Understanding the Factors of Property Management
There are a lot of crunches that people face when negotiating a leasehold enfranchisement with the landlord. There are also in many cases details that crop up within the negotiations that were unseen at the beginning.
There are certain requirements that need to be fulfilled in order for a leasehold enfranchisement to be concluded satisfactorily.
The building in question has to be made up of at least 2 flats, and the original lease on the property must have been purchased with at least 21 years left to run on it. Out of all the leaseholders a minimum of 50% of them need to participate in the leasehold enfranchisement. There are companies, such as, Simarc who can help you with the deal, however you need to have a good understanding of the market before committing to any company.
If the freeholder is living in the building that he or she originally converted into flats, and the total number of flats is less than 5, then it will not be possible for a leasehold enfranchisement to go ahead.
The leaseholder is not required to be a resident of the property.
The cost of purchasing the freehold is a little complicated in the way it is worked out. There are three aspects to the calculations:
They are made up of the capitalised value of the ground rent, the expected value of the property when it reverts to the freeholder once the lease comes to an end, and 50% of the marriage value.
Marriage value is defined as the increase in value of the property once the leasehold and freehold interests are ‘married’, that is combined together.
To get the ball rolling for a leasehold enfranchisement, all the leaseholders have to form a ‘right to enfranchise’ company. Then the solicitor that has been enlisted to help will serve notice on the freeholder in the form of making a monetary offer for the purchase of the freehold. At this point the freeholder will either accept the offer or if he/she is not satisfied with the offer then a counter notice will be served containing the freeholders asking price. The negotiations will carry on from here until a mutually satisfying arrangement is agreed.
