Staying put?
If the credit crunch and the fall in property prices mean that you are remaining longer in your flat (and you hold a long lease of it) there are a couple of things you can consider which may, in the long term, improve your flat’s value.
Collectively, a majority of leaseholders have the right to either: -
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manage the building containing their flats or alternatively;
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they can buy the freehold from their landlord (a process known as collective enfranchisement).
In both cases your flat must be in a self contained building; at least 50% of the leaseholders in the building must take part; no more that 25% of the building can be commercial space; your lease must have originally been granted for a term longer than 21 years (‘a qualifying tenancy’); and at least two thirds of all the flats must be let on a qualifying tenancy.
The right to manage enables leaseholders to take over the management of the building, so you get to choose which managing agents are employed and control the building’s services and maintenance. It is also an effective way of dealing with an absent landlord or ineffective management. The right is exercised on notice and providing all the qualifications are met, the landlord cannot refuse.
Buying the freehold to the building achieves the same ends as a right to manage claim, but with added benefits. Not only do you realise the benefits of owning a share of the freehold to your building but you also secure the long term investment in your home.
Inevitably though, buying your freehold will cost more than a right to manage claim as agreement has to be reached with your landlord over price. However, what is less commonly understood is that the valuation provisions in the current legislation are in your favour. Because of the recent falls in property values the amount to pay for the freehold is likely to be substantially less than would have been paid when prices were at their highest. This is even more the case where the leases in the building have more than 80 years left until they run out.
One word of caution, this is general summary of a highly complex area of law and there are various exclusions and special provisions. You should always take specialist advice on your particular circumstances before taking any action. Without doubt you will need expert guidance from a solicitor, a valuer and a managing agent to reach your desired goal.
For further information and professional advice on this and other related property matters, please contact Oliver Maxwell-Jones.
This publication provides general information and does not constitute legal advice. You should only act after, or refrain from acting until, you have received specialist advice. © Copyright in the content of this publication is owned by Woolley Bevis Diplock LLP. It is believed to be correct as at 1 August 2009 but is subject to change. To be sure you have the most up to date information, please contact us.
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