notice.
A thought ...
Why not grant a separate lease for the loft and 'air space' above? Then you'll have 4 leases (assuming you have one for your flat) and then the downstairs leaseholders cannot reach 'more than 50%'.
Happy to discuss.
Bernie Wales

Mehar Kashyap

21:22 PM, 29th July 2020
About 4 months ago

Reply to the comment left by BernieW at 29/07/2020 - 17:31
Hi Bernie, thank you for your comments. I have all the leases and happy to discuss it with you. I have emailed you at Bernie @ BernieWales .co.uk. Please reply.
Have a great evening.

Tim

7:49 AM, 1st August 2020
About 4 months ago

As a live in freeholder I think that would bar enfranchisement, if this is the case you can’t be forced to sell the freehold.
Also are you a purpose built block or a conversion?

Mehar Kashyap

10:17 AM, 1st August 2020
About 4 months ago

Dear Tim, Thank you for your comments. Flats are purpose builts and you are right I live here with my family and this is our home and the other two leasehold owners have rented out from day one, they never lived in their respective properties from day one.

I have received similar kind of hope from #Bernie but later I realized that since I am the freeholder and as well as the leaseholder I cannot make changes to my lease by way of Deed of variation.

Please can you confirm if by law (any reference/s) I can refuse their request to stop enfranchisement?

Once again, thank you for your time.

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