And The Rights Of Leaseholders

By: - Legal - May 1, 2011

Before the commencement of any procedures relating to enfranchisement, arrangements for available finances should be put in place and the participating parties must all be made aware, that in the even of a withdrawal, the parties will be responsible for payment of their own and the costs of the landlord.

Although it is not a legal requirement, it is recommended that a formal valuation is carried out, in order for there to be awareness of the potential value of the property. There is no stated right of collective enfranchisement however, the right of enfranchisement, can only be pursued by way of an (RTE) or “Right to Enfranchise Company”.

The number of leaseholders needed for a successful action, must comprise a minimum of fifty percent. By example, a building, consisting of fourteen flats means that seven qualified leaseholders must be participants. However, in the advent of there being only two flats in the building, then both leaseholders must participate.

An important aspect to consider before proceeding with any enfranchisement action is whether the building in question complies with the required conditions and that there are sufficient qualifying leaseholders to enable the process. The internal floor area of the property must not exceed 25% utilised as “non-residential” space. Furthermore, a minimum of two thirds of the existing flats, must be let to leaseholders who qualify

Until the commencement of the specified Act, any purchase must be conducted by using a Nominee Purchaser. This is a person designated in the Initial Notice to the freeholder who will acquire the title to the premises and become the new owner, or landlord. Because of the term “Transitional Arrangements” this designated person may be a lessee or a representative for a type of Management Company, owned by one or several the lessees.

While collective enfranchisement is not recognized as a right, a lease is renewable under certain conditions. For a property to qualify for collective enfranchisement it must be a conversion of four or fewer flats and not a designated block built for a specific purpose. In addition, the same person should have held ownership to the freehold right, prior to the conversion of the building into flats.

Furthermore, this said person or an adult member of his family, have resided in the said building for at least the last twelve months. Another consideration is whether the freehold includes the track for an operating railway system, a bridge, tunnel or a retaining wall for the track of a railway.

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