Monday, May 13, 2013

Enfranchisement procedure

In 1967, leasehold enfranchisement was put into practice in Wales and England. Since then, in a period of over four decades, it has experienced a lot of change and development as it has posed many legal challenges. Simply put, it is the long leaseholder's right to buy the freehold or to legally acquire an extension on the lease. Policy makers have to protect the rights of both parties in the agreement- the tenant and the landlord. Therefore, this branch of law is still undergoing development. Leasehold enfranchisement has been in the centre of the public's attention because of its direct relevance to all the tenants and landlords.

The legislation, when it comes to leasehold enfranchisement, recognises two rights: the right of individuals or groups to purchase the freehold, and the right to extend the lease term. Even though, after the introduction of the Commonhold and Leasehold Act of 2002 the whole process of making a claim was made simpler, residents are still required by law to pass a series of qualification tests.
Property in Europe
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Tenants are greatly benefited by the changes introduced to leasehold enfranchisement. The two year ownership test replaced the previous residence requirement. Therefore, residents can now make a claim even if they have not occupied the property for the previously required period of two years. Moreover, when it comes to collective enfranchisement, they no longer have to worry about the cumbersome ownership requirement. Qualification tests on the rateable values and rent have been removed, which makes it possible for higher value houses to now enfranchise.

To make a claim for enfranchisement, tenants first need to make sure they are eligible for it. If they lack the necessary information, they can simply notify the landlord, who will be required to give them all the information on the property's interests. Asking for such information does not place any commitment on the tenant.

When you receive the above notice from your landlord and you check whether the building qualifies, you have completed the first step. Next, you are advised to ascertain whether the other tenants are also willing to go through with the enfranchisement. Overall, at least half of the tenants must be willing to finance the procedure. This rule does not apply when there are only two flats in a building. There, both have to agree to the enfranchisement.

When you have fulfilled all the requirements, you can begin the enfranchisement. To ensure that it will go without any problems or setbacks, some practical steps can be undertaken before the procedure has been started.

A valuation on the property will calculate the approximate costs that will be incurred from the procedure. Tenants should be privy to those overall expenses beforehand, because they will have to cover them later on if they wish to acquire the freehold. The valuation will take into account factors such as the marriage value of the building, the loss-in-value compensation to the previous freeholder, and the investment value of the building. The valuation is a complicated procedure that will be impossible to approximate without professional help.