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Obtaining collective enfranchisement for your building in Notting Hill means that you and your neighbours will manage the building as a joint freehold-owning corporation. This gives you a powerful measure of control over its operations that can not be usurped by an unelected “professional” leasehold managing agent.
The 1993 Leasehold Reform, Housing, and Urban Development Act (as amended) empowers Leaseholders to band together to purchase the freehold of their building from the Freeholder, provided they meet several qualifying criteria. We have seen an upsurge in Collective Enfranchisement recently, and it seems to be a more attractive option for Leaseholders than it was a few years ago.
If you are thinking of joining a Collective Enfranchisement, you need legal support to do it. You also need professional advice to avoid pitfalls and missteps, especially if you have not done this kind of legal work before.
They can help you by advising on the process of enfranchisement so that you and your fellow leaseholders can buy the freehold of your property. Enfranchisement is a complicated journey and one that you are best advised not to undertake without the help of experienced professionals.
Why should you bother to own the freehold? There are valid reasons for the owners of leasehold flats in a block to act together in acquiring the freehold of their block of flats.
If a leaseholder does not want to extend the lease, the next best option is collective enfranchisement. This means that a group of residents in a block of flats have banded together to purchase the freehold. Once this is done, they can agree to lease extensions for their individual flats at no extra cost to them. They can also, if they choose, convert the leasehold flats to freehold. They can waive ground rent. They can do anything that will make the property in question more valuable and more saleable, which is really something they should do if they are the ones living in a block of flats.
Instead of extending their leases, a group of residents can buy the freehold. This allows them to agree to lease extensions for individual residences, without added costs, and to eliminate ground rent. They have turned a liability into an asset. Their residences will be more valuable when it comes time to sell them, and the sales will entail less hassle. The benefits include the following:
Every business, whether large or small, needs to have some form of management control in place—either formal or informal—to maintain the proper functioning of the company and to ensure it reaches its goals.
When you own the freehold, you also own, in legal terms, the land and buildings along with the other owners, giving you virtually unlimited freedom and control in the day-to-day running of the building. You can decide to use a management company to do the functioning of the common parts of the building, or you can do it yourself. You can also choose your own contractors to do the work needed in the common parts. Hence, the presence of “freehold” in the name of a flat development does confer important benefits. To be eligible for freehold ownership, however, you must meet certain basic requirements.
The initial step in the procedure involves the Notting Hill leaseholders creating a company (the nominee purchaser) of which they are all members and then designating a purchaser. In the initial Notice, the leaseholders state certain foundational facts about themselves, as the flat owners, and about the building. They name an independent surveyor of their choice and cite a figure (substantially below the freeholder’s initial asking price) that they are offering for the freehold. This Notice is served on the freeholder, who then has 2 months to respond with a counter-notice.
When the nominee purchaser and the freeholder can not come to an agreement, the leaseholders can take the matter to the tribunal. The tribunal’s jurisdiction is set out in the Leasehold Reform, Housing and Urban Development Act 1993. Under this legislation, if leaseholders want to buy the freehold to a building, the price must be determined by an independent tribunal if direct negotiations fail. This process is necessary because, as with any negotiation, the two sides start from different positions. The freeholder usually bases the amount demanded on a very high figure, while the leaseholders want to pay a low and reasonable price. The steps are therefore:
The Full Building Survey report includes the following:
When it comes to the detail that the surveyor will go into concerning defects, repairs, and maintenance, the Homebuyer Survey is fairly standard. Full Building Surveys, however, are more refined and go into more detail about possible and likely defects. Repairs and maintenance are covered in more detail. The Survey cost depends on the age, size, and value of the property.
The analysis they undertake is a visual inspection. This means that, for the most part, the building components that can be seen will be looked at and assessed in accordance with the surveyor’s remit. The Home Survey Report will show you the visible defects and then go on to discuss the kinds of partially hidden or totally hidden defects that the surveyor thinks you should be aware of. It will also try to clarify what kinds of repair work need to be done and the nature of the repairs. The survey is effectively a way to consider “defects” and their potential impact on the building.
A Building Survey Report contains the most important information for understanding the condition of a property. The surveyors that undertake the work follow a set procedure. The first part of the report contains a general overview of the property and its surroundings. The second part details the major and minor problems with the property’s components, inside and out. These problems range from serious structural defects to issues with doors or windows that don’t close properly, and everything in between. The report is written in clear English, complemented by diagrams and photographs. If any of the problems found are what a surveyor might consider important, that’s what the report indicates—using clear and unambiguous language.
Surveyors usually use a tick box to indicate methods of repair when drafting a building survey report. They are also required to comment on the timescale of any repairs. A condition rating is typically included: what needs to be addressed immediately, what is in the process of deteriorating but is in reasonable condition, and what has not deteriorated at all.
A building surveyor is responsible for a variety of checks and tests during a building inspection. These could be checks or tests for damp and woodworm, or they could be visual inspections of the building’s structure. In building surveying, there are visual inspections of roofs – checking for tiles and slates (if applicable) and also checking for leadwork (if applicable) and looking at the junctions between roof and wall. If the wall structure has brick in it, the surveyor will visually check for any “spalling” (brick breaking apart visibly) and any bulging (brick failing to hold its place visibly), for example.
If defects need fixing immediately, then the options recommended for this survey specify what to repair and give some idea of how long the problem has existed. For the most part, this survey describes recommended repair approaches that are standard in the industry and that do not require excessive expenditure. Future maintenance is also discussed, including what to expect when the problem being surveyed is not repaired and what to expect with repairs that are made but with questionable methodology.
Your surveyor will explain some of the legal aspects of purchasing the building, covering—in as much or as little detail as you desire, and their implications, but this is subject to your solicitor verifying.
You might consider having a separate market valuation done to determine whether the property’s asking price is warranted. You’ll also need a reinstatement cost valuation for insurance reasons.
RICS’s industry guidelines suggest building surveys for properties that are large, very old, in some disrepair, or have unusual features. Building surveys are also recommended if you plan to do any significant renovations or extensions.
If you’re purchasing a relatively modern home that’s in decent shape and built to ordinary standards, then a Home Buyer Survey is an acceptable choice. If you want the assurance of an inspection and report that are pretty much guaranteed to turn up any issues that might be hidden or just hard to see, then you should go for a Full Building Survey instead.
The Full Building Survey is more detailed; it is more specifically tailored to the property your surveyor would be inspecting. It also comes with more advice on the visible defects found and on the potential hidden defects that they suspect may be present. Your surveyor will illustrate reports with photographs so that you can clearly see what has been discovered. Both the Home Buyer and Full Building Surveys describe the repairs needed, the order in which the repairs should be done, and the kind of “maintenance measures” that will be required to keep the property in good condition.
A HomeBuyer Report does include a market valuation as well as reinstatement costs. However, a Full Building Survey does not. The main reason for the differences in what is and isn’t included in the two types of reports is how focused the reports are on the condition of the property. The Full Building Survey is the most in-depth and comprehensive survey of a property that you can have done.
A number of different elements affect the calculation of the price for the freehold, making it less than straightforward. The principal ones are the value of the individual flats and the length of lease remaining on each flat. A formula provided in the Leasehold Reform, Housing and Urban Development Act 1993 can give valuers an idea of the sort of freehold premium that might need to be paid. It is essential that anyone considering the enfranchisement process knows precisely what they are buying. A basement, for example, or underground car parking could form a part of the freehold. If any of the leases could be described as short (less than 80 years), that in itself will inflate the freehold purchase price.
Looking for a Chartered Surveyor? If you are buying a property, contact us for a building survey. Our panel of CIOB, RPSA and RICS surveyors will help you with the Level 2 or Level 3 property survey you need in Notting Hill. We can also assist you in Red Book Valuations, Party Wall Awards and other services. Reach out to us today for building surveyors, valuers and party wall surveyors in London!
