Leasehold Enfranchisement for Landlords - FAQs

I have received a Section 13 Notice under the Leasehold Reform, Housing and Urban Development Act 1993?

If receiving a notice such as this, it potentially means that a collective of leaseholders in the building are trying to purchase the freehold and are doing so by providing you with offer terms to do so. By law, providing the claim is valid, you are compelled to comply; you would then have two months from receipt in order to respond with a counter notice. Failing this, the leaseholders can proceed on the terms of their offer notice (or “initial notice”). It is therefore important to instruct a Solicitor and a Surveyor as soon as possible to deal with such a notice. The leaseholders must pay your reasonable legal and surveyor costs involved in this process.

Many landlords would prefer not to be compelled to sell their freehold property, depending on the circumstances, an enfranchisement can be stopped or delayed. We can for example advise on preventative measures to a potential enfranchisement claim.

Can I oppose a statutory enfranchisement claim?

If the initial notice is itself invalid, it can be rejected. For example, if the notice does not come from at least 50% of the qualifying tenants. If the notice is not critically defective, this would at most be a delaying tactic, but when the premium price is dependent on a particular valuation date, and the fact that the valuation date is frozen on the date that the offer notice is served before marriage value is to become applicable, one can begin to see how such delays can be advantageous in some circumstances.

If there are grounds to dispute the claim, then you still will want to maximise your investment. The leaseholders are only permitted to obtain the residential parts that qualify under the Act, this means that you can retain a segment of the building that you wish to keep, known as a Leaseback. The "Leaseback" must be specified in your counter-notice, or otherwise you will lose your right to claim it.

The terms of Transfer are also regulated under the legislation; you will for example, if you have other surrounding properties, wish to prevent the leaseholders from developing their freehold to the detriment of your neighbouring properties. You are able to insist on such prohibitions to development within the transfer deed.

If you have received a Section 13 Notice, or you would like advice on how best to prepare for a potential enfranchisement claim, we are happy to help.

If you would like to know more, please feel free to get in touch by calling Daniel Tang on 0208 290 7373 or email dtang@judge-priestley.co.uk