possibly Stamp Duty Land Tax (“SDLT”) though thereisalittleknownexemptionthatyou can take advantage ofwhich, in themajorityof cases,means that no SDLT is payable.


NomINEE PuRChASER The Nominee Purchaser (NP) is the entity that will acquirethe freehold.The NP will becomethe newlandlord andultimately will be responsible for themanagement of the building.Itwillbethe entity namedonthe InitialNotice. TheNPcan be an individual,atrust or a


corporatebodybut it is usuallyacompany formed by the lessees for the purpose of acquiringthe freehold. Youwillneed to consultasolicitor to advise


Your blockofflats


must comply with the statutoryrequirements


leaseholders will need to getorganised.It is possible that morethanthe minimum required number of leaseholders will want to participateinthe acquisition: alternatively, youmay need to actively encouragemore peopletojoinin. Whatever thescenario, thefirst thing


that needs to be done is to set up an active committeewho will coordinate and liaise with the leaseholders throughout the process andserve as thepoint of contactbetween the participating lessees and the solicitor. Obviously,where groups of diversepeopleare involved (and somegroups couldbeverylarge) getting agreement onmatters related to your freehold acquisition can be difficult. So once thegroup is formed,itisagood idea


to instruct your solicitortoprepare aformal ParticipationAgreementwhichwillset out voting rights, hownegotiations will take place, agreementoftermsandthe individual tenant’s financial contribution.The Agreementalso sets out the processwhere flats are sold and bindsbuyersofthose flats into thecollective enfranchisement process. Theagreement canthenbereliedoninthe caseofadispute amongparticipating lessees. This is especially importantinlarge blocks of flatswhereany delays in decisionmaking or disputes could endanger compliance with timelimits and damage theprocess. Before residentscan committothe freehold


purchase, they need an idea of thepurchase pricesoitisadvisable to have an initial valuationcarried outbyaspecialist leasehold enfranchisementvaluer. In additiontothe price, flat owners should be aware of the likelycostsinvolvedinthe process. These will include professional advisers’costs; any mortgage/loan arrangementfees; andthe landlord’sreasonablecosts(forwhich you areresponsible fromthedateofservice of the Initial Notice). There will also be fees for registration of thetitle at Land Registry and


Flat Living Winter 2011


on theformation of thecompany,its articles of association (which is the constitution of the companyand thedocumentwhich governs thevotingrightsand controlofsharesetc]) and dealing with Companies House.


gAThERINg INFoRmATIoN It is vitaltohaveall informationtohandbefore the service of the Initial Notice. This triggers thefreeholdacquisition processand is the pointwhenthe lesseesbecomeresponsible forthe landlord’sreasonablecosts. Thedate of serviceofthe InitialNoticealsofixes thevaluation date.Sonomatterhow long negotiations take,the priceofbuyingyour freehold will be basedonthe factorswhich appliedonthatdate. After service of the InitialNotice you and


your flatownersmustprotect it by registeringa UnilateralNotice at the Land Registry and your solicitorwillensurethatthisistheundertaken


WhaTprofessionaladVicedoWeneed?


Whenbuyingyour freeholdyouwillneedadvice frombothavaluerandasolicitorwith experienceof collectiveenfranchisement.Theservicesthey offerwill include:


TheValuer nSupply of rangeof valuations–bestand worst–togivetenants ideaofpossible outcomeof negotiationswith landlord onpriceoffreehold.This is atechnical arearequiring aprofessionalwith the requisiteexperienceto deal; nAdviceontheoffer figure for the InitialNotice; nAssistancewith responseto landlord’s counternotice; nNegotiationand settlement of the premium tobepaid;


ThesoliciTor nAdvisingontheinitial stagesofascertaining qualificationto proceed; nAssistancewith initial meetingsof lessees andgeneraladviceon procedure; nDraftingParticipation Agreement; nFormingtheCompany whichwillacquire the freeholdandadvising onthecompliance requirementsand recommendationof accountants; nDraftingandservingthe InitialNotice;


nAssistancewith responsestolandlord’s requestsforsubstantiation of claim; nTheconveyance of freeholdtitleand completionofmortgage/ loan; nAttendingtoSDLT requirements (if applicable); nRegistrationof title[and mortgage/loan] atLand Registry; nNegotiationand preparationofvariations to leasesorgrant ofnewleases after enfranchisement.


Donotunderestimatetheimportanceofappointingprofessionalvaluersandsolicitors withexperienceofcollectiveenfranchisement. If youare consideringbuyingyour freehold, youcanalways contacttheAssociationofEnfranchisementPractitioners(ALEP) orTheLeaseholdAdvisoryService(LEASE) foralist ofsuitably qualifiedandexperienced professionalswith theexpertiseto act.


53 SETTINg uP ThE


shortly after the InitialNotice is served. The landlordmust then serve the Counter Notice by thedatestatedinthe InitialNotice.


He has the following options: nAgreethe residents’ righttoacquire the freehold andaccept theirterms(orpropose alternative terms). If termscannotbeagreed forthe purchasewithin2monthsfrom service of theCounter Notice either partycan applyto theLeasehold Valuation Tribunal (“LVT”) for


determination of the issues]; nDeny the residents’ right to acquirethe freehold andgivereasonswhy(whichwill then be determined by theCountyCourt if


challenged); nAdvise that redevelopmentofthe building is to take place. Thelandlord will notbe required to sell the freehold if he can prove that redevelopment is to take place –but redevelopmentcan only take placewhere at leasttwo thirds of theleases in thebuilding aredue to terminatewithinaperiodoffive


yearsfrom thedateofthe InitialNotice];or nSpecify any leaseback proposals. If for any reason your landlord fails to serve a Counter Notice by the specified date, you and your fellow residentsmay–withinsixmonths of thedateonwhich theCounter Notice ought to have beenserved-apply to theCounty CourtforaVestingOrder.Thisgives youthe legalpermissiontoacquire thefreeholdon thetermsset on in theInitial Notice andat thepremiumstated.The Courtwillensure youhavesatisfiedthe enfranchisement requirements before granting the Vesting Order.●


GrahamJaffe and Katiecohenare Partners with JPCLaw email gjaffe@jpclaw.co.uk and kcohen@jpclaw.co.uk Tel 020 7644 7260 and 020 7644 7261 www.jpclaw.co.uk


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