If you and your fellow leaseholders are keen to purchase your freehold, you will want to know the likely costs involved in the collective enfranchisement process.
There are two main aspects to collective enfranchisement costs:
1) The price (known as the ‘premium’) that you will pay for the freehold, and
2) The legal and professional costs that you will need to pay to your solicitors and valuers.
How much does it cost to buy your freehold?
Calculating the premium (or price) of your freehold is the job of a specialist surveyor. They will assess the property and provide you with best case and worst-case valuations.
The cost of the freehold varies in the same way as do house prices so it is difficult to give an accurate assessment of how much it might cost, but the price will increase as the lease gets shorter in length.
What are the legal and professional costs of collective enfranchisement?
In our experience at Brady Solicitors, where there are 10 or more participating flats it is rare for each participating flat to have to pay more than £500 plus VAT in legal costs.
The cost per flat increases in blocks with fewer flats however, even if there are only two flats participating in the collective enfranchisement claim, the legal costs would rarely exceed £1,500 plus VAT per participating flat.
Surveyors’ costs will also vary from property to property. For small developments with 3 or 4 flats, the fees may be around £1,000, rising to five figures for larger blocks. Brady Solicitors can put you in touch with a specialist surveyor for this essential part of the collective enfranchisement process.
Participants are also jointly liable for the reasonable legal costs and valuer’s costs incurred by the freeholder in dealing with your Initial Notice and you should bear this in mind when estimating what your collective enfranchisement claim may cost.
It is very difficult to guess what another solicitor or valuer might charge, particularly when we do not know who they will be, but in our experience, you can expect to pay approximately the same as your own legal and valuer’s fees.
As litigation costs may be payable in the event of a tribunal or court application being made, it is advisable that the participants have a “fighting fund” for legal costs in case tribunal or court proceedings become necessary. The freeholder is however responsible for their own costs in relation to any collective enfranchisement tribunal proceedings.