Case Study - Lease Extensions Collective 2
Case Study - Lease Extensions, Collective Enfranchisement 2
Jean Howe – Partner Kirkby & Diamond Ref.: JH/16/7’07
The client was a management company acting on behalf of an estate of 77 flat owner occupiers/ leaseholders who sought to acquire the freehold interest under the terms of the Leasehold Reform Housing and Urban Development Act 1993.
A detailed inspection was undertaken of the majority of the properties on the estate being typical properties of each design and certainly several flats within each of the seven blocks. It was necessary to have in place a participation agreement as marriage value formed part of the valuation and therefore the effect of participating and non participating tenants on the valuation came into play.
Kirkby and Diamond advised the management company (ie the acquiring company) on numerous matters including the contents of the participation agreement, the funds that would be needed to facilitate the purchase, the funding of the sums payable for the non participating tenants, the progress of negotiations with the freeholder and valuer.
Whilst there was always the back up scenario of taking this matter before a Leasehold Valuation Tribunal, the freeholder accepted the inevitable and consented to a negotiated purchase price without the recourse to the Leasehold Valuation Tribunal with the associated additional costs to both parties.
By the expert and detailed knowledge that Jean Howe, partner at kirkby & diamond Chartered Surveyors has in this particular field, she was able to advise the purchasing management company of the options available to it in respect of proceedings and potential costs.
Eventually, 2 years 9 months after the initial instruction, the purchase was completed. Subsequently, Jean Howe now acts as valuer for the freehold owning company where individual leaseholders seek to acquire individual lease extensions from the freehold owning company.
The management company was able to buy the freehold and gain control over the entire estate for the benefit of the future owner occupiers of the estate. The company received good quality advice and therefore was able to make decisions from a position of knowledge and understanding of the implication of those decisions.
Eventually, the majority of non participating tenants actually took up the offer to participate in the freehold purchasing company which reduced the exposure to commercial loan funding.