The Northwood Hall (Freehold) Company has been set up so that eligible leaseholders can participate in a collective enfranchisement scheme. This is a process that enables the owners of flats in a building to join together and buy the freehold of that building from the landlord. The UK Government set up this scheme in 1993 under the Leasehold Reform Housing and Urban Development Act.

 

Collective enfranchisement is a well understood and lawful scheme within the UK property market and is recognised as being highly advantageous to leaseholders. 

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Through the collective enfranchisement process, this offer aims to bring leaseholders together with a shared interest in managing Northwood Hall to the highest standard and maximising value for money.

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This scheme has been negotiated by leaseholders in Northwood Hall, ensuring that eligible leaseholders can participate and benefit financially irrespective of their current financial circumstances.

 

Signing up to join is completely free of financial commitment and carries no financial risk. If the process is unsuccessful for whatever reason, you will have paid nothing and lost nothing.

 

The entire legal process and all professional costs have been covered by a "White Knight" investor, who has been brought in to cover the shortfall in funds, making it affordable for leaseholders to participate. 

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Our proposal for collective enfranchisement has been tailored to respond to the specific case of Northwood Hall, but otherwise follows the standard process used by many similar and wholly legal actions by like-minded leaseholder groups across the UK.

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Two novel aspects of the proposal that specifically benefit Northwood Hall leaseholders are:

 

1. the ability to participate but delay payment 

2. the need for a special resolution (75%) of shareholders to approve any major expenditure or development

 

The process is controlled by law which means that the purchase of the freehold can only go ahead with the support of at least 50% of leaseholders in the qualifying flats – in the case of Northwood Hall not less than 97 leaseholders.​

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The Law on Enfranchisement

 

• It relies on express statutory provision

• The UK Government supports collective enfranchisement and is currently considering making the process easier for leaseholders (for more, click here)

• Where there is a shortfall in finances to complete the purchase, including a “White Knight” investor is not unusual:

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Swabey & Co. solicitors reported that a West-London art-deco block of 189 flats with commercial premises at its base wanted to buy the freehold, but there was insufficient support for an enfranchisement. One of the flat owners had connections with a property company – step in the White Knight. 

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The White Knight Co. (WKC) put up the finance for the non-participating leaseholders and agreed to take a 999-year head-lease, wrapping up the non-participating leases. In this way the enfranchisement was able to proceed with WKC providing approximately half of the purchase price in return for the headlease of the non-participating flats. The Company is now recovering its investment from the premiums paid to it as those leases are extended. In this way the enfranchisement proceeded and the leaseholders have secured the long term investment in their flats. (www.newsontheblock.com)

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And according to Jason Richardson, an associate at Bircham Dyson Bell: "The benefit of using a white knight is that a collective enfranchisement can complete, enabling a tenant to get rid of a poor managing agent and solve the problem of their lease terms getting shorter." (Daily Express, 27 January 2012)

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The Process

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1. At least 50% of the qualifying leaseholders sign up (in the case of Northwood Hall, no less than 97)

2. The initial notice is served on the freeholder

3. The freeholder losing their property to leasehold buyers will nearly always refer the matter to the First Tier Tribunal. However, it is not cost-effective for the freeholder to delay the process, as the price of the freehold and head lease are completely frozen from the moment the process is triggered

4. The process should take about 12 months to complete

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