When dealing with a leasehold title, the statutory requirements for a freehold purchase and a lease extension are largely the same:
- The lease must be a ‘long lease’ (more than 21 years)
- The tenant must have been a tenant in the property for at least two years
- There must not be any applicable exclusions
However, the crucial difference is that to purchase your freehold title under the Leasehold Reform Act 1967, the property must be defined as a ‘house’, rather than a flat.
A house is defined in the legislation quite generally, as a building adapted for living in and can be reasonably so called. However, a house cannot be divided horizontally from separate “houses”, in which case the house building may be a house.
If you serve a s.5 notice on your freeholder, you are effectively bound into the proceedings of purchasing the freehold. This means if the freeholder were to challenge your notice on eligibility grounds, you would be roped into the resulting litigation with potentially costly consequences.
You must, therefore, be confident in your eligibility before the notice is served. If your property is not obvious to be a house by instinct, but you are considering looking into statutory enfranchisement – consider the points below.
Thinking of purchasing your freehold? Find out how we can help
The question as to what defines a ‘house’ as a ‘house’ for the purposes of the LRA 1967 is dense and complex despite its apparent legislative simplicity. The definition is largely legal, which means it is difficult to receive a definitive answer from a surveyor. Instead one must consider the application of legal principles in the common law.
For properties that aren’t fully residential – the Court of Appeal in Grosvenor Estates Ltd v Prospect Estates Ltd [2008] held that a building could not reasonably be called a house when nearly 90% of the building could not be lawfully occupied for residential purposes. This case infers that a property’s suitability for being labelled a ‘house’ may be based on the physical ratio of the ‘house’ and non-‘house’ elements.
For overhangs – the LRA1967 states that a ‘material’ part must not lie above or below part of the structure not included in the demise. Parsons v Trustees of Henry Smith’s Charity [1973] held that in most instances, an overhang of a property into a separate part of the building will often be deemed ‘material’.
However, the judges held that the general legal question was contextual, “largely factual and one of common sense”. The issue of materiality was considered in Malekshad v Howard de Walden [2001], where four out of the five law lords stated that the matter should be considered in the context of the house alone and not to the rest of the building/structure to which the ‘house’ is attached.
The case law generally implies that each house must be considered on a case-by-case basis when determining if it qualifies for enfranchisement as a ‘house’. Before serving a s.5 notice, make sure to copiously consider any possible deviations from the standard definition of a ‘house’ and make sure to fully understand the context of how and why the differences are there. For more detailed information on leasehold enfranchisement please see our blog – Freehold Purchase – Top 10 Facts for individual house owners where you can download a free copy of our freehold enfranchisement brochure.
If your property is excluded from freehold enfranchisement by not meeting the criteria of a house, there is always a viable alternative of a lease extension. A lease extension can increase the value of your property’s title and help push your lease further away from the alarming 80-year danger zone where the marriage value can prove costly very quickly. For more detailed information please see blog – Lease Extension – Top 10 Facts for flats or apartments.
To discuss any aspect of the freehold purchase & lease extension process or a consideration of the ‘house or flat’ question considered above, feel free to contact ours specialist lease extension and freehold purchase solicitor in Manchester on 0161 820 8888 or solicitor in London on 0208 889 8888 and speak to one of our experienced members in the Leasehold Team.
For more information on our buying the freehold service visit our Freehold Purchase page. Alternatively, call our Leasehold Enfranchisement Solicitors on 0330 127 8888 for a free 30-minute consultation on your matter.
For more information see our guides on:
– Lease Extensions (Flats) (OR DOWNLOAD OUR FREE BROCHURE HERE)
– Leasehold Enfranchisement & Freehold Purchases (OR DOWNLOAD OUR FREE BROCHURE HERE)
– Collective Enfranchisement (Flats)
– Professional Negligence – Leasehold Property
– Right to Manage & Appointment of Manager
– Service Charge & Breach of Covenant Disputes
– Freeholders, Landlords and Management Companies
About Monarch Solicitors
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