BUYING YOUR FREEHOLD
frequenTlyAsked quesTions
Wehave served a section 13 notice on our landlordand have notreceiveda counter-notice.What canwedo? In theSection13notice youmustspecifya date forresponseofatleast2monthsfrom thedateofservice of thenotice.Ifyour freeholderdoesnot respond or responds late then you can apply to the County Court to acquire the freehold on the terms of the Section 13 notice within 6 months from the date the counter-notice was supposed to be given.
Weareinthe processoftryingtobuy our freehold butwecan’t agree the premiumor other terms.What canwe do? You can apply to the LVT for them to determine the terms. This application must be madewithin6monthsfromthe date of
thecounter-notice.There is no feefor such an application.
Weare buying the freehold of our building collectively. howdowesplit the costs between us? The Leasehold Reform, Housing and Urban Development Act 1993 does not addressthispoint andsoitisamatterfor agreement between the leaseholders. It is important to agree on this point prior to startingthe process. Youmay wish to enter into a Participation Agreement to make sure all of you provide funds in the agreed proportions.
Wewant to buy the freehold of our building. aretherecosts to pay, other than the price of the freehold? You will be responsible for your landlord’s
reasonablecosts.Thisis limited to legal and valuation costs, forexample thelandlord’s valuation, legal costs of transferring the freehold and checking your right to buy the freehold. You do not have to pay the landlord’s costsinconnectionwithany LVTproceedings.Ifyou areprivately negotiating to buy the freehold outside the 1993 Act there are no rules regarding costs. It is a matter of agreement between the parties.
What happens if anyofthe participating residents wish to withdrawafterthe initialnoticehas beenservedonthe freeholder? Thewithdrawalofanindividual participating resident does not affect theacquisitionand theinitial notice will continue to be valid. The remaining participating residents will continue to be liable forall costsincurredinconnection with the acquisition. It is therefore advisablethatthe participationagreement sets out the terms on which participating residents agreetoconduct theacquisition of the freehold.
Formore informationonbuying your freehold go to
www.lease-advice.org
56 MarkChick speaking
at the alEP conference (see news p11)
Dealing with your landlord
AnnAfAvre explodes some popularmyths surrounding freehold acquisition
The process of buying your freehold is widely thoughttobechallenging,adversarial and full of potential pitfalls with landlord pitched against the put-upon homeowner. But it doesn’t have to be that way. Theright to buythe
freehold ofablock of flats wasintroducedin1993 andwithitcameasea changeintenants’
rights.Atthattime, many landlords took theviewthat thecompulsory
acquisitionoftheir
propertywasinherently wrongand loudly
opposedthe legislation –evenarguing that the legislationwasabreachof
humanrights.However,almost
two decades later, landlords have generally adopted a more pragmatic viewto the law. Many landlordswelcomethecashflow generatedbyfreeholdacquisition andview
it as a windfall.Unlikemanyother formsof revenue, theproceedsattracttax relief (known as “roll-over relief”) offeringthe landlord theopportunity to reinvest themoney in a tax
efficientmanner.Landlordsmay also be pleasedtorid themselves of troublesome buildingswhich maybedilapidated andrun downor perhaps the subject of longrunning service charge disputes with the tenants. As everylandlord
will acknowledge,maintaining andmanaging a leasehold building can be a challenging andsometimes unrewarding undertaking.
However, particularly with larger landlordssuchasthe London Estates, sellingindividual buildingscan lead to such estates becomingfragmented andthismay reduce theirappealifthe
incoming freeholdersflouttheirmanagement obligations or neglect their building. Formore expensiveareas in centralLondon,proper
AskTheexperTs
If youare considering buyingyour freehold youwillneedspecialist advice fromasolicitor todealwith the legal aspectsandavaluation surveyor (a valuer) to calculatehowmuchyour freeholdisworthand what itwill cost tobuyit fromyour
landlord.To help youfindtheright peoplefor thejob,the associationofleasehold Enfranchisement Practitioners(alEP) publishesalist of specialistsonits website. alEPwassetup
fiveyearsagoin responseto theneeds of flatownersand their freeholderswho wantedreassurance that thepeoplethey weredealingwithwere
reputable.Toqualify for membership ofalEP,
professionalssuch assolicitors,valuers andotheradvisers mustprovetheyreach anagreedstandard
ofcompetence.They must alsocommit to highprofessional standards,integrity, qualitycustomer serviceandahigh level ofmarketknowledge. alEPdirectoranna Baileysays:“Youcan beconfidentthatany memberofalEPwill beexperiencedand competentinmatters relatedtoleasehold enfranchisement, inparticularlease extensionsandfreehold acquisitions”. Tofindasolicitoror
valuer to discussyour freeholdacquisition,
visitwww.alep.org.uk andgoto theSearch Memberspage.
Winter 2011 Flat Living
Jargon Buster
WhATishopevAlue?This is thelossto thefreeholder of potential futuremarriagevalue.
Hopevalueistakentobepart of what themarriagevalueis worth,whichiswhy the premiumscandiffer betweenparticipating flatsandnon- participating flats.
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