Ensuring that our clients understand what they read here is of paramount importance to us. Below are a list of technical terms with a corresponding definition.
The right of a group of 50% or more of Leaseholders in a particular block of flats to buy the freehold of the building from their Landlord.
The Landlord’s response to the initial Notice of Claim served by the Leaseholder in a lease extension, or the participating Leaseholders in a collective enfranchisement.
Deed of Variation
When the time comes to complete the paperwork to extend a lease, the Deed of Variation is the legal document which will allow the Leaseholder to make changes without signing a whole new lease.
An expression applied to a property which is not vertically divided (e.g. a flat or a maisonette) which is held as an independant freehold. Such properties are fairly rare and generally considered unsatisfactory by mortgage lenders due to the difficulty of enforcing covenants.
The absolute ownership of a property, defined as the highest form of property tenure offered in English law.
A nominal amount paid by the Leaseholder to the Landlord in compensation for the use of the land by the building in which the Leaseholder has a flat.
This is a payable by the Leaseholder(s) when they are buying the freehold of their property. It is extra value attributable to an interest under the freehold where there is a likelihood of being able to negotiate a lease extension in the future. For example, the participating Leaseholders in a collective enfranchisement would pay a ‘hope value’ for the non-participating flats, on the basis that they may profit in the future from granting lease extensions.
An arrangement whereby the Landlord sells his his interest subject to a new lease of 999 years at a peppercorn rent to him/herself in respect of part or all of the property. A peppercorn rent means that they will not have to pay any money.
Ownership of leasehold property means that the Leaseholder has a right to use and enjoy that property for a defined period of time, for example 99 years, 125 years or 999 years.
In general, a lease granted for a term certain of more than 21 years.
For a lease extension, the value of the Leaseholder’s interest increases when he/she buys a new lease while the value of the Landlord’s interest falls. However, there will often be an overall increase in the total value of the two interests. The difference between the total value of the interests before and after lease renewal is the marriage value.
Notice of Claim (Initial Notice)
The notice served by the Leaseholder on the Landlord under Section 13 of the 1993 Act, the service of which formally commences the enfranchisement process.
A Leaseholder who fulfils the qualifying criteria, that is, a Leaseholder of a flat under a long lease who does not own three or more flats in the building.
Right To Manage (RTM)
The right of Leaseholders within a block to take control of the management of the building. A Right to Manage company in which each participating Leaseholder is a member must be formed.
The amount payable by each Leaseholder towards the maintenance and repair of the common parts of a block of flats.