| LEASEHOLD PROPERTY |
Ownership of leasehold property means that the leaseholder has a right
to use and enjoy that property for a defined period of time i.e. 99 years,
125 years or 999 years. |
| LEASE |
A Lease is a legal term used to describe a particular type of contract.
A Lease is therefore a written agreement between two or more parties
setting out the terms/agreement that has been reached between those
parties. |
| LONG LEASE |
In general a lease granted for a term certain of more than 21 years. There
are other definitions, these are likely to be of significance under the right-
to-buy legislation. |
| LEASEHOLD REFORM,
HOUSING AND URBAN
DEVELOPMENT ACT
1993 |
Received Royal Assent on 20th July 1993. It is the radical piece of
legislation that introduced the right for leaseholders to extend their
leases and the right for leaseholders to purchase the freeholds of their
buildings (‘collective enfranchisement’). |
| COMMONHOLD AND
LEASEHOLD REFORM
ACT 2002 |
The Leasehold Reform, Housing and Urban Development Act 1993 has
been subject to amendment since its introduction. The most significant
changes were contained in the Housing Act 1996 and the Commonhold
and Leasehold Reform Act 2002. |
| RELEVANT PREMISES |
The Building, the freehold of which is to be acquired. |
| QUALIFYING TENANT |
A leaseholder who fulfils the qualifying criteria i.e. a leaseholder of a flat
under a long lease and does not own three of more flats in the building. |
| PARTICIPATING TENANT |
A Qualifying Tenant who participates in the collective enfranchisement
process. |
| R.T.E |
A Right to Enfranchise Company. The Commonhold and Leasehold
Reform Act 2002 states that a claim for a right to collective enfranchise
-ment can only be made through a RTE. These provisions relating to
RTEs have been highly criticised and have yet to come into force. |
| NOMINEE PURCHASER |
Person(s) or entity named in the initial notice who will acquire the
freehold and become the new landlord of the building (this will be the
RTE when and if those provisions come into force). |
| INITIAL NOTICE |
Notice informing the Landlord of the leaseholder’s claim for the purchase
of the freehold. This notice must contain certain prescribed information
as set out by legislation. Service of the initial notice formally commences
the enfranchisement process. |
| RELEVANT DATE |
This is the date the Initial Notice is served. It is also the valuation date i.e.
the date at which the valuation is made for the purpose of calculating the
price to be paid for the freehold. |
| MARRIAGE VALUE |
Is the extra value brought about by the freehold and leasehold interests
being under the same control, merged or “married” i.e. the ability of
participating tenants to grant themselves long leases at no premium.
These interests are often worth more together than apart. |
| HOPE VALUE |
It is presumed the only person who will ever want to bring the freehold
and leasehold interests together is the leaseholder. The leaseholder is
therefore usually willing to offer a higher price than others may do and
hope value is that “overbid” i.e. the additional payment that the lease-
holder would make in order to ensure that they, and no-one else, would
get the freehold. |
| COUNTER NOTICE |
The landlord’s response to the initial notice served by the participating
leaseholders. |
| LEASEBACK |
The right of the freeholder to a lease-back of certain parts of the premises
on completion of the purchase of the freehold by the participating
tenants. In some cases the leaseback is mandatory; in other the
leaseback is optional. |
| SPORTELLI CASE |
Earl Cadogan and Cadogan Estates Ltd v Sportelli and others - the case
that rocked the Leasehold Valuation Markets! The case went from the
Leasehold Valuation Tribunal all the way up to the House of Lords! On
10th December 2008 the House of Lords gave judgment in this group of
appeals and held:
- “Hope Value” exists in the real market although hope value is not
the same as marriage value;
- Where marriage value is payable, hope value is not;
On these principles, in their Judgment the Lords held:
- That “hope value” was not be to included in valuations for houses
under Section 9(1) and Section 9(1A) of the 1967 Act;
- That “hope value” is not payable in valuations for lease extension
under the 1993 Act as the tenant pays marriage value; although
- In applications for collective enfranchisement claims under 1993
Act, hope value is payable and should be taken into consideration
but only insofar as non- participating tenants are concerned.
|