How To Get a Freehold Enfranchisement Valuation

If you and your fellow leaseholders are thinking about buying the freehold for your building, getting a professional valuation is a crucial step. But where do you start? Don’t worry – we’re here to guide you through it. In this article, we’ll break down the key steps involved in getting a freehold enfranchisement valuation, so you can understand the process and approach it with confidence.

We’ll also cover what you need to consider about calculating your freehold value before diving in, from key legislation to how marriage value works, and why having the right surveyor makes all the difference. Let’s get started!

How To Get a Freehold Enfranchisement Valuation

Step 1: Get a Project Manager

Appointing a project manager will streamline the enfranchisement process by coordinating tasks, managing deadlines, and ensuring all necessary professionals are recruited efficiently. 

Freehold purchase agents like The Freehold Collective are professionals dedicated to helping leaseholders buy their freehold, seeing you through the entire process from building leaseholders to freehold owners.

An external consultant familiar with leasehold matters will oversee communication among leaseholders, surveyors, and solicitors while keeping the process on track.

Step 2: Form a Leaseholder Group

Organising a group of leaseholders interested in purchasing the freehold is essential for collective enfranchisement. This step involves identifying those who qualify and are willing to participate, as well as ensuring at least 50% of leaseholders are on board. A strong, cooperative group can facilitate decision-making, share costs, and improve the likelihood of a successful purchase.

Step 3: Check Eligibility

Before proceeding, it’s important to verify that the building meets the legal requirements for enfranchisement. The main criteria include having at least two flats in the building and ensuring that participating leaseholders collectively own at least 50% of them. 

Additionally, qualifying leaseholders must hold long leases (typically over 21 years). Confirming eligibility early helps avoid unnecessary costs and delays.

There are other eligibility criteria that are most appropriately reviewed by a solicitor, but a good project manager will be able to give you a steer in the right direction.

Step 4: Appoint a Valuation Surveyor

Engaging a specialist surveyor with experience in leasehold enfranchisement is crucial for obtaining an accurate valuation. The surveyor will assess factors such as lease lengths, ground rents, and market conditions to determine a fair price for the freehold. A well-qualified surveyor ensures you have reliable figures to support negotiations.

The role of a valuation surveyor is critical in identifying potential issues that may affect the freehold price, such as planning restrictions or outstanding service charges. They also provide expert guidance on statutory valuation principles, helping leaseholders understand the financial implications.

Additionally, they may act as an expert witness if the case is taken to a tribunal, ensuring that leaseholders have strong professional support during disputes.

Step 5: Surveyor Inspects the Property

The valuation surveyor will conduct a thorough inspection of the building, reviewing key details such as the condition of the property, remaining lease terms, and any factors that may impact the valuation. They will also consider relevant legal and financial aspects, such as potential development opportunities or any restrictions affecting the property’s value.

Step 6: Receive the Valuation Report

Once the inspection is complete, the surveyor will provide a detailed valuation report outlining the estimated freehold purchase price. This report will include important figures such as the marriage value (if applicable), premium to be paid, and any additional costs, helping leaseholders understand the financial implications of enfranchisement.

Step 7: Use the Valuation in Negotiations

The valuation serves as the foundation for discussions with the freeholder. Leaseholders should use it to make an initial offer and negotiate terms. If an agreement isn’t reached, the valuation becomes crucial evidence in a tribunal proceeding to ensure a fair outcome. Having a professionally prepared report strengthens your position during negotiations.

Step 8: Seek Professional Advice

Throughout the enfranchisement process, seeking professional advice from a freehold purchase agent or solicitor experienced in leasehold matters is highly recommended. Their expertise ensures compliance with legal requirements when purchasing a freehold and protects leaseholders’ interests during the transaction.

What to Consider Before Your Freehold Valuation

The value of your flat’s freehold will be determined through a variety of valuation principles, processes and legalities, which you should take into consideration ahead of your freehold enfranchisement valuation for a clearer estimate:

• Legislation: Legislation stipulates the legal framework governing leasehold enfranchisement, ensuring leaseholders have the right to purchase their freehold under the Leasehold Reform Act 1993. Understanding these statutory guidelines will help in navigating the process efficiently.
• Lease length: Lease lengths can significantly impact your freehold value, so it’s a good idea to review current leases and assess how they may add to or reduce the premium payable.
• Marriage Value: Linked to lease lengths, marriage value is the increase in the value of the property following the completion of a lease extension, reflecting the additional market value of the longer lease. This is currently split between landlord and leaseholders.
• Capitalisation methods: Current property capitalisation such as annual ground rent, investment value and other landlord income streams may impact the freehold value.
• Similar freehold sale prices: Looking at the freehold property value for comparable sales or current market value is a good way to get a wide estimated value for your freehold.
• Financial implications for the leaseholder: You can use an instant online freehold calculator tool like our Freehold Purchase Calculator to get a very rough estimate of the premium that will be payable, helping you get a clearer picture of the financial implications before starting the legal process.
• Valuing an intermediate interest: An intermediate freehold interest arises when there is a third-party interest between the freeholder and leaseholders, such as a head leaseholder. This factor may impact valuation calculations and negotiations, as different levels of ownership rights must be considered.

Closing Thoughts

Securing a freehold enfranchisement valuation is a vital step in purchasing your building’s freehold, and understanding the process will help you navigate it with confidence. 

If you and your fellow leaseholders are considering collective enfranchisement, seeking professional advice can make the process smoother and more efficient. At The Freehold Collective, we specialize in guiding leaseholders through every step of the freehold purchase journey, from valuation to negotiation.

Get in touch with our team today to ensure you receive expert support tailored to your needs. Whether you need assistance with valuation or strategic advice for buying your freehold, we’re here to help.