22 July 2016 by

Fees To Be Introduced For The First Time By The First-Tier Tribunal (Property Chamber) For Enfranchisement Applications

Owners of flats are often being informed of their rights to extend their lease term (known as a ‘Lease Extension’) and purchase the freehold of their building (known as ‘Collective Enfranchisement’), provided under the Leasehold Reform, Housing and Urban Development Act 1993. There is a plethora of information available online and in the press on what a leaseholder is entitled to do, how to qualify and the different stages in the process before completion of the Lease Extension or Collective Enfranchisement. However, where terms cannot be agreed between a Leaseholder and their Landlord, then the matter may have to be referred to the First-Tier Tribunal (Property Chamber) (“FtT”). This article looks at the fees involved in making an application to the FtT.

Current First-Tier Tribunal Costs

One important component of the enfranchisement process is agreement. Both the Landlord and Leaseholder must agree the amount to be paid for the new Lease, known as the premium, or the purchase price for the freehold. The terms to be included in the new Lease or Transfer must also be agreed before completion.

In both Lease Extension and Collective Enfranchisement claims, if an agreement is not reached, then within 6 months from the Landlord having served a Counter-Notice an application to the FtT must be made as a protective measure to avoid the Leaseholder’s claim being ‘deemed withdrawn’.

Currently, where Leaseholders seeking a Lease Extension or collectively purchasing the freehold of their premises cannot reach an agreement with their Landlord, then those Leaseholders can apply to the FtT for a determination without incurring any application fee.

An application to the FtT will rarely be made by a Landlord, as they are required to cover their own costs in the proceedings and can also benefit if the Leaseholder fails to file an application within the 6 month deadline. Once deemed withdrawn the Leaseholder is barred from trying again for 12 months which will change the valuation date and, inevitably, increase the premium or purchase price.

Introduction of the First-Tier Tribunal Fee in Enfranchisement
On Monday 25th July 2016 the position will change.

Leaseholders will now be required to pay £100 for filing an FtT application and a further £200 if notice of a hearing date is given.
The level of fee has been set relatively low and not on a fee scale (as originally proposed). However, it will still increase the costs to be paid by the Leaseholder. The introduction of a fee will undoubtedly have an effect on the timing of when Landlords and Leaseholders reach an agreement and the tactics used in negotiations.

In cases where a group of Leaseholders from the same building each apply to their Landlord at the same time for a Lease Extension and agreement cannot be reached over the new lease terms, then the £200 hearing fee can be shared between them. This may encourage Leaseholders to contact their neighbouring flat owners and seek to share the cost of the process, particularly where Leaseholders are unhappy with their Landlord.

For further information on extending your Lease and purchasing your Freehold contact one of our solicitors in the Enfranchisement team here.

8 July 2016 by

D.I.Y. L.P.A. – What can go wrong if you don’t use a solicitor?

The Office of the Public Guardian (OPG), which seeks to protect people who do not have the mental capacity to […]

15 July 2016 by

Brexit: implications for owner-managed businesses

Following the outcome of the referendum on 23 June 2016 and while the exit arrangements are negotiated, there is likely […]

Signup To Our Weekly e-News

"*" indicates required fields

We’ll never share your details with any third party in line with our privacy policy.