The document discusses leasehold and freehold property ownership in England and Wales. It explains that freehold property provides full ownership of the land and building, while leasehold property involves owning the property for a set lease period, typically paying ground rent and service charges. The document outlines options for leasehold owners such as extending their lease through statutory means for an additional 90 years, or acquiring the freehold altogether through collective enfranchisement if multiple flats are involved. It also discusses resolving disputes over excessive service charges through the Property Tribunal.

1. Darren Coleran
William Bethune
Sonal Ghelani

2. 1. Do you know the difference between Freehold and
Leasehold Property?
2. Did you know that a Leasehold Title is essentially a
depreciating asset where the landlord is first in line to
benefit. Can I protect my investment?
3. Can I own both the Freehold and the Leasehold.
4. My service charge is too much and the landlord doesn’t care
– what can I do?

3. FREEHOLD PROPERTY:
 Is the highest class of property ownership in England and
Wales.
 There are no payments of ground rent or service charge.
Rent Charges may apply but these are generally quite rare
and the payments relatively small.
 You own the building and the land upon which it is built

4. LEASEHOLD PROPERTY.
 Comprises of an estate in land subject to a predetermined
period of ownership. Most flats are leasehold.
 You essentially retain an estate interest for a prescribed
period of ownership ranging from 99 – 999 years and usually
pay ground rent and contribute toward the maintenance and
insurance of the building – (Service Charge)
 As the lease starts to decrease so too does the value of the
property. Leases with less than 80 years left are difficult to
sell and buyers are reluctant to consider these.

5.  Owning leasehold property comes with many benefits for
instance shared maintenance and insurance costs. That is
not to say that there are not disadvantages.
 The length of the lease will forever determine the value of
your home and you need to carefully monitor this. As we
have seen leases with less than 80 years can be difficult to
market and to mortgage. This is because the landlord is
entitled to “marriage value” when the lease is extended.
Marriage Value is typically described as the increased value in
marrying the leasehold and freehold estates. As your term
decreases the landlords share in your property will increase.

6.  A Lease extension – Statutory or Voluntary
 An application for Collective Enfranchisement
 Do nothing – You may simply decide to do nothing. You may
have plans to sell the property in the future but be cautious.
By doing nothing you seriously undermine the value of your
estate and may give yourself a headache on sale.

7.  Many lessees make the mistake of trying to negotiate a lease
extension directly with their landlord. Whilst most landlords
will have the discussion caution is advised. A small premium
is likely to reflect an increase in the ground rent payable.
This can also impact negatively on re-sale. A voluntary lease
extension does not have the benefit of statutory protection
and many landlords will abuse the naive lessee.
 A Solicitor or Surveyor should be retained to negotiate on
your behalf. If the landlord is unwilling to negotiate
reasonable terms then there may be a fall back position.

8.  The 1993 Leasehold Reform Housing and Urban Development
Act provides a statutory framework in which to extend your
lease. Under the legislation you will automatically become
entitled to a lease extension of 90 years as well as the
unexpired term. The ground rent will be reduced also to a
peppercorn (nil).
 To qualify under the 1993 Act you need to have owned the
property for a period of 2 (two) years. Ownership is
determined by the date of registration with the land registry.
 The right to extend the lease can be assigned by a qualifying
lessee. This means that you can purchase a flat and enjoy the
benefits of the rights created by the Act without waiting 2 yrs.

9.  The 1993 Act as well as providing a statutory framework to
extend your lease also provides for the acquisition of the
freehold reversion. The purchase of the freehold is often
referred to as “Enfranchisement” and you may also see
property being marketed with a “share in the freehold”.
 To qualify for collective enfranchisement there must be at
least two flats in the block with long leases. A long lease is
typically defined as one granted in excess of 21 years. As
long as at least 50% of the qualifying lessees agree a claim
can be made to acquire the freehold. The benefits are
significant and range from self determination of service
charge issues to extending your lease.

10. Getting Started.
 You will need to consult with a Solicitor who specialises in
such matters to ensure that you qualify under the Act. Is the
lease a long lease and have you owned the property for two
years or more?
 A surveyor is then appointed to consider the lease and to also
undertake a valuation of the property. Specialist Surveyors
are recommended.

11.  Once the valuation has been undertaken your Solicitor will
prepare the Notice for service on the landlord. A minimum
period of two months is allowed for a response.
 The landlord will usually ask to carry out their own valuation
of the property during this two month period, evidence of
your entitlement will also be requested together with a
statutory deposit (generally 10% of the proposed premium of
£250.00 whichever is the greater)
 A counter notice is then usually issued by the landlord setting
out their proposals for the lease extension. At this stage you

12. should expect the premium to exceed that set out in your
notice.
 The parties are then required to enter into a period of
statutory negotiation lasting six months. During this time
your surveyor will attempt to negotiate a reasonable premium
with the landlords representatives.
 If an agreement can be reached then a period of two months
is allowed to complete with a further two months allowed to
deal with any complications and issues where the Courts
intervention might be needed.

13. Getting Started.
 Since this is a collective right you and your fellow
lessees/participants need to meet with a Solicitor to establish
your entitlement under the Act. The criteria is strict and the
make up of the property must not exceed 25% non-residential
use.
 Assuming that you qualify a “Participation Agreement” is
prepared. This agreement sets out the basis upon which you
all agree to participate in the process and deals with such
issues as costs and the grant of new 999 year leases after
completion.

14.  A valuation for enfranchisement purposes is then prepared
and again a specialist surveyor should be consulted. Your
Solicitor can usually make a recommendation.
 A notice of claim is then prepared and setting out the basis of
your claim. This must be signed by all of the participants
prior to service.
 On service the landlord is given two months to respond,
much like the section 42 process. It is not unusual for the
landlord to request evidence of entitlement as well as their
own valuation of the property.

15.  A counter notice is then received and it is not unusual for the
landlord to value the reversion higher than you.
 The parties are then required to enter into a period of
statutory negotiation, again lasting six months. Your
surveyor and the landlord surveyors will attempt to negotiate
a settlement.
 If terms can be agreed the parties have two months in which
to complete with a further period of two months reserved for
Court applications and complications.

16.  The Property Tribunal , formerly known as the LVT exists to
determine issues of contention and relating to s.42 and s.13
claims.
 In cases where the parties are not able to negotiate a
settlement following the two months reserved for
negotiations then an application can be made. In both cases
(s.42 and s.13) you have four months to make the
application. Failure to do so will result in the deemed
withdrawal of your claim and you will not be entitled to make
a fresh claim for 12 months.

17.  Tribunal applications are similar to applications made to
Court and involve lengthy processes and strict compliance
with directions. The proceedings can be extremely
expensive. The advice of your Solicitor and Surveyor at this
stage is critical.
 Vesting Orders. – In cases where the landlord fails to respond
to your claim (s.42 and s.13) A claim can be made to the
County Court for a Vesting order. The Court will essentially
and in conjunction with the Property Tribunal determine the
application and your entitlement. Similar applications are
used where the landlord is absent.

18.  Many firms specialising in leasehold reform will readily
acknowledge that service charge disputes make up a
significant part of their work.
 The payment of service charge should be seen as a benefit
and something that protects and adds value to your property.
Often however this is not the case with excessive demands
and poorly drafted demands making up the majority of
complaints.
 A Service Charge demand needs to meet a prescribed
statutory format to have been legitimately raised. The 1987
Landlord and Tenant Act (S. 47-48) provides that the demand
must contain:-

19.  The name and address of the landlord.
 An address for service of notices if not in the UK.
 For demands raised after 1st October 2007 and where the
service charge is payable in advance a summary of rights and
obligations must be attached to the demand (30th November
2007 – Wales)
 Where the service charge is payable in advance s.18 provides
that the landlord can only recover the costs incurred within an
18 month period of raising the demand in the prescribed
format.

20.  If you have owned your property for two years or more you
can ask your landlord for a lease extension. You are
automatically entitled to 90 years plus the unexpired term.
Ground rent is reduced to a peppercorn.
 If there are two or more flats in the building with long leases
you may be able to acquire the freehold. 50% of the
qualifying tenants must agree to participate and no more
than 25% of the building can be made up of commercial
premises. The benefits range from self determination over
maintenance and insurance to being able to extend your
lease.

21.  The Property Tribunal (formerly the Leasehold Valuation
Tribunal) exists to determine issues of contention in relation
to 1993 Act claims – (lease extension or enfranchisement). If
you believe that the landlord is making an excessive demand
then you can ask the tribunal to make an independent
determination.
 Service Charges disputes can be resolved by asking the
tribunal to make a determination on the reasonableness of
the charges raised. This can be an expensive and time
consuming process and it might well be advisable to consider
a “Right to Manage Claim”

22.  Right to Manage claims, if successful allow you take over the
management and maintenance of your block. Often these
proceedings are considered where there is not a sufficient
majority to enfranchise or where perhaps the finance is not
readily available to fund such a claim.
 You have the power – The legislation relating to landlord and
tenant has improved significantly over the years and the
recent case law suggests that the days of the bullying
landlord may well be behind us. Tribunals now have much
wider powers to award costs and landlords are now much
more likely to embrace compromise and reasonable
negotiation.

23.  The Leasehold Reform team at Bolt Burdon specialise in all
matters appertaining to lease extensions and
enfranchisement. We regularly attend the Property Tribunal
and County Court on behalf of our clients.
 Bolt Burdon undertake all work on a fixed fee basis. Unlike
many firms we do not charge by the hour and understand
that cost is a sensitive issue.
 As a firm we actively embrace technology and our lawyers are
able to work remotely and at times to fit in with you.
Weekend and late evening appointments can be arranged.

24. Providence House
1 Providence Place
Islington
N1 ONT
Tel :- 020 7288 4775
darrencoleran@boltburdon.co.uk
williambethune@boltburdon.co.uk
sonalghelani@boltburdon.co.uk