Enfranchisement of houses
Leasehold Reform Act 1967.
What is it?
The Leasehold Reform Act 1967 gives the tenant of a leasehold house who fulfils certain rules of qualification the right to acquire the freehold and any intermediate leases.
“A freeholder cannot resist a claim on redevelopment grounds.”
Amy Jackson
Partner, Residential estates
How do I qualify?
In looking at the rules of qualification under the 1967 Act, there are three basic questions that need to be answered.
The price
The 1967 Act has three different valuation methods. In every case, the valuation date is the date of the claim.
How do I claim?
The procedure for a claim is relatively straightforward. The tenant serves his notice of claim in prescribed form.
Disputes
If the claim is admitted and either the terms of the conveyance or the price remain in dispute after two months following the date of the notice of claim, then either party can apply to the First-tier Tribunal (Property Chamber) (or, if the property is in Wales, to the leasehold valuation tribunal) for the matter in dispute to be determined. There are no time limits on the making of this application. Most claims are settled by negotiation.
However, if a First-tier Tribunal is required to make a determination, then there is a right to appeal that decision to the Upper Tribunal (Lands Chamber) if permission is given to do so.
Completion
Once the terms of the conveyance and the purchase price have been agreed or determined by the First-tier Tribunal, the matter reverts to a conveyancing transaction with the parties proceeding to completion.
The tenant can withdraw at any time up to one month following the determination of the purchase price. Unlike collective enfranchisement and statutory lease extension claims, there are no strict procedural time limits. However, the tenant is liable for the landlord’s costs as from the date of his notice of claim.
A notice of tenant’s claim is capable of being assigned but only in conjunction with a contemporaneous assignment of the lease. It is common for a seller to serve a notice and then assign that notice with the lease to a purchaser, who will take over the claim.
The extended lease option.
The 1967 Act also allows the qualifying tenant of a house to take an extended lease of the house for a term of 50 years to expire after the term date of the existing lease at a modern ground rent throughout the extended term and without payment of a premium.
This right has been little exercised in recent years not least because none of the amendments relating to the abolition of financial limits and the low rent test introduced by the 1993 Act, the 1996 Act, the 2002 Act and the 2008 Act apply to it. Furthermore, the extended lease originally had no statutory protection and carried no right to acquire the freehold.
However, all tenancies extended under the 1967 Act now have security of tenure. Furthermore, the tenant under an extended lease now has the right to acquire the freehold, if he otherwise fulfills the qualifying conditions; in such cases, the purchase price will be determined in accordance with section 9(1C) but with the modified assumptions set out in section 9(1AA).
“The tenant will be required to reimburse the freeholder his legal costs and valuations fees.”
Anna Favre
Partner, Residential estates