Collective Enfranchisement – Frequently Asked Questions

Specialist Collective
Enfranchisement
SolicitorsCollective Enfranchisement Solicitors. Image of block of flats

What is the difference between freehold and leasehold?

When you purchase a lease, you are in reality paying for a long-term rental contract. Your landlord [technically, the freeholder] retains overall ownership – the freehold – and at the end of the lease, the leased property returns entirely to the landlord. Whilst the lease is running, the landlord has certain obligations including an obligation to maintain the property – but the tenant usually has to pay ground rent and a service charge.

Looking for Specialist Legal Advice on Enfranchisement, Lease Extension or the Right To Manage? Call our expert Solicitors on FREEPHONE 0800 1404544 for FREE Initial Phone Advice – with no strings attached.

Why should we take over management of our block of flats?

Many flat owners are frustrated by having to deal with a management company. Sadly a significant number of management companies provide poor quality work and maintenance – but still know how to charge. Poor maintenance is not only an eyesore but can affect the value of your flat – putting off prospective purchasers. Many tenants have successfully taken on management of their block of flats themselves – or have at least taken control by appointing management agents of their own choice. Savings can be quite significant.

Our Solicitors can help you set up a Right to Manage Company to maintain your building – or can help you apply to the First Tier Property Tribunal for the court to appoint an independent block manager of your choice.

Click here to read more about the Court Appointed Manager.

Should I extend my lease – or leave things as they are?

While you may prefer avoiding the initial expense and time taken making an application for a lease extension, putting things off only makes it worse. The shorter a lease gets, the lower its value becomes and the more expensive it can be for the lease to be extended or to buy the freehold jointly.

If I join in buying the freehold can I sell my interest?

Yes

Do I need a professional valuation to buy the freehold?

Not necessarily – some landlords will agree a reasonable price for you to buy the freehold without the necessity of a formal valuation. However if you cannot reach agreement with your landlord, then a professional lease enfranchisement valuation by a surveyor will usually be necessary – both to increase your negotiating power with the landlord and as evidence in any application to the First Tier Tribunal (Property Chamber) – previously known as the Leasehold Valuation Tribunal or LVT.

If you do decide to buy the freehold and plan asking a surveyor to prepare a valuation, you are going to need a specialist in collective enfranchisement valuation. We can provide you with the name of an experienced enfranchisement surveyor local to you.

What is a participation agreement?

A participation agreement is a legal binding document that commits all those who sign it to participate in the freehold purchase. It’s not always necessary in very small blocks – but the larger the block, the more important the participation agreement becomes. That’s because one of the main causes of delay may well be your fellow leaseholders. Often the hardest part of enfranchisement is actually keeping everyone committed and on board throughout the process.

We strongly recommend the use of participation agreement in all but the very smallest block. Our solicitors can help tailor a participation agreement to your particular block and your circumstances.

Click here to read more about the Participation Agreement

What happens if I don’t want to buy the freehold?

If you don’t join in with the other tenants in buying the freehold or exercising the right to manage, then your position remains roughly the same – the only difference is that you will when you freeholder – so in future you are going to need to pay any ground rent and service charge to those tenants who did buy the freehold as your new landlords – and they will be responsible for managing the property.

What happens if I don’t take part in the right to manage my block of flats?

Again your position will remain roughly the same – you will continue paying a management charge – but in future it will be to whoever has now exercised the right to manage the block of flats who will be responsible for management of the block .

What is a Nominee Purchaser?

Part of the process of buying your freehold involves deciding on the person or body who will actually own the freehold. The name of the nominee purchaser needs, for example, to be included in the initial enfranchisement notice.

In most cases the nominee purchaser will be a company you and your fellow leaseholders set up specifically to buy the freehold of your block – and in which you all hold shares.

What legal expenses does the freeholder have?

When going through the process of collective enfranchisement, you will need to pay the reasonable legal and valuation costs of your freeholder. The costs of your freeholders’ own solicitors are likely to incur the following:

(a) confirming that the leaseholders are indeed entitled to buy the freehold

(b)  checking that those leaseholders provide all the correct and accurate relevant paperwork, including the initial notice, and that they comply with both the procedure and timetable or freehold purchase;

(c) providing information required by the Nominee Purchaser;

(d) valuation of the premises; and

(e) conveyance of the freehold to the Nominee Purchaser

Provided that these costs are reasonable, the leaseholders will have to pay them. However, if there is a dispute over whether or not these costs are reasonable, then the issue can be referred to the First-Tier Property Tribunal for a decision.

Do We Need A Managing Agent After Buying our Freehold?

If your block of flats has recently  gone through the process of collective enfranchisement, then you have the choice over who manages your block.

You can of course choose to manage the block yourself, but this requires a lot of time and know-how as well as requiring experience and certain skills. And that’s especially the case if your block is a large one.

If you do decide to manage your block yourself, then you will have to be patient when dealing with calls, letters and personal visits from all of the leaseholders. Some of the requirements in place can seem cumbersome and expensive, but they are there to protect you, the people living in the building and any visitors or contractors. The regulations are also there to help you protect your investment.

The managing agent is the neutral third party between leaseholder and freeholders. An impartial managing agent has a crucial role to play when there are tensions or problems to solve between you as the freeholder and one or more of the leaseholders.

Getting a good managing agent who offers competitive service charges is essential. Using a good agent will add value to your investment over time, as they prove their effective management of the property.

How important is proper block management when I come to sell my flat?

When you come to sell your property, a solicitor is going to start asking you several questions. They will ask questions to work out whether the block has been properly managed, and to ensure there are no major repairs outstanding. Any experienced managing agent will be able to help with the answers to these questions as they will have gone through this process many times before.

What legal responsibilities do managing agents take on?

It is also important to have processes in place to make sure that all legal requirements are complied with. Either you, or a managing agent, will have to make sure this happens.

Some of the most important requirements are:

•    Carrying out electrical testing in common areas on a regular basis
•    Arranging comprehensive building insurance which also states the reinstatement value
•    Carrying out health and safety risk assessments in communal areas
•    Organising safety and maintenance checks of any lifts in the building
•    Assessing the fire risk of the building
•    Inspecting all fire alarm systems or other fire safety equipment
•    Carrying out an asbestos survey and being aware of any implications when employing contractors
•    Keeping up to date with any changes to regulations and ensuring new legislation is complied with

It is human nature to want to keep costs as low as you can when running any sort of property or business, but these legal requirements can’t just be ignored – they won’t go away. If you aren’t up to date with your legal obligations, this could well mean that the solicitor acting for someone who wants to buy your flat will advise them not to go ahead.

In addition, you may also be breaking some of the conditions of your lease (unless you have bought the freehold of the flat) and this can cause huge tensions between the manager and the leaseholders. It can even lead to legal enforcement expensive action against you.

Looking for specialist Collective Enfranchisement Solicitors? Call us today

For a FREE initial telephone consultation on freehold purchase, UK Lease extension or right to manage issues from our expert solicitors, contact us now

  • Call us on FREEPHONE 0800 1404544 OR
  • Complete the contact form below