Collective Enfranchisement: How Much Can It Cost? - By: Tim Bishop

When looking at the costs you are going to incur in your collective enfranchisement, first consider the freehold owner who will have to be compensated for the loss of all the ground rent income that she or he would have received right up until the end of all the leases. This is often referred to as the term value (collective enfranchisement is full of complex legal terms).

Additionally the freehold owner will be compensated for the value of the freehold (note that this figure includes all the flats) at the point that the leases all expire. During collective enfranchisement this can also be called 'revisionary value'.

The freeholder is also eligible for a share of the marriage value. This term is used to refer to the 'marriage' between the freehold and leasehold. If the collective enfranchisement process is followed and the leaseholder acquires the freeholder interest the value of the property will increase, due to this the landlord will be entitled to claim 50% of this increase - which is referred to as 'marriage value'.

Collective enfranchisement is nothing if not fair to all parties and the freehold owner will also be eligible for the value of all the other interests that may be in the property, so this would include any 'Rent Act' tenancies or garages that are part of the building.

Now the cost of freehold purchase does not end there. It is actually a very complex process, with each building that is being bought in terms of collective enfranchisement being treated individually. Nevertheless, one additional cost that leaseholders should consider are the fees charged by a specialist valuer. They will have the right expertise to guide the leaseholder through the process, although this will cost more, their experience will be worth it. As well as this, the freeholder can throughout the entire process transfer any professional fees incurred across to the leaseholders. This means that the leaseholders have to pay the cost of the legal fees incurred by the freeholder, as well as the total of the valuer's fees.

As well as being liable to the freeholder's legal fees, the leaseholders will have a set of legal fees that they themselves have incurred. When considering legal advice, make sure you appoint solicitors who specialise in this type of work. Thus the costs of collective enfranchisement can add up, but overall, the costs should be weighed against the constant cost of paying the freeholder rental money.

About the Author

Do you need collective enfranchisement solicitors? Contact Bonallack & Bishop, specialists in advising on freehold purchase. Senior Partner Tim Bishop is responsible for all major strategic decisions at the firm, which he has grown by 1000% in 13 years. Tim sees himself as a businessman who owns a law firm.

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