Freehold Enfranchisement of Houses

LEASE Law can act for freeholders who have been served a freehold enfranchisement notice from their tenant claiming their right to buy the freehold interest in their leasehold house.

Am I required to transfer the freehold interest to the tenants?

Once instructed, we will investigate the validity of the claim notice that has been served on you and the entitlement of the tenant to acquire the freehold of their house. If we find any discrepancies during our investigations, we will ask the tenant’s solicitor to clarify these and will then advise you whether it is likely that the tenant has a valid claim for the acquisition of the freehold.

If the tenant has a valid claim for the acquisition of the freehold then you are required to transfer the freehold interest to the tenant.

Does the tenant qualify to make a claim to buy the freehold?

For the tenant to qualify for a claim to buy the freehold the following conditions must be fulfilled:-

  1. the claim must be made in respect of a building which is reasonably considered a house and divided vertically from any adjoining house; and
  2. the lease must be a long lease which was originally granted for a term of 21 years or more; and
  3. the tenant must have owned the property for at least two years before they serve the initial notice (but they do not necessarily have to have lived in the property for the last two years).

What is the cost to me of the freehold enfranchisement claim?

The tenant is generally responsible for your reasonable costs in connection with the transfer of the freehold which will include your legal costs in connection with the legal aspects of transferring the freehold interest and your valuation costs in respect of obtaining advice on the premium that you are likely to obtain for the freehold interest.

The tenant is not responsible for your costs which are incurred in relation to any negotiations which will include your valuer’s costs in connection with negotiating the premium and any protracted negotiations in relation to the terms of the Transfer Deed (the document that will transfer the freehold interest to the tenant).

The tenant is also not responsible for any costs that you incur in preparing for or attending a Tribunal hearing.

LEASE Law will recover their fees for acting for you from the tenant on a time-cost basis, and if there are any additional costs that are not likely to be recovered from the tenant, we will provide you with a breakdown of these estimated additional costs and obtain your agreement to the estimate before proceeding to carry out the work (this includes any Tribunal work).

How long will it take to finalise the claim?

We usually estimate that the procedure will take 6-12 months from the service of the initial notice to completion of the claim, however, there are no strict statutory time limits for progressing the claim, so please do be prepared for it to take considerably longer.

What is the procedure for a claim to buy the freehold of my house?

The freehold enfranchisement procedure starts when the tenant serves a formal notice on the freeholder (in the prescribed form). The formal notice does not need to include a proposed premium for the freehold interest.

The freeholder may then serve a notice in reply which must be served within two months of the date of the tenant’s notice. This notice should state whether the freeholder admits the claim and if they do not admit the claim they must provide their reason why they do not admit the claim. If the freeholder does not admit the claim, then the tenant must apply to the court to buy the freehold.

It must be noted that if the freeholder does not serve a notice in reply then there may be subsequent cost consequences, so we highly recommended that the freeholder serves a notice in reply.

Provided that the freeholder admits the claim, the parties’ valuers will enter negotiations with a view to agreeing the premium and the parties’ solicitors will enter negotiations to agree the terms of the Transfer Deed (the legal document that will transfer the freehold interest to the tenant). If the premium cannot be agreed then the parties can apply to the Tribunal to determine the premium.

In accordance with the regulations, completion of the sale should take place at least four weeks after the premium is agreed and either party can serve a completion notice on the other setting a completion date on the first working day four weeks after giving the notice.

How can LEASE Law help me?

LEASE Law are specialist solicitors who can act on your behalf in respect of the legal requirements for transferring the freehold to your tenant. LEASE Law will recover their fees for acting on your behalf from the tenant on a time-cost basis, and if there are any additional costs that are not likely to be recovered from the tenant, we will provide you with a breakdown of these estimated additional costs and obtain your agreement to the estimate before proceeding to carry out the work (this includes any Tribunal work).

The work that we will carry out for you includes receiving and investigating the initial notice, investigating the leasehold and freehold titles to the house, preparing and serving the notice of reply on the tenant’s solicitor, drafting and negotiating the terms of the Transfer Deed and completing the transfer. We will also liaise with your valuer in respect of the premium as and when necessary.

We can also recommend specialist enfranchisement valuers who have extensive experience and expertise in this area to ensure that the premium that you receive for the freehold interest is as high as possible. Your valuer will provide you with an initial report which will advise you on the premium that you can expect to receive following negotiations. Your valuer will also negotiate the premium with the tenant’s valuer on your behalf following the service of the initial notice.

If you would like LEASE Law to assist you, please send a copy of the tenant’s initial notice or have a copy of the notice to hand, and contact Jade Wilson (jade@leaselaw.co.uk or 0204 511 9100) or Joanna Botley (joanna@leaselaw.co.uk or 0204 511 9101) for a no obligation discussion about your tenant’s freehold enfranchisement claim.