Block of flats/maisonette- Freehold enfranchisement valuation disagreement

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    Block of flats/maisonette- Freehold enfranchisement valuation disagreement

    Hi
    We currently in progress of purchasing the freehold from the freeholder. We already have our ‘Acceptance Notice Served’ and we have a majority (17 out of 26 leaseholders served an acceptance notice).

    Now, we work on ‘Nomination Notice Served’. Currently, we have 4 different types of properties like below
    • 2 bedrooms flat
    • 2 bedrooms maisonette
    • 1 bedroom flat
    • 1 bedroom maisonette

    Since we have 4 types of property in order to ensure everyone pays fairly to their share. We get a local RICS surveyor to work out how much each property cost to extend the lease. I did some research I found the valuation should be based on the criteria below:

    • The current value of the freehold

    • The annual ground rent

    • The number of years remaining on the lease

    But, our RICS surveyor worked out on a floor area basis. i.e. the larger properties pay more than the smaller ones. This is the first time I heard people using this method to calculate how much each of us should pay. As a result, the maisonette is far more expensive to buy their freehold compare to the flat. The price difference is around £1,500 between 2 beds flat (£5,400) and 2 beds maisonette (£6,900). But, if I based on the current value of the freehold (like https://www.freeholdcalculator.com/freehold.php), the annual ground rent and the number of years remaining on the lease. The price between 2 beds flat (£5,450) and 2 beds maisonette (£5,990) is just £500.

    Personally, I feel unfair for 2 beds maisonette owner. I did raise this issue to the participants. Since they are more flats owners than maisonette owners. They insist to use the floor area basis method compare to the value of the freehold property.

    So, the choice that they have given to us is either we will process with the method based on the floor area. If not, they will process without us. I like to proceed because this is a good opportunity to buy the freehold, but feel very unfair for the freehold price. May I know what is my right? And what I should do.

    Hope to hear any feedback and suggestion.

    #2
    I have only dealt with purchase of freehold in flats etc a few times (5 in total) and valuation has always been done on measurement as you describe here. I see a 1 bed maisonette as being superior to a 1 bed flat and it would probably attract a higher price on the open market.



    Freedom at the point of zero............

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      #3
      I would calculate for each flat what the cost of a statutory lease extension would be and then pro rata the cost of the freehold in that same ratio

      You may have to accept the unfairness of the calcuation in the interest of getting the deal done - getting an enfranchisment underway on such a large block is far far from easy and you must not let the process lose momentum



      Comment


        #4
        I have seen valuations of this type done on floor area of each unit or on number of habitable rooms per unit (ie kitchen/living room/bedroom, etc, but excluding bathrooms and toilets).

        However I would think floor area is probably the best way of 'sharing' the building's freehold cost.

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