Why People Go For Enfranchisement
It is true that the issue of financial value is one of the chief reasons for freehold purchase, which is also known as enfranchisement. This is simply because as a leaseholder holds a lease for a number of years, it will diminish in value as the terms of the lease reduces. So if there are only 50 or so years left on a lease then it will obviously be worth much less than if it had 90 years to run.
Leaseholders can therefore decide to buy the freehold from their landlord. This will mean that they are able to get a lease extension because they now own the freehold interest. The flat involved will then be much more marketable simply because prospective buyers will wish to buy a flat that has an associated freehold, this is far preferable to having a lease that is only left with twenty or so years to run. So it is more financially beneficial doing a freehold purchase!
However bad management by the landlord or freeholder is also a major reason for the initiation of enfranchisement. Often the freeholder is too slow to carry out repairs or does not afford enough time and attention to the building. Due to this leaseholders can often be frustrated with the landlord and the only option they have is to start the enfranchisement procedure (purchasing the freehold).
Bad management of common areas such as the stairways and a lack of maintenance generally, along with an increase in service charges can cause leaseholders to lose patience pretty quickly. Service charges are often levied for cleaning, lighting or heating to common areas and so on. If these are kept reasonable then the leaseholders will tolerate the charges. But if the freeholder suddenly increases these charges, then the leaseholders can feel that they are no longer willing to tolerate charges being imposed upon them.
The final reason for enfranchisement happening is simply that the freeholder has alienated the leaseholders in some other fashion, through being unwilling to co-operate, lacking interest or generally being disagreeable. This is mercifully rare, but it can lead leaseholders to simply try and take control over their own destiny, as opposed to being at the mercy of someone whom they view as not having their interests at heart.
If you are interested in enfranchisement for your block, be aware that the legal process and in particular the timescale, complex and can be tricky. It is crucial therefore that when electing your advisors you need to get yourself a specialist solicitor and surveyor whom are experienced in freehold purchase.
About the Author
Thinking of enfranchisement? Talk first to Bonallack and Bishop - solicitors specialising in freehold purchase (http://www.enfranchisementsolicitors.co.uk ). Tim Bishop is senior partner at the firm, responsible for all major strategic decisions. He has grown the firm by 1000% in 13 years and has plans for further expansion.
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