What is the basis of the valuation?
The price payable for the freehold is calculated on the same statutory principles as a lease extension, aggregated across all qualifying flats:
Freeholder's existing interest : the capitalisation of the ground rents and the reversionary value of the building.
Marriage value :
the value created by merging the freehold and leasehold interests, shared between the participating leaseholders and the freeholder.
Hope value :
an additional sum reflecting the prospect of non-participating leaseholders later extending their leases or joining the enfranchisement.
Do you qualify?
Under the Leasehold Reform Housing and Urban Development Act 1993 (as amended), a collective claim requires a qualifying building and a minimum number of qualifying leaseholders. At least two thirds of flats must be held by qualifying tenants, and no more than 25% of the building may be in non-residential use.
What is the procedure under the legislation?
A Initial Notice is served on the freeholder by the nominated purchaser, setting out the participating tenants and the proposed price. The freeholder then serves a Counter Notice, after which the premium is negotiated.
If the price cannot be agreed, an application may be made to the First Tier Tribunal (Property Chamber) to determine the price to be paid.
Key Benefits
Collective enfranchisement gives leaseholders control over the management, insurance and maintenance of their building, and removes the uncertainty and cost of individual lease extensions.