You are the freeholder or intermediate leaseholder of a house and want to know what price you will receive from enfranchisement of the house?
You have established your tenant satisfies the qualifying criteria and they can enfranchise the house, under the Leasehold Reform Act 1967. See Can my tenant or their purchaser enfranchise the house? You may have received a Notice of Claim from your tenant, to which your solicitor must respond to either admit or deny the Claim, within two months of the date of the Notice.
The following describes how the price is calculated:
What price will I receive for the house? Method of calculation.
There are three different valuation methods under the 1967 Act:
If the house qualified before 1993 and had a rateable value of less than £1,000 on 31 March 1990 (£500 outside Greater London) then the valuation is under section 9(1), which excludes any marriage value and restricts the valuation to a proportion of site value.
If the house qualified before 1993 but did not have a rateable value of less than £1,000 on 31 March 1990 (£500 outside Greater London) then the valuation is under section 9(1A), and includes the value of the capitalised rent, landlord’s reversion, and 50% of the marriage value in situations where the unexpired term was for less than 80 years at the date of the Claim.
If the house qualified after 1993, then the valuation is under section 9(1C), and includes the value of the capitalised rent, landlord’s reversion, 50% of the marriage value in situations where the unexpired term was for less than 80 years at the date of the Claim, and any loss in the value of other property owned by the freeholder as a result of the consequence of the severance of the house from other property owned by the freeholder.
In addition to paying the price, the leaseholder is required to pay the reasonable legal and valuation costs of the freeholder and any intermediate leaseholders.
What price will I receive for the house? Process to calculate.
In order to calculate the price, and your share of it, we as Chartered Surveyors, Regulated by RICS, with Registered Valuers that are experts in lease extensions and enfranchisement can:
- inspect the house;
- calculate the floor areas;
- research the market;
- ascertain whether the house should be valued under section 9(1), 9(1A), or 9(1C) of the 1967 Act; and
- value the house on any basis necessary to calculate the price.
In preparing our calculations, and report on the price, we take account of the terms of the leases, deeds of variation, licences for alterations and any other documents of relevance. If there is an intermediate lease, we advise on the implications, including those if it is a Minor Intermediate Leasehold Interest (‘MILI’).
What price will I receive for the house? Negotiations.
After reporting, we attempt to negotiate the price with the tenant’s valuer, to save you the expense and risks of a First Tier Tribunal (Property Chamber) hearing, with possible appeal to the Upper Tribunal (Lands Chamber).
If negotiations do not progress so we can recommend settlement, we provide a Cost Benefit Analyses to assess the sense of proceeding with a hearing in the First Tier Tribunal (Property Chamber), or if the case is subsequently appealed, in the Upper Tribunal (Lands Chamber).
If a decision is taken to proceed to tribunal, we prepare and give expert evidence at the hearing, after which the tribunal will issue their determination.
What price will I receive for the house? Examples of our recent work.
We have recently:
Enfranchisement of House: Reported on the price likely to be receivable from the enfranchisement of several houses and whether the client might have been provided with negligent valuation advice in relation to the purchase of a substantial portfolio of ground rent investments.
Enfranchisement of House: Reported on the price likely to be payable for the enfranchisement of a house and negotiated the price.
Our services: We are able to advise you on the price you are likely to receive from the enfranchisement of a house where you are either the freeholder or intermediate leaseholder. If you have received a Notice of Claim under the 1967 Act, or a copy of one, we are able to advise you on the likely enfranchisement price, and to negotiate the price for you. Your solicitor, or the freeholder’s solicitor if you are an intermediate leaseholder, will need to respond within two months of the date of the Notice, stating whether or not the Claim is admitted. We are Chartered Surveyors, Regulated by RICS, with Registered Valuers that are experts in lease extensions and enfranchisement. We are also able to provide further information to answer What price will I receive for the house?
