Enfranchisement Information

Colin Wetherall has acted for numerous residents associations who have collectively purchased the Freehold of their block of flats under the Leasehold Reform, Housing and Urban Development Act 1993. Although complicated, you will find that with our help, the legislation works!

The formal route to purchase the Freehold of a property is for the Tenant’s Solicitor to complete a form known as an “Initial Notice” which is then served upon the Freeholder (and any Head or intermediate Lessor). This Notice has to be signed by all participators. This is normally served upon the Freeholder’s Solicitors, who will check whether the Notice is valid on the basis of the number of participators.

The Notice also must state the proposed purchase price for the Freehold (and any intermediate Leasehold interest).

The Freeholder must respond within two months, and normally in the intervening period the Freeholder instructs their Valuer to inspect the premises who will then prepare a valuation.

The Freeholder must respond by serving a Counter Notice which will state firstly whether he admits the right to purchase the Freehold, and secondly the price he considers correct.

If he does not admit the right to purchase the Freehold, then this can be referred to the County Court, who will have an award of costs if the non-admission was unreasonable.

Once the Initial Notice and Counter Notice have been served, there are effectively two lines drawn in the sand between which the purchase price must lie. There is then a statutory period of two months for negotiation between the parties, normally carried out by their respective Valuers, and at the end of the two month period either party can refer the matter to the Leasehold Valuation Tribunal (LVT) for a Hearing. If, at the end of a period of six months from the date of the Freeholder’s Counter Notice, neither party has referred the matter to the Tribunal for a Hearing, the matter fails.

Once the Tenants’ Solicitor has served an Initial Notice, the Tenants are responsible for the Freeholder’s (and any Head or Intermediate Lessor’s) reasonable legal and valuation costs pursuant to the Initial Notice, and the costs of any conveyance. However, before the LVT, each party bears their own costs.

There is no application fee to the LVT. A Hearing at the LVT normally lasts between half and one day, depending upon the complexity of the case.

The Tribunal result is then published, normally within c. two months from the date of the Hearing.
As an alternative to the above, it is possible to carry out “Outside of the Act” negotiations on receipt of my valuation to see if terms can be agreed, without the complexity of using the Leasehold Reform Legislation with a consequent saving in time and costs. Depending upon the situation, this can be used to advantage, but you should bear in mind that in these circumstances there is no referral to the Leasehold Valuation Tribunal.

We have been involved with a number of cases where initial “Outside of the Act” negotiations have not proceeded with the result that either the Freeholder has ended up with abortive costs or the Tenants have to resort to going down the formal route anyway. In those circumstances it would have been simpler and quicker to insist the matter proceeds under the Legislation at the outset.

Our preferred solution is to negotiate within the Act.

Basis Of Enfranchisement Valuation

The method to be used for calculating the enfranchisement price is set out in Statute. The formula is complicated but it basically compensates the freeholder in money terms for the loss of his investment that you are compulsorily acquiring from him.

Currently, the freeholder receives an annual ground rent and theoretically has the right to have the premises back at the end of the lease. In practice, the freeholder would not be able to repossess at the end of the lease because other legislation prevents this, but this has to be ignored in the enfranchisement valuation.

The freeholder is paid a one off lump sum, which equals the capital equivalent of the present and future ground rents and reversion at the end of the lease. The amount payable depends upon the level of ground rent, whether it is reviewed, the length of the lease, the value of the flats and the prevailing level of interest rates.

The freeholder is also compensated for the loss of any marriage value. Marriage value is the increase in the value of the flats once the freehold is owned by the flat owners. The reason it is called marriage value is because it is value created by the marriage of your existing leases and the freehold.

The legislation states that the marriage value is shared 50/50 between the freeholder and the participating tenants. The amount of marriage value depends upon the unexpired length of the lease and the value of the flats. The shorter the lease, the more marriage value there will be to pay. Incidentally, although marriage value exists above 80 years unexpired, it is only payable when there is less than 80 years unexpired. Enfranchisement prices rise significantly when the unexpired term becomes less than 80 years.

Finally, in addition to the items mentioned above, if it can be shown that any land retained by the freeholder in the immediate vicinity will be diminished in value by the loss of the freehold that you are acquiring, then this can be added into the equation as well. This is fairly rare but if it applied in your case, it would be dealt with in the valuation report.

It is very important to understand that the amount the freeholder receives depends on the number of participators. You may think that this is odd but the reason for this is that marriage value is only payable on participating flats. However, when a non-participating flat joins in at a later date the new freehold company, now under your control, will charge the non-participating flat owner marriage value on their share. The new freehold company can expect to ultimately make a significant profit from the sale of shares to non-participating flats, and this is normally distributed amongst the original participators. In some cases this can provide quite a windfall.

A lease extension valuation is a carried out in exactly the same way as an enfranchisement valuation except that it only relates to the individual flat in question. The freeholder is paid an amount to remove the ground rent and extend the lease by 90 years plus 50% of the individual marriage value relating to the flat. In that case the marriage value is the value created by the marriage of your existing lease and the 90 year extension.

Because of this, a lease extension will cost exactly the same as an equal share in the freehold if all flat owners participated, but the professional fees will be higher.

List of acquisition or sale of Freeholds of blocks of flats negotiated under the Leasehold Reform, Housing and Urban Development Act 1993  

YEAR      BLOCK, LOCATION (NO OF FLATS)

2007      Thames Close, Ferndown (8)
2007      Denham Court Highcliffe (8)
2007      Moriconium Quay, Poole (107)
2007      Carlton Court, Southampton (70)
2007      Langton Dene, Westbourne (12)
2007      Lulworth House, Dean Park (12)
2007      Bracken Court, Dean Park (8)
2007      Freshwater Drive, Hamworthy (4)
2007      St Hilary, West Moors (8)
2007      Wilverley Court, East Cliff (4)
2007      Chesterfield House, Southsea (13)
2007      Friars Gate, Highcliffe (9)
2007      Milton Villas, Charminster (9)
2007      Greenside Court, Barton on Sea (15)
2007      Cathedral Court, Salisbury (7)
2007      The Gatehouse, Bournemouth (11)

2006      Guest Court, Branksome (6)
2006      Stanfield Road, Winton (2)
2006      Falaise, West Cliff (6)
2006      Clevelands, Weston Super Mare (11)
2006      Forest Lake, Ringwood (14)
2006      Sunningdale, Christchurch (20)
2006      Easter Court, Boscombe (14)
2006      Hormead Road, London (3)
2006      Horseshoe Court, Dean Park (12)
2006      Cavendish Hall, Dean Park (12)
2006      Lyndon Gate, West Cliff (24)
2006      Cliff Walk, West Cliff (12)
2006      Watergardens, Bournemouth (21)
2006      Hampshire House, Dean Park (12)
2006      Milton Road, Bournemouth (2)
2006      Erinbank, East Cliff (20)
2006      King Edward Court, East Cliff (20)
2006      Lindsay Grange, Poole (32)
2006      Surrey Towers, Poole (11)
2006      Mildenhall, West Cliff (62)
2006      Seahaven, Sandbanks (6)

2005      Radcliffe Court, East Cliff (14)
2005      Westerngate, Bournemouth (49)
2005      Beverley Grange, Bournemouth (12)
2005      Roxborough, Bournemouth (12)
2005      Deansway Court, Bournemouth (12)
2005      Boston Lodge, Bournemouth (12)
2005      Princes Gate, Bournemouth (24)
2005      Collingdale Lodge, Bournemouth (12)
2005      Porchester Road, Bournemouth (2)
2005      Kings Walk, Boscombe (28)
2005      Seaview Road, Highcliffe (3)
2005      Lacehurst Court, Dean Park (9)
2005      Magnolia Court, Westbourne (12)
2005      Moonrakers, Canford Cliffs (9)
2005      Grants Avenue, Springbourne (2)
2005      Danehurst, Talbot Woods (12)
2005      Tall Trees, Parkstone (4)
2005      Amberley Court, Bournemouth (33)
2005      Wesley Grange, Bournemouth (12)
2005      Redhill Court, Redhill (50)
2005      Berkeley Court, Dean Park (11)
2005      Queens Park Lodge, Queens Park (4)
2005      Studland Road, Alum Chine (6)
2005      Baildon Lodge, Boscombe (8)
2005      Fairwinds, Sandbanks (15)

2004      Clive Court, Bournemouth (12)
2004      Athelney Court, East Cliff (29)
2004      Cransley Court, Westbourne (12)
2004      Capstone Road, Charminster (2)
2004      Milton Road, Bournemouth (5)
2004      Wharf Mill, Winchester (16)
2004      Belle Vue Gardens, Southbourne (72)
2004      Salterns Point Block A, Lilliput (20)
2004      Kennilworth Court, Canford Cliffs (12)
2004      Roslin Hall, East Cliff (34)
2004      Coronation Avenue, Charminster (2)
2004      Baronscroft, West Cliff (5)
2004      Earlswood, Westbourne (12)
2004      Elizabeth Court, East Cliff (133)
2004      Belmour Lodge, Westbourne (12)
2004      The Woodrisings, Sandbanks (12)
2004      Sea Point, Sandbanks (6)
2004      The Towans, Sandbanks (6)
2004      Salterns Point Block B, Lilliput (20)
2004      Eden Court, West Cliff (12)
2004      Stirling Court, Westbourne (12) 
2004      Parkgate Mews, Bournemouth (15)
2004      Shore Road, Sandbanks (2)

2003      Gadbridge Court, West Cliff (16)
2003      Fairways, Charminster (12)
2003      Clarendon Road, Westbourne (2)
2003      Owls Road, Boscombe (6)
2003      Coolhurst, Lilliput (9)
2003      Edgehill Road, Bournemouth (2)
2003      Chine Mansions, Bournemouth (12)
2003      Wolverley Court, Westbourne (9)
2003      South View, Meyrick Park (16)
2003      Knoll Manor, Meyrick Park (16)
2003      Sandown Court, East Cliff (12)
2003      Wilton Place, West Cliff (12)
2003      Bickerley Gardens, Ringwood (18)
2003      Brookley Court, Bournemouth (12)

2002      Cranborne Court, Westbourne (9)
2002      Avonwood, West Cliff (3)
2002      Harewood Court, Boscombe (4)
2002      Carisbrooke, Canford Cliffs (18)
2002      Parkwood Road, Southbourne (5)
2002      Bancroft Court, Poole (8)
2002      Pentillie, Bournemouth (5)
2002      Cavendish Place, Bournemouth (6)
2002      Albany, East Cliff (133)
2002      Seacliff Court, Southbourne (15)
2002      Little Court, Canford Cliffs (15)

2001      Admirals Walk, West Cliff (121)
2001      West Cliff Court, Westbourne (12)
2001      Dellmere, Bournemouth (9)
2001      Fairthorn, Bournemouth (4)
2001      McKinley Road, West Cliff (3)
2001      Camelford Court, Westbourne (12)
2001      Rutherford, Bournemouth (12)
2001      Burford Court, East Cliff (16)
2001      Twynham Court, Southbourne (12)

2000      McKinley Road, West Cliff (6)
2000      Alexander Court, Bournemouth (6)
2000      Portarlington Court, Westbourne (6) 
2000      Grove Court, East Cliff (16)
2000      Edenhurst, Westbourne (6)
2000      Greenacres, Westbourne (12)
2000      Sherwood, Bournemouth (5)
2000      Kirby Way, Southbourne (2)
2000      Purbeck Court, Southbourne (12)
2000      Rothwell Dene, West Cliff (8)

1999      Shelbourne Road, Bournemouth (2)
1999      Mayfair, West Cliff (27)
1999      Rydal House, Westbourne (12)
1999      Twynham Manor, Southbourne (9)
1999      Chesterfield Court, East Cliff (10)
1999      Compass Point, Poole (39)
1999      Riviera, East Cliff (25)
1999      Keythorpe, East Cliff (25)

1998      Wychwood Grange, Bournemouth (18)
1998      Wellington Court, Bournemouth (9)
1998      Montague Park, Highcliffe (54)
1998      Ashmede, West Cliff (12)
1998      Brownsea View Close, Poole (16)
1998      Marchwood, East Cliff (34)
1998      Hinton Wood, East Cliff (62)
1998      Farrington, West Cliff (13)

1997      Rossmore Road, Poole (2)
1997      Chine Crescent House, West Cliff (12)
1997      West Cliff Palms, West Cliff (12)
1997      De Gresley Mansions, Southbourne (12)
1997      Blue Cedars, West Cliff (4)
1997      Seaview Court, Poole (5)

1996      Langtry House, East Cliff (4)

1995      Solent Pines, East Cliff (52)
1995      Sandykeld, East Cliff (30)

1994      Heathside, Lilliput (12)
1994      Heathside Court, Lilliput (12)

List of acquisition of freeholds of houses negotiated under the Leasehold Reform Act 1967

YEAR      ADDRESS, LOCATION

2007      Ascham Road, Charminster
2007      West Overcliff Drive, West Cliff
2007      Poole Road, Westbourne
2007      Alton Pancras, Dorchester

2006      The Cottage, Falaise, West Cliff
2006      Library Road, Parkstone

2005      West Cliff Road, Westbourne
2005      Craven Grange, Bournemouth
2005      Lansdowne Road x 2, Bournemouth

2004      The Triangle, Bournemouth
2004      Christchurch Road, Bournemouth
2004      Knyveton Road, Bournemouth
2004      Ascham Road, Bournemouth
2004      Audley Road, Birmingham

2003      Braidley Road, Bournemouth
2003      Holdenhurst Road, Bournemouth
2003      Milner Road, Westbourne

2002      Annerley Road, Bournemouth
2002      Milner Road, Westbourne
2002      McKinley Road, Bournemouth
2002      Branksome Wood Road, Bournemouth

2001      Holdenhurst Road, Bournemouth
2001      Marlborough Road, Westbourne
2001      Branksome Wood Road, Bournemouth
2001      Branksome Wood Road, Bournemouth
2001      Branksome Wood Road, Bournemouth

2000      St Swithuns Road, Bournemouth
2000      Merlewood Close, Bournemouth
2000      McKinley Road, Bournemouth
2000      Tenby Close, Southampton
2000      Milner Road, Bournemouth

1999      Manor Road, East Cliff
1999      Methuen Road, Bournemouth
1999      McKinley Road, West Cliff
1999      Marlborough Road, Westbourne

1998      Portchester Place, Bournemouth
1998      McKinley Road, West Cliff
1998      Clarendon Road, Westbourne

1995      Merlewood Close, Bournemouth