Non-qualifying Permises

NEW FIGURES SHOW FREEHOLD PURCHASE IS ON A ROLL

Press Release : October 2007

NEW FIGURES SHOW FREEHOLD PURCHASE IS ON A ROLL

LONDON, 18th October 2007 --- Enfranchisement & Leasehold Solutions (ELS) announced that a record number of owners of leasehold flats are opting to purchase their freehold (enfranchise). ELS are currently arranging collective enfranchisement for over 2,000 flats in London.

This news comes on the fifth anniversary of the Commonhold & Leasehold Reform Act 2002, the legislation that made it substantially easier for tenants of flats and houses to purchase the freehold of their properties.

LEASE also report that since commencement of the 1993 legislation there have been 765 cases of collective enfranchisement determined at the Leasehold Valuation Tribunal, relating to a total of around 7,500 flats. However, there is no record anywhere of 1993 Act cases which have settled without going to the LVT or acquisitions by private negotiation outside the Act. LEASE think that cases determined at the LVT might represent around 10% of all acquisitions but they say that this is just educated conjecture.

ELS STARTS COLLECTIVE ENFRANCHISEMENT FOR LEASEHOLDERS IN THE HEART OF KENSINGTON

6th JUNE 2007 - Press Release

LONDON, 6th June, 2007 --- Enfranchisement & Leasehold Solutions (ELS) announced today that it has reached agreement with the leaseholders at 83-85 Queens Gate, SW7 to conduct the collective enfranchisement of the property and enable the participant lessees between them to obtain the freehold.

ELS has just arranged for the Initial Notice to be served on the owners of the freehold, Cawarra Properties Ltd, after 11 out of the 15 flats decided to participate in purchasing the freehold.

"Please pass my thanks on to everyone in ELS who has been involved with this project, and in particular Mr Lyndon-Skeggs, who we should thank for sticking with us after a difficult start."

Alexander Urquhart, Ellesmere Court

Dalmeny Court, Duke Street, St James

Collective Enfranchisement, 24 Flats

River Court, Upper Ground

Collective Enfranchisement, 86 Flats

Robert Adam House, Baker Street

Collective Enfranchisement, 14 Flats

27 Cranley Gardens, London, SW7

Collective Enfranchisement, 15 Flats

24 Bath Road, Reading

Collective Enfranchisement, 10 Flats

Meadway Court, Meadway

Collective Enfranchisement, 55 Flats

38 Stanhope Gardens, London SW7

Collective Enfranchisement, 5 Flats

Windsor Way Estate, Windsor Way

Collective Enfranchisement, 200 Flats

10 Lennox Gardens

Collective Enfranchisement, 5 Flats

12 Lennox Gardens, London SW1X

Collective Enfranchisement, 6 Flats

49 Lennox Gardens, London SW1X

Collective Enfranchisement, 5 Flats

Boss House

Collective Enfranchisement, 109 Flats

High Mead, Harrow

Collective Enfranchisement, 25 Flats

The Perspective, Westminster Bridge Road

Collective Enfranchisement, 185 Flats

Admiralty Gate, Kent

Collective Enfranchisement, 12 Flats

An Englishman's home is his castle: or is it?

Property People Magazine: October 2007

To compound all of this, there are the added difficulties of changing legislation, a shortage of solicitors and surveyors with in-depth expertise, the
human problems of co-ordinating a group of disparate lessees, many of whom may be absent from the block, plus the challenge of countering the commercial professionalism of the larger landlords, and the intractability of some
of the smaller landlords.

This formula has proved popular and ELS is now conducting a large number of enfranchisements of all types and sizes of blocks throughout London and beyond.
Every enfranchisement differs and it is almost certain that each will have its own particular problems. However, the essential elements of a typical collective
enfranchisement are as follows:

Andrew Lyndon-Skeggs is the founder and managing director of ELS
email: anls@els-els.com; www.els-els.com.
www.ppmagazine.co.uk october 2007 property people

"Nice job Andrew. Keep up the good work!"

R Shah, Windsor Way

Princes Riverside Estate

Collective Enfranchisement, 127 Flats

Manor House, Marylebone Road, London NW1

Collective Enfranchisement, 58 Flats

51 Green Street, London W1K

Collective Enfranchisement, 6 Flats

Clarewood Court, Seymour Place, London W1H 2NN

Collective Enfranchisement, 87 Flats

56 Cadogan Place, London SW1 9RT

Collective Enfranchisement, 6 Flats

Woburn Close, Stevenage, SG2 8SW

Collective Enfranchisement, 27 Flats

36 Buckingham Gate, London SW1E 6PB

Collective Enfranchisement, 35 Flats

Andrewsfield, Welwyn Garden City, AL7 2PQ

Collective Enfranchisement, 37 Flats

Beaumont, Belgrave & Beverley Courts, London W4

Collective Enfranchisement, 140 Flats

14 Addison Crescent, London, W14

Collective Enfranchisement, 4 Flats

Collective Enfranchisement, 15 Flats

Manor House

The Advantages of Collective Enfranchisement

Freehold acquisition by Collective Enfranchisement offers many advantages and is a sensible decision for almost all long leasehold tenants. The benefits include:

1. Your property will no longer be a wasting asset.

2. Your flat will immediately increase in value and this increase should be more (sometimes significantly more) than the cost of enfranchisement.

4. As a participant, you will cease to pay ground rent.

5. Following the acquisition of the freehold, the management will be fully under the control of the participant lessees.

6. With control of the management, it should be possible to reduce the running costs, particularly in so far as insurance and maintenance costs.

The Advantages of Lease Extensions

Lease extensions offer some of the advantages of Collective Enfranchisement. However, the cost of a 90 year lease extension will be close to the cost of Share of Freehold (with 999 year lease), whereas a lease extension does not increase value to the same extent as Collective Enfranchisement, and neither does it secure control of the property.

It is generally best therefore to consider lease extensions only in situations where Collective Enfranchisement is not possible, either because it would not be feasible to gather 50% of the lessees, or for some other reason.

Lexham Gardens

The history of Enfranchisement is enshrined in the following Acts.

Leasehold Reform Act 1967

Leaseholders of houses granted the right to acquire either the freehold or 50 year lease extension.

Landlord and Tenant Act 1987

Obliged Landlords disposing of their interest to offer it first to tenants, and gave tenants rights to acquire in the event of default in the landlords management obligations.

The Leasehold Reform, Housing & Urban Development Act 1993:

The Housing Act 1996

Minor modifications to the above.

Commonhold & Leasehold Reform Act 2002

In force from July 2002 and May 2003 (deferred). This Act made it substantially easier for tenants to enfranchise, not least by abolishing the residency test, and is likely to lead to profound changes in the existing system of leasehold ownership.

Onslow Gardens

Exceptions include buildings where the non-residential content is more than 25%, lessees who own more than 2 flats and, in some instances, blocks of 4 or less flats, where there is a resident landlord.

So... What Do You Get.

Egerton Place

What you get depends on the type of project:

Lease Extension: Generally a 90 year extension to your lease, at peppercorn ground rent.

One of the advantages of Collective Enfranchisement is that it not only provides lessees with the freehold, but also any intervening head lessor interests.

So... Enfranchisement Valuation.

Maitland Court

The method of valuation for enfranchisement is stipulated by legislation. It is technical, and the details of the way in which it is applied rest on precedent. We aim to settle the price during the negotiation period but, if this is not possible, the price is determined by adjudication, by an impartial organisation, the Leasehold Valuation Tribunal.

The Act aims to recompense the landlord on a basis that is fair to both parties, and provides that the notional profit that arises by bringing together the freehold and leasehold interests (the Marriage Value) is split equally between the landlord and the participant lessees, where the unexpired term of the lease is less than 80 years.

The division of the Marriage Value is one of the reasons why the increase in value resulting from enfranchisement should always be greater than the cost.

So... The 80 Year Rule.

Strathmore Gardens

As a result, the cost of enfranchisement increases, sometimes considerably, the moment that the unexpired term drops below 80 years. This is important and applies to Collective Enfranchisement and Lease Extensions. The 80 years date is the date of the Initial Notice. Accordingly, if your lease is nearing 80 years, appointment of experts (hopefully ELS!) becomes crucial.

So... Non-Participants.

Cranley Gardens

It is perfectly normal in Collective Enfranchisements to have some lessees who do not wish to participate, and perfectly acceptable provided participancy is 50% or more, and provided there is a means of financing the non-participant part of the purchase price.

Someone therefore has to pay for the non-participant part and this is traditionally the participants. This may well cause the enfranchisement break down.

However, one of the advantages that ELS brings is that we have exclusive access to a fund that will provide the finance for the non-participant element (and associated fees) at no cost to the participants, if the participants so wish.

The non-participant lessees themselves remain in exactly the same situation as they were at the outset, on the same lease, paying the same ground rent, the only difference being that they will have a new freeholder (the Nominee Purchaser Company) and will pay ground rent to whoever finances the non-participant element of the purchase price.

So... Non-Qualifying Premises.

23-25 Lowndes Square

A landlord has the right (and in some instances an obligation) to take a leaseback over non-qualifying premises such as flats held direct (with statutory tenants), commercial premises etc.

If the freeholder does not choose to take a leaseback, and if the non-qualifying premises are not wanted by the residential lessees, ELS can make alternative arrangements through its Fund, or otherwise. This will simplify what might otherwise have been a complex and costly situation, changing it instead to one where participants, if they so choose, need only to be responsible for the premium applicable to their own flat.

Princes Riverside Estate

Most tenants holding leases in excess of 21 years have an absolute right to acquire their freehold by Collective Enfranchisement, or obtain a 90 year Lease Extension.

Collective Enfranchisement & Lease Extensions offer considerable advantages to lessees, and the 2002 legislation makes each more widely available, especially so Collective Enfranchisement.

Nevertheless, the process is not easy, requiring specialist legal and property expertise and, in the case of Collective Enfranchisement, the need for a high degree of coordination between tenants and financial resources to cater for non-participants.

ELS overcomes all of these problems by conducting the entire enfranchisement project from start to finish, with finance packages for participants and non-participants (if required). ELS also fixes its fees from the outset, at a competitive level, thereby avoiding cost overrun.

At the start of the project, ELS provides lessees with preliminary advice, and establishes whether the property and the tenants will qualify.

ELS then offers a free preliminary meeting and indicative valuation, sufficient to enable the tenants to decide whether to proceed.

A fixed fee is agreed upon, based on a detailed Fee Quote. This fee encompasses all of the work involved (aside from LVT), including the valuations, negotiations, all of the legal work, setting up the Nominee Purchaser Company etc. ELS offers considerable value for money.

Once the appointment has been settled, ELS then works closely with the lessees, to steer the process through the many stages from start to finish, working to a closely monitored, structured programme.

ELS works exclusively for lessees, and seeks to obtain optimum results for the lessees in every case.

41 Eaton Place

Most tenants holding leases originally in excess of 21 years have an absolute right to acquire their freehold by Collective Enfranchisement, or obtain a 90 year Lease Extension.

Collective Enfranchisement & Lease Extensions offer considerable advantages to lessees, and the 2002 legislation makes each more widely available, especially so Collective Enfranchisement.

Generally, we advise lessees to opt for Collective Enfranchisement (to obtain Share of Freehold) wherever possible, otherwise Lease Extension. The overall cost (per flat) is approximately the same.

The process is not easy, requiring specialised legal and property expertise and the need for a high degree of coordination throughout the project.

ELS is highly unusual in that it conducts the entire enfranchisement process, covering all aspects of the work involved, including the legal and surveying work, and does so at a fixed, competitive fee established at the outset of each project.

At the start of the project, ELS provides lessees with preliminary advice and establishes whether the property will qualify for a Lease Extension, and may give an initial approximate guide to cost.

A fixed fee is agreed upon based on a detailed fee quote. This fee encompasses all of the work involved (aside from LVT), including the valuation, negotiation and the legal work. ELS offers value for money.

Once appointed, ELS liaises closely with the lessees to steer the process through the many stages from start to finish. ELS works exclusively for lessees and seeks to obtain optimum results for lessees in every case.

Cranley Gardens

ELS can assist with funding and finance packages for participants as follows:

Generally, participants will pay by cash, or by extending their existing mortgages.

However, if this proves difficult, ELS can introduce participants to specialist teams at HSBC and at the Royal Bank of Scotland, each of whom may be able to assist.