BuYinG Your FreeHolD aeneanconvallismaurismoselienulla WhatWillmyfreeholdcost?


Ifyouarebuyingyourfreehold,firstyouwillneedhelp fromaprofessionalvaluer.andreWPridell explains theinsandoutsofthiskeyrole


When leaseholders are wonderingwhether ornotbuyingtheir freehold isaviable option, theirfirst port of call is oftento take advice froma valuer.Themost commonissues raised are: nWe’veaskedthefreeholder to extend thelease, buthesays ‘No’ nWe’veasked thefreeholderifhewill sell thefreehold, buthedoesnotwant toknow nWe’veaskedthefreeholder foranew lease, buthewants£30,000 plus his costs. nWe’veaskedthefreeholderhowmuch hewants for thefreehold, buthesayswe donotqualify. Thevaluer is able to explain therights


of flatownersunder thelegislation governingleasehold property, themain Actofwhichisthe1993Leasehold ReformHousingandUrbanDevelopment Act.Once leaseholdersunderstandwhat ispossible, thenext issue ismoney:


understandingthe valuer’srole


Thevaluer: n is often the first on stage.


nliaiseswithandsupportsthe clientandworkscloselywith the client’ssolicitor.


nexplainstheprocesstotheclient andkeepsthe clientup-to-datewith progress of the case.


nsettlesthetermsandadvisesall the parties.


nWe’vegot to get ridof this freeholder/ managingagent butwearefrightenedby thepotential cost nWillmyflatgoupinvaluebymorethan it is likely to cost ? nMyestateagent reckons it willonly be £2,000 tobuymyfreehold – is this about right? Thevaluer explainsthatthepremium


or price dependsonanumberoffactors –thegroundrent,theunexpiredterm onthelease,thevalueoftheflatandany improvements thathave beenmade.The first step is to carryoutaninspectionof theflat inquestion.Heor shestudies the titledocuments (thelease)and,once the flat is inspected, thevaluer preparesa valuationwhichisbasedontheelements laid downby thelegislation.Theseare: nThecapitalisationof thegroundrent – whichis essentiallyhowmuchsomeone wouldpay today asalumpsumto receive allthegroundrentsfromtheblock over theperiods of theleases. nThevalueofthereversion–ina leaseextensionthereversionis theflat revertingtothefreeholderattheendof theterm.Whenafreehold ispurchased, theflats willnot revert because the lessees becomethefreeholder. nMarriagevalue-this ispayableonlyon leases with less than80 years left to run andisthedifference betweenthevalueof theflatonitsshort leasecomparedwith what it isonthelonglease. Leasehold legislationsays50%of thisispayable to thefreeholder–andisknownas ‘relativity’. Thevaluationreportisthensubmitted


andthevaluer’s figureisusedtodraw uptheInitialNotice that is servedon thefreeholder to start thepurchase process. Thefreeholder thenhastwomonths


to comeback withaCounterNotice settingout theprice they will accept. Invariably thefigures in thetwonotices aredifferentbecause theflatownergoes in with thelowestpossible price that can be credibly defendedwhereas - of course - thefreeholder comesback with the highestpossible price (seepage 55). Thevaluer discusses this with the


clientandthenconductsnegotiations with thefreeholder’svaluer.Ifterms can’t be agreed, thevaluer will appear asanexpert witness at theLeasehold ValuationTribunal,whichis setupto determinesuch cases.Thenit is over to thelawyers to deal with thetransfer of thefreehold interest.●


the first step is to carry out an inspection


52


andrewPridell FRICSischairmanofAndrew PridellAssociatesLimited,Chartered Surveyors and Valuers based inHove,West Sussex tel 01273 202620 emailapridell@apassociates.org


Getting it


riGht first time


katie cohen and grahamJaffe, PartnersatJPC Lawexplain how the process works


if your block of flats andyourfellow flatownersmeetthe criteria set outbythe LeaseholdReform, Housingand Urban DevelopmentAct 1993,asamended by the Commonhold and Leasehold Reform Act 2002 (the Act),you have thelegal rightto‘collective enfranchisement’ or in otherwordsbuy your freehold with your fellow leaseholders. TheAct setsout theprocessinvolvedbut it is complicatedand youwillneed expert advice fromthestart fromboth asolicitor andavaluerwithexperienceofcollective enfranchisement.


freeholdacquisitionchecklist


nInstruct professionaladvisors nCheckyourblockandfellow leaseholders qualify


nGetorganisedforcollective enfranchisement


nFormthe companytoactasthe NomineePurchaser


nObtain the recommendedoffer figure fromthevaluer


nCollateinformation nServeInitialNotice nDealwithLandlord’sCounterNotice


process involve? Your blockofflatsmustcomplywiththe statutory requirements and theremust be asufficientnumberoftenantswhoqualify underthe rulesset outinthe Act. Tomake sure that this is the case your block should instruct asolicitorwhospecialisesinleasehold enfranchisement. Ensuring that your buildingmeetsthe


Whatdoes the


criteriamayalsomeanemploying asuitably qualifiedsurveyorasthemeasurements required to ascertain qualificationofthe buildingmust bemade accordingtoRICS guidelines.Thisisespeciallyimportant if theblock comprisesbothcommercialand residential elements and the former possibly exceeds 25%of the block. Once youare satisfied that youare eligible to buyyourfreehold, youand your fellow


Winter 2011 Flat Living


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