a short guide to enfranchisement and lease extension€¦ · a short guide to enfranchisement and...
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A short guide to Enfranchisement and Lease Extension
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PAge
5 INTRODUCTION
7 THe COLLeCTIVe RIgHT TO eNFRANCHISe • WHATISIT?
• HOWDOIPREPAREFORACLAIM?
• HOWISACLAIMMADE?
• DISPUTES
• COMPLETION
12 THe INDIVIDUAL RIgHT TO eXTeND • WHATISIT?
• WHATDOIGET?
• THEPRICE
• HOWDOICLAIM?
• DISPUTES
• COMPLETION
15 ENFRANCHISEMENTOFHOUSES • WHATISTHERIGHT?
• HOWDOIQUALIFY?
• THEPRICE
• HOWDOICLAIM?
• DISPUTES
• COMPLETION
• THEEXTENDEDLEASEOPTION
CONTeNTS
enfranchisement 3
INTRODUCTION LEASEHOLDREFORMACT1967
LEASEHOLDREFORM,HOUSINGANDURBANDEVELOPMENTACT1993
The area of leasehold enfranchisement has attracted a plethora of media and academic interest since its formal introduction in 1967andhasbeenamendedandexpandedoverthepastfourdecades.Therightoflongleaseholderstobuytheirlandlord’sinterestoutrightoracquireanextendedleaseterm,isuniquetoEnglandandWalesand,perhapsunsurprisingly,hasledtoanumberoflegalchallengesovertheyears.Landlordsandtenantsalikeareanxioustoprotecttheirrespectivepropertyinterestsinamarketthatshowsnosignofabating.Consequently,thisareaofthelawiscontinuallyevolving.
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Ingeneralterms,thelegislationconferstwodistinctrights:topurchasethefreehold,eitherindividuallyinrelationtoleaseholdhouses,orcollectivelyforablockofflats,ortoseekaleaseextension.Althoughtheserightsarecurtailedbythestatutorytestsforqualification,changestothelegislation,introducedbytheCommonholdandLeaseholdReformAct2002,havemadeiteasierthaneverforleaseholderstomakeaclaim.
Therequirementthatleaseholdersmusthaveoccupiedthepropertyinquestionforaperiodoftwoyears(theso-calledresidencerequirement)haslargelybeensweptawayandreplacedbyanew,twoyearownershiptest.Indeed,inthecaseofacollectiveenfranchisement,eventheownershiprequirementhasbeenremoved.Likewise,qualificationtestsbasedontheproperty’srateablevaluesandrenthavegone,withtheresultthathighervaluehouses,forexample,maynowenfranchise.
Thepurposeofthisguideisnottogiveadefinitivestatementofthelawbuttoprovideanoverviewofthelegalrightsandobligationsthatthelawgrants.Asindicatedbelow,thelegislationiscomplexandlengthyanditisrecommendedthatprofessionaladviceisalwayssoughtbeforeaclaim is commenced.
WehopeyouenjoyreadingtheShortGuidetoEnfranchisementandLeaseExtensionandfindtheinformationhelpful.
enfranchisement 5
THe COLLeCTIVe RIgHT TO eNFRANCHISeLEASEHOLDREFORM, HOUSINg AND URBAN DEVELOPMENTACT1993
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WHATISIT?
Thisgivestherightfortenantsofflatsactingtogethertopurchasethefreeholdandanyheadleasesoftheirbuilding.Inorderforthebuilding toqualifyundertheAct,itmust:
•beanindependentbuildingorbeapartofabuilding whichiscapableofindependentdevelopment;and
•containtwoormoreflatsheldbyqualifyingtenants;and
•haveatleasttwothirdsoftheflatsheldbyqualifyingtenants.
Inordertobeaqualifyingtenantyoumusthavealongleasewhichmeansaleasewhich,whenoriginallygranted,wasforatermofmorethan21years.However,youmustnotownthreeormoreflatsinthebuilding.Youcannotbeaqualifyingtenantifyouholdabusinesslease.
Notwithstandingtheabove,thebuildingwillnotqualifyif:
•itcomprisesfourorlessunitsandhasa“residentfreeholder”;
•morethan25%oftheinternalfloorspace(excluding commonparts)isusedfornon-residentialpurposes;
•thebuildingispartofanoperationalrailway.
enfranchisement 7
HOWDOIPREPAREFORACLAIM?
Anyqualifyingtenantcangiveanoticetohislandlordorthemanagingagentrequiringdetailsofthevariouslegalinterestsintheblock.Thisnoticeplacesnocommitmentonthetenantbuttheresponsetothenoticeshouldprovidethetenantwiththeinformationnecessaryfor himtoascertainwhetherthebuildingcontainsasufficientnumber ofqualifyingtenantsforittoqualify.
Havingestablishedthatthebuildingqualifies,itisthenadvisabletoascertainwhetheryouhaveasufficientnumberoftenantswhowant toparticipate,bothforthepurposeofqualifyingforenfranchisement andforthepurposeofbeingabletofinancetheacquisition.Inorder toqualifyforenfranchisement,youneedtoestablishthatthenumber ofparticipatingtenantscomprisesnotlessthanonehalfofalltheflats inthebuilding.However,ifthereareonlytwoflatsinthebuildingthenbothmustparticipate.
Whenyouhaveestablishedthatthebuildingqualifiesandthatthereisasufficientnumberofqualifyingtenantswhowishtoparticipate,thentherearefivefurtherpracticalstepswhichshouldbetakenbeforeembarkingontheenfranchisementprocedure.
First,youneedtoestablishwhatitisgoingtocostbyobtainingavaluation.Insimpleterms,thepricetobepaidbytheparticipatingtenantstopurchasethefreeholdofthebuildingistheaggregateof:
•thebuilding’sinvestmentvaluetothefreeholder–thecapitalisedvalueofhisgroundrentsandthevalueofhisreversion(beingthepresentfreeholdvacantpossessionvaluedeferredfortheunexpiredtermof theleases);
•onehalfofthemarriagevalue–theincreasedvalueattributabletothefreeholdbyvirtueoftheparticipatingtenantsbeingabletograntthemselvesextendedleasesatnilpremiumandapeppercornrent; themarriagevalueattributabletoaleaseheldbyaparticipatingtenantwillbedeemedtobenilifthatleasehasanunexpiredtermofmorethan80yearsatthedatethattheinitialnoticeisgiven;
•compensationforlossinvalueofotherpropertyownedby thefreeholder,includingdevelopmentvalueconsequentto theseveranceofthebuildingfromthatotherproperty.
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Thevaluationdateisthedatethattheclaimnoticeisgiven.Value addedtotheflatofaparticipatingtenantbytenant’simprovements isdisregardedinthevaluation.
Forthepurposesofcalculatingprice,thetenantsshouldtaketheadviceofaproperlyqualifiedsurveyororvaluerwithexperienceinthefieldofenfranchisementandknowledgeofthemarket.
Inadditiontothepriceandtheparticipatingtenants’ownlegalcostsandvaluationfees,theclaimantswillberequiredtoreimbursethefreeholderhislegalcostsandvaluationfees.
Secondly,theparticipatorswillneedtoestablishhowtofinancethecostofacquisition.Itmay,forexample,benecessaryforanumberofparticipatingtenantstoseekafurtheradvancefromaBuildingSocietyorBank.Inparticular,theparticipatorswillwanttodecidewhoistofinancethepurchaseofthenon-participators’flatsandonwhatbasis.
Thirdly,itwillbenecessarytoestablishwhatvehicletheparticipatingtenantsshoulduseinordertobuythefreeholdandhowtheywillestablishandregulatetherelationshipbetweenthemselves.Inmostcases,thisislikelytobethroughacompanystructure,althoughin somecircumstancesatrustmightbemoreappropriate.Itshouldbe notedthattheparticipatingtenantsdonotallhavetohaveequalshares,sothattheproportionoftheshareholdingswillbeamatterfornegotiationbetweenthem.
The2002ActprovidesforcollectiveclaimstobemadethroughthemechanismofaRighttoEnfranchise(RTE)company.Howeverthoseprovisionshaveneverbeenbroughtintoforceanditisunlikelythat theywillbe.
Fourthly,theparticipatingtenantsshouldseekadvicetoestablish whethertherearetaximplicationstothetransaction,bothinrelation totheirindividualpositionsandinrelationtothevehiclechosento buythefreehold.
Finally,thecollectiveenfranchisementlegislationprovidesnoguidanceorcontrolsonthewayinwhichtheparticipatingtenantsshouldworktogetherinordertoacquirethefreehold.Sincethepurchasemaywellinvolvesubstantialsumsofmoneyandislikelytotaketimetocompleteand,duringthistime,theparticipatingtenantswillbeheavilyreliantoneachotherfortheperformanceoftaskswithinstrictlimits,itisstronglyadvisedthat,beforeembarkingonaclaim,theparticipatingtenantsshouldenterintoaformalagreement(calledaparticipationagreement)inordertoregulatetherelationshipbetweenthemduringthecourseofthe claim.
Enfranchisement9
HOWISTHECLAIMMADE?
Itisimportanttobeawarethatmostofthetimelimitsimposedontheprocedural stages of the claim are strict and a failure to do something withintherequiredtimeframecanhavedireconsequencesforthedefaulter.Itisthereforeessentialthat,bythetimeyoureachthenextstageoftheprocedure,youarewellorganisedandbackedbyexpertprofessionaladvice.
ThereasonforthisisthatthenextproceduralstepistheservicebytheparticipatingtenantsonthelandlordofwhattheActcallstheinitialnotice–thenoticewhichclaimstherighttocollectiveenfranchisement.Costsstarttorunagainstthetenantsfromthetimetheyservethe initial notice.
Amongstotherthingsthisnoticemustspecify:
•theextentofthepropertytobeacquired–supportedbyaplan;
•fullparticularsofallthequalifyingtenantsinthebuilding– notjusttheparticipatingtenants;
•thepricebeingofferedforthefreehold–theoffershouldbegenuine;
•thenameandaddressofthenomineepurchaser–thepersonorcompanynominatedbytheparticipatingtenantstoconductthenegotiationsandtobuythefreeholdontheirbehalf;
•thedatebywhichthefreeholdermustgivehiscounter-notice, beingadatenotlessthantwomonthsfromthedateoftheservice of the initial notice.
Thefreeholderislikelytorespondwithaproceduralnoticerequiringtheparticipatingtenantstodeducetitle.Thefreeholder’svaluerisalsolikelytoinspectthebuildingforthepurposeofcarryingoutavaluation.
Withintheperiodspecifiedintheinitialnotice,thefreeholdermustservehiscounter-notice.Firstandforemost,thismuststatewhetherornottheclaimisadmitted.Ifitisnot,thentheparticipatingtenantsmustdecide iftheywishtodisputetherejectionthroughthecourts.
Therearecircumstanceswherethefreeholdercanresistaclaim onthegroundofredevelopment.
Iftheclaimisadmitted,thenthecounter-noticemuststate,amongst otherthings:
•whichoftheproposalscontainedintheinitialnoticeareacceptable;
•whichoftheproposalscontainedintheinitialnoticearenotacceptableandwhatarethefreeholder’scounter-proposals–particularlyonprice;
•whetherthefreeholderwantsaleasebackonanyunitsinthebuildingnotheldbyaqualifyingtenant(forexample,aflatsubjecttoashorttermtenancyoracommercialunit).
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DISPUTeSIfanytermsofacquisition(includingtheprice)remainindisputeaftertwomonthsfollowingthedateofthecounter-notice,theneitherpartycanapplytotheleaseholdvaluationtribunalforthematterindispute tobedetermined.
Thisapplicationmustbemadewithinsixmonthsfollowingthedate ofthecounter-noticeortheclaimislost.
Mostclaimsaresettledbynegotiation.Ifaleaseholdvaluationtribunalisrequiredtomakeadetermination,thenthereisarighttoappealthatdecisiontotheLandsTribunalifpermissionisgiventodoso.
COMPLETION
Oncethetermsofacquisitionhavebeenagreedordeterminedbytheleaseholdvaluationtribunal,thenthematterrevertstoaconveyancingtransactionwiththepartiesenteringintoasalecontractonthetermsagreed or determined and thence to completion.
Ifthematterproceedstocompletion,thentheparticipatingtenants,throughtheirnomineepurchaser,willbecomethefreeholderofthebuilding,subjecttothevariousflatleases.Ineffect,theparticipatingtenantswillreplacetheexistingfreeholder.Thiswillputtheminapositiontograntthemselvesextendedleases.
Theremaybetaxationconsequencesongrantinganextendedlease,particularlyforsecondhomeowners.
Therewillalsoberesponsibilities.Theparticipatingtenantswillbecomeresponsibleforthemanagementofthebuildingandtheadministrationoftheservicechargeaccountinaccordancewiththecovenantsintheoriginal leases.
Ifthenomineepurchaserisacompany,allparticipatorswillbeshareholdersandsomewillbeofficersofthatcompany.
Theseareallmattersonwhichclearprofessionaladvicewillbeneeded.
Itisimportanttonotethatanindividualtenanthasnorighttobecomeaparticipatingtenant–evenifheisaqualifyingtenant.Itisamatterforthetenantstoresolvebetweenthemselves.Youcanalwaysasktobeallowedtojoinin,butyouwillhavenoremedyifrefused.Ifagroupdoesformwithoutyou–anddoesnotneedyou–youmaywellfindyourselfleft out.
However,ifyouareleftout,thatneednotnecessarilybetheendoftheroad.Thisisbecauseofthesecondmajorinnovationthatwasintroducedbythe1993Act–theindividualrighttoacquireanewlease.
enfranchisement 11
THe INDIVIDUAL RIgHT TO eXTeNDLEASEHOLDREFORM,HOUSINGANDURBANDEVELOPMENTACT1993
WHATISIT?
Theindividualrighttoastatutoryleaseextensionappliestoallqualifyingtenantsofflats.Theconditionisthatyoumustbethetenantofaflatwhichyouholdonalonglease(i.e.aleaseforanoriginalterminexcessof21years).Furthermore,youmusthaveownedtheleaseforatleasttwoyearsbeforethedateoftheclaim.Forthepurposeoftheleaseextension,thereisnolimittothenumberofflatsyoumayowninthebuildingandyoumayextendanyorallofthemprovidedthattheconditionsaremet.However,youcannotbeaqualifyingtenantifyouholdabusinesslease.
Priortothe2002Act,thepersonalrepresentativesofadeceasedtenanthadnorightstomakeaclaim,evenwherethedeceasedtenantwasabletofulfilthequalifyingconditions.However,suchpersonalrepresentativescannowmakeaclaimprovidedthattherightisexercisedwithin aperiodoftwoyearsfromthedateofgrantofprobate.
WHATDOIGET?
Ifyouqualify,thenyouwillbeentitledtoacquireanewextendedleaseinsubstitutionforyourexistinglease.Thisextendedleasewillbeforatermexpiring90yearsaftertheendofthecurrentleaseandwillreserve a peppercorn rent throughout the term.
Broadly,theleasewillotherwisebeonthesametermsastheexistingleasebutthelandlordwillhavecertainadditionalredevelopmentrights,exercisablewithin12monthsbeforetheexpirationofthecurrentleasetermandwithin5yearsbeforetheexpirationoftheextendedlease.
THe PRICeThepricetobepaidforthenewleasewillbetheaggregateof:
•thediminutioninvalueofthelandlord’sinterestintheflat,consequentonthegrantoftheextendedlease;beingthecapitalisedvalueof thelandlord’sgroundrentandthevalueofhisreversion(beingthepresentnear-freeholdvacantpossessionvaluedeferredforthe unexpiredleaseterm);
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•50%ofthemarriagevalue(theadditionalvaluereleasedbythetenant’sabilitytomergetheextendedleasewiththeexistinglease)mustbepaidtothelandlordalthoughthemarriagevaluewillbedeemedtobeniliftheexistingleasehasanunexpiredtermofmorethan80yearsatthedateoftheclaim;
•compensationforlossinvalueofotherpropertyownedbythefreeholder,includingdevelopmentvalue,consequentonthegrant ofthenewlease.
Thevaluationdateisthedateoftheclaimnotice.
Inadditiontothepriceandthetenant’sownlegalcostsandvaluationfees,youwillalsoberequiredtoreimbursethefreeholderhislegalcostsandvaluationfees.
HOWDOICLAIM?
Theproceduretobefollowedisverysimilartothatforcollectiveenfranchisement.Itisthereforeimportanttobeawarethatmostofthetime limits imposed on the procedural stages of the claim are strict and afailuretodosomethingwithintherequiredtimeframecanhavedireconsequences for the defaulter.
Thequalifyingtenantcanserveapreliminarynoticetoobtaininformation.Thereafter,heserveshisnoticeofclaim(inthiscasecalledthetenant’snoticeofclaim)whichamongstotherthingsneedstostate:
•adescriptionoftheflat–butnotnecessarilywithaplan;
•sufficientparticularstoestablishthattheleasequalifies;
•thepremiumbeingoffered–itmustbeabonafideoffer;
•thetermsofthenewlease;
•thedatebywhichthelandlordmustgivethecounter-notice, beingadatenotlessthantwomonthsfromthedateofservice ofthetenant’snotice.
Thelandlordislikelytorespondwithaproceduralnoticerequiringpaymentofadeposit(equalto10%ofthepremiumbeingoffered) andaskingthetenanttodeducetitle.Thelandlord’svaluerisalso likelytoinspecttheflatforthepurposeofcarryingoutavaluation.
Withintheperiodspecifiedinthetenant’snotice,thelandlordmustservehiscounter-notice.Firstandforemost,thismuststatewhetherornottheclaimisadmitted.Ifitisnot,thenthetenantmustdecideifhewishestodisputetherejectionthroughthecourts.However,unlikeacollectiveenfranchisementclaimwherethenomineepurchasermakestheapplicationtothecourtinthesecircumstances,inthecaseofthestatutoryleaseextension,itisthelandlordwhomakestheapplication if he has refused the claim.
enfranchisement 13
Therearecircumstanceswherethelandlordcanresistaclaimonthegroundofredevelopment.
Iftheclaimisadmitted,thenthecounter-noticemuststate,amongst otherthings:
•whichoftheproposalscontainedinthetenant’snoticeareacceptable;
•whichoftheproposalscontainedinthetenant’snoticearenotacceptableandwhatarethelandlord’scounter-proposals–particularlythe premium.
DISPUTeS
If either the terms of the lease or the premium remain in dispute after twomonthsfollowingthedateofthecounter-notice,theneitherpartycanapplytotheleaseholdvaluationtribunalforthematterindispute tobedetermined.
Thisapplicationmustbemadewithinsixmonthsfollowingthedate ofthecounter-noticeortheclaimislost.
Mostclaimsaresettledbynegotiation.Ifaleaseholdvaluationtribunalisrequiredtomakeadetermination,thenthereisarighttoappealthatdecisiontotheLandsTribunalifpermissionisgiventodoso.
COMPLETION
Oncethetermsoftheleaseandthepremiumhavebeenagreedordeterminedbytheleaseholdvaluationtribunal,thenthematterreverts toaconveyancingtransactionwiththepartiesproceedingtocompletionofthenewlease.
Thetenantcanwithdrawatanytimeandthereareprovisionsforthetenant’snoticetobeconsideredwithdrawnifcertainstricttimelimits arenotmetbythetenant.Asincollectiveenfranchisement,thetenantisonriskastocostsasfromthedateofhistenant’snoticesoitisessentialtobepreparedandtobeproperlyadvisedbeforestartingdowntheroadtoanextension.
Atenant’snoticeiscapableofbeingassignedbutonlyinconjunctionwithacontemporaneousassignmentofthelease.Itiscommonfor asellertoserveanoticeandthensellthatnoticewiththeleaseto apurchaser,whowilltakeovertheclaim.
Thereisnolimittothenumberoftimesthatatenantcanexercise thisright–solongasheispreparedtopaythecostsfordoingso.
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ENFRANCHISEMENTOF HOUSeSLEASEHOLDREFORMACT1967
WHATISTHERIGHT?
TheLeaseholdReformAct1967givesthetenantofaleaseholdhousewhofulfilscertainrulesofqualificationtherighttoacquirethefreeholdandanyintermediateleases.
HOWDOIQUALIFY?
Inlookingattherulesofqualificationunderthe1967Act,therearethreebasicquestionsthatneedtobeanswered.First,doesthebuildingqualify.Secondly,doestheleasequalify.Thirdly,doesthetenantqualify.
Inorderforthebuildingtoqualify,itmustbea‘house’.Thishasdevelopedawidedefinitionandcanmeanashopwithaflatabove, orabuildingconvertedtoflats.However,oneessentialfeatureisthattheremustbenomaterialoverorunder-hangwithanadjoiningbuilding(ifthereis,thenitislikelytobeaflat).
Theleasemustcomprisethewholeofthehouseanditmustbealongtenancy,i.e.,aleasewithanoriginaltermofmorethan21years.However,ifitisabusinesstenancy,thenitwillnotqualifyifitisfor anoriginaltermof35yearsorless.
Thetenantmusthaveownedtheleaseofthehouseforaperiodofatleasttwoyearsbeforethedateoftheclaim.Priortothe2002Act,itwasalsonecessaryforthetenanttooccupythehouseashisonlyormainresidenceforathreeyearperiod.Theresidencetesthasnowbeenabolishedsaveinlimitedcircumstances.
Ifahouseismixedusesothatthereisabusinesstenancy(forexample abuildingcomprisingashopwithaflatabove)orifthehouseincludesaflatwhichissubjecttoaqualifyingleaseunderthe1993Act(seeabove),thenthetenantisstillrequiredtofulfilaresidencetest.However,itismodifiedsothatthetenanthastooccupythehouseashisonlyormainresidenceonlyfortwoyearsorperiodsamountinginaggregatetotwoyearsintheprecedingtenyears.
enfranchisement 15
Priortothe2002Act,thepersonalrepresentativesofadeceasedtenanthadnorighttomakeaclaim,evenwherethedeceasedtenantwasable tofulfilthequalifyingconditions.However,suchpersonalrepresentativescannowmakeaclaimprovidedthattherightisexercisedwithinaperiodoftwoyearsfromthedateofgrantofprobate.
THe PRICe
The1967Acthasthreedifferentvaluationmethods.Ineverycase, thevaluationdateisthedateoftheclaim.
Ifthehousequalifiedpre-1993(i.e.bynotneedingtorelyonamendmentsmadetothefinanciallimitsand/orlowrentconditionsbyeitherthe1993Act,the1996Actorthe2002Act)andhadarateablevalueoflessthan£1,000(£500outsidetheGreaterLondonarea)on31March1990thenthevaluationisunderSection9(1).Thissectionexpresslyexcludesanymarriagevalueandrestrictsthevaluationtoaproportionofsitevalue.
Ifthehousequalifiedpre-1993butdidnothavearateablevalueoflessthan£1,000(£500outsidetheGreaterLondonarea)on31March1990,thevaluationisunderSection9(1A).Thevaluationelementshereare:
•thecapitalisedvalueofthelandlord’sgroundrentandthevalueofhisreversion(beingthepresentfreeholdvacantpossessionvaluedeferredfortheunexpiredleaseterm);and
•50%ofthemarriagevalue(theadditionalvaluereleasedbythetenant’sabilitytomergethefreeholdandleaseholdinterests)mustbepaidtothelandlordalthoughthemarriagevaluewillbedeemedtobeniliftheleasehasanunexpiredtermofmorethan80yearsatthedateoftheclaim.
Ifthehousequalifiespost-1993(i.e.theclaimantneedstorelyonamendmentsmadetothefinanciallimits/lowrentconditionsbyeitherthe1993Act,the1996Actorthe2002Act)thenthevaluationisunderSection9(1C).ThisisbroadlythesameasaSection9(1A)valuationexceptthefreeholdercanbecompensatedforlossinvalueofotherpropertyownedbyhim,includingdevelopmentvalue,consequent ontheseveranceofthehousefromtheotherproperty.
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HOWDOICLAIM?
Theprocedureforaclaimisrelativelystraightforward.Thetenant serveshisnoticeofclaim,whichisinprescribedformandneeds tostate(interalia):
•adescriptionofthehouse–butnotnecessarilywithaplan;
•particularstoestablishthattheleaseandtenantqualify;
•whatthetenantthinksisthebasisofvaluation.
Inadditiontothepriceandthetenant’sownlegalcostsandvaluationfees,hewillberequiredtoreimbursethefreeholderhislegalcostsandvaluationsfees.
Thelandlordislikelytorespondwithaproceduralnoticerequiringpaymentofadeposit(equaltothreetimestherentpayableunderthelease)andaskingthetenanttodeducetitleand(ifaresidencetestisrelevant)toproduceevidencebystatutorydeclarationthathefulfilstheresidence condition.
Thelandlord’svaluerisalsolikelytoinspectthehouseforthepurpose ofcarryingoutavaluation.
TheActrequiresthelandlordtostate,withintwomonthsofthenoticeofclaimbeingserved,whetherornotheadmitstheclaim.Iftheclaimisnotadmittedthenthetenantmustdecideifhewishestodisputetherejectionthroughthecourts.
Afreeholdercannotresistaclaimonredevelopmentgrounds.
DISPUTeS
Iftheclaimisadmittedandeitherthetermsoftheconveyanceorthepriceremainindisputeaftertwomonthsfollowingthedateofthenoticeofclaim,theneitherpartycanapplytotheleaseholdvaluationtribunalforthematterindisputetobedetermined.Therearenotimelimitsonthemaking of this application.
enfranchisement 17
COMPLETION
Oncethetermsoftheconveyanceandthepurchasepricehavebeenagreedordeterminedbytheleaseholdvaluationtribunal,thematterrevertstoaconveyancingtransactionwiththepartiesproceeding to completion.
Thetenantcanwithdrawatanytimeuptoonemonthfollowingthedeterminationofthepurchaseprice.Unlikecollectiveenfranchisementandstatutoryleaseextensionclaims,therearenostrictproceduraltimelimits.However,thetenantisliableforthelandlord’scostsasfromthedate of his notice of claim.
THe eXTeNDeD LeASe OPTION
The1967Actalsoallowsthequalifyingtenantofahousetotakeanextendedleaseofthehouseforatermof50yearstoexpireafterthetermdateoftheexistingleaseatamoderngroundrentthroughouttheextendedtermandwithoutpaymentofapremium.Thisrighthasbeenlittleexercisedinrecentyearsnotleastbecausenoneoftheamendmentsrelatingtotheabolitionoffinanciallimitsandthelowrenttestintroducedbythe1993Act,the1996Actandthe2002Actapplytoit.Furthermore,theextendedleaseoriginallyhadnostatutoryprotectionand carried no right to acquire the freehold.
However,followingthe2002Act,alltenanciesextendedunderthe 1967Actnowhavesecurityoftenure.Furthermore,thetenantunder anextendedleasenowhastherighttoacquirethefreehold,ifheotherwisefulfilsthequalifyingconditions;insuchcases,thepurchasepricewillbedeterminedinaccordancewithsection9(1C)butwithmodifiedassumptions.
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Thisguideisageneralstatementofthelawasat1September2007.Eachclaimneedstobeconsideredinlightofitsownfacts.Itisrecommendedthereforethatspecificadviceshouldalwaysbeobtainedontheparticularfacts of each case.
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Enfranchisement19
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