Enfranchisement of a Leasehold House FAQs

Lessees of houses have since Leasehold Reform Act 1967 had the right to purchase the freehold. There have been various legislative changes to this right, the most recent of which were set out in Commonhold and Leasehold Reform Act 2002. The qualifying criteria have now been simplified, although there can still be highly technical legal issues which arise and the valuation principles are complex.

These FAQs are necessarily general in nature and you should not act or refrain from acting without taking specialist advice on your particular circumstances.

Q. What are the Qualifying Criteria?
A. The main ones are:-

• the property in question must be a house – see the next answer;
• the house must be held under a long lease, i.e. one which was granted for a term of more than 21 years;
• the house must have been owned by you for more than two years.

It is no longer necessary for the person exercising the right to have lived in the property. There is no residency qualification, only that you have owned it.

Q. Part of an adjoining building goes under my house, can I still enfranchise?
A. Interestingly there have been a number of cases on what constitutes a house. The building must be self contained and be divided vertically from any adjoining property. There is no right to enfranchise if the material part of other premises runs either under or over your house. If the part of the adjoining property is material then there is no right to enfranchise.

Q. How much will I have to pay?
A. The valuation principles are complex but are primarily based on ground rents and yields and the length of the unexpired term. If your lease has less than 80 years left at the date you serve your Notice on the freeholder, you must also pay marriage value which can considerably increase the price. In addition you will have to pay costs – see below.

Q. Do I need a valuer?
A. It would be extremely unwise not to have a formal valuation from a specialist valuer, both in order to assist you with negotiations and also to advise you before you serve your Notice on the landlord so that you have an idea of how much you are likely to have to pay.

Q. Do I have to pay the landlords’ costs?
A. Yes. You will need to pay the landlords’ reasonable professional costs which will normally be solicitors’ and surveyors’ fees. These include costs relating to considering and assessing your Notice and generally dealing with the statutory process, the valuation aspect and also the conveyancing of the freehold.

Q. What other costs must I pay?
A. You will also have your professional costs which will be those of your solicitor and surveyor and, in some more complex cases, possibly those of a barrister. There will also be the usual payments to third parties as with any conveyancing transactions such as Stamp Duty Land Tax, Land Registry fees and incidental disbursements.

Q. What about ground rent and the other covenants in the Lease?
A. As part of the price you pay you will be buying out the ground rent and therefore this will no longer be payable. The Act specifies which rights and other covenants contained in the lease will still apply to the freehold once it has been acquired. Although arguably a secondary consideration to the price, the question of covenants and rights is one that needs to be looked at carefully.

Q. What if the Freeholder disputes my entitlement to claim or we cannot agree on the price?
A. In most cases these differences are resolved by negotiation between the parties’ valuers. In a minority of cases where there is a dispute as to entitlement and the matter can be referred to a County Court or where the price cannot be agreed, then the matter can be referred to the LVT for a determination.

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