Leasehold enfranchisement process

Leasehold Enfranchisement – the process following service of the initial notice  It is important to remember that the process of enfranchisement has only just begun when the Initial Notice has been served.  It is of paramount importance that the parties comply with the statutory timetable set down following service of the notice. What is the

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Leasehold Enfranchisement – the process following service of the initial notice

 It is important to remember that the process of enfranchisement has only just begun when the Initial Notice has been served.  It is of paramount importance that the parties comply with the statutory timetable set down following service of the notice.

What is the procedure ?

Deduction of title

 Having received the initial notice, the landlord has a period of 21 days within which he can request that the nominee purchaser provides proof of the participating tenants’ title.  This evidence of title has to be supplied by the purchaser within 21 days of service of the request.  Failure to provide proof of title within the deadline will result in the initial notice been deemed to be withdrawn.

Proof of title can usually be satisfied by proving up-to-date office copy entries for all participating tenants.  In order to avoid any potential delays, this should ideally be prepared prior to service of the initial notice.

Counter-notice

For the landlord, the main concern on receipt of the initial notice is how to respond.  The counter-notice must be served on the nominee purchaser by the date stated in the initial notice.

In order to decide how to respond, the landlord will usually request proof of title (see Deduction of title, above).  It will then be advisable to instruct a specialist surveyor to carry out a valuation for inserting in the counter-notice and for the purposes of any negotiations.

The counter-notice must include the following details:

  • Confirmation of the landlord’s position – does he admit that the purchaser has the right to exercise the claim?;
  • An address for service in England and Wales
  • If he does not admit the right then the landlord must set out the reason for this position; and
  • Confirmation of any intention to oppose on the basis of redevelopment.

What if no counter-notice is received ?

If counter-notice is not received from the landlord by the date stated in the tenant’s initial notice, then the landlord will automatically have lost his right to oppose the proposals set out in the tenant’s initial notice.  It is therefore obviously of great importance for the landlord that this deadline is complied with and the appropriate preparation made in good time.

In these situations, the tenant has to make an application to the Court to make an order stating that the renewal lease be granted on the terms set out in the initial notice.  This application must be made within 6 months’ of the deadline for service.  If the application is made, the Court has to make an order on the terms set out in the initial notice.

What happens once a counter-notice has been served ?

If the landlord’s position is, for example, that the tenant’s application is opposed on the grounds that the landlord intends to redevelop the land, then the landlord must make an application to the court on this basis.

Alternatively, the landlord could maintain that the initial notice is invalid for a technical reason.  If this is the case, then either party can apply to Court seeking determination of whether the notice is valid or not.

If the landlord does not oppose the tenant’s application or the validity of the notice, there is a specified period of 2 months for negotiations to take place from service of the counter notice. In the vast majority of cases this is not sufficient time for the parties to reach an agreement on all the terms in question. If terms can not be settled between the parties, it will be necessary to apply to the leasehold valuation tribunal, seeking the determination the terms that remain in dispute. This application must be made not earlier than 2 months nor later than 6 months from the date of service of the counter notice.

The above time limit is an absolute time limit and failure to comply would lead to the deemed withdrawal of the initial notice. It is therefore obviously important that negotiations are progressed as rapidly as possible.

 What is the procedure once terms have been agreed?

 When terms are agreed or determined, the parties have two months from that date to enter a binding contract. If there is no binding contract, you will be required to apply to Court before the expiry of a further two months beginning with the end of the appropriate period. Again, if these deadlines are not complied with there is a deemed withdrawal of the initial notice.

As is clear from the information above, the preparation of the initial notice is only the beginning of the process with a great deal of time-sensitive work to follow.  It is extremely important that the parties comply with the statutory deadline or they risk severely prejudicing their position.  If you need help or advice on the enfranchisement process, please contact us and we will be glad to assist.

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