Who said life was dead in the enfranchisement market?

There is indeed life ahead despite the continuing ‘B word’ impasse affecting the London property market as Shingles looks forward to negotiating 3 completely different collective enfranchisement claims for his clients in the months ahead.

The first is a fabulous historic Georgian former coach house with stabling in the heart of Belgravia converted into 4 flats,

The second a former ink factory of 25 amazing loft style flats with garaging on the edge of the City,

The third a ‘Brutalist’ rigorous and unyielding architecture late 1950’s building of 7 flats flanking Georgian, Victorian and Edwardian buildings in arguably London’s finest address where the ensemble of Trad and Modern works well together.

Just watch this space.

 

 

The conundrum of owning a lease from an Ecclesiastical Landlord

Section 31 of The Leasehold Reform Act 1967 [for houses] requires in the case of Ecclesiastical Landlords that: “The sanction of the Church commissioners is required as to the contents of any conveyance of extended lease to be granted by  any ecclesiastical landlord and as to valuation and certain other matters under the 1967 Act.

Section 96 of The Leasehold Reform, Housing & Urban development Act 1993 [for flats] has a similar sanction: “As with the 1967 Act, detailed provision is made for the Church Commissioners to sanction the contents of any conveyance or lease under the 1993 Act, and as to price. The Church commissioners are entitled to appear to be heard in any proceedings involving ecclesiastical land.”

It then adds:-  “There is no right to acquire to acquire any interest in, or a new lease of, property that is within the precincts of a cathedral church.”

So as can be seen, in the case of houses, there is no such exemption.

The only way for a flat to obtain an extended lease or freehold (i.e.: collectively – although this would be highly unlikely to succeed as all of the participating flats will need to qualify as a ‘house’ – see paragraph following)  is if the flat can reasonably pass the test as a ‘house.’

To qualify as a ‘house’ – the property does not have to have 4 vertical walls per se, it just has to be a house with no other property under / oversailing. Those houses where there are parts of other properties that under / oversail – then the test is the degree of whether the under/ over sail is a Material Part (of the subject house in question, not the other property that under/ over sails) as determined in Malekshad.

However, as much as a ‘flat’ could qualify as a ‘house’ if it is deemed that the under / oversail is not a material part and thus require the Church to sell the freehold; the next potential dilemma on the horizon is the view of the Law Commission as to its final recommendation to government on leasehold reform.

One of the main changes it proposes is a new regime in that there would no longer be “houses” and “flats”  but a single category of “residential units” covering both.

Logic has it that if the s 96 exemption is retained, then it would include houses as well unless the Law Commission  looks carefully at the s 96 exemption and proposes to government it be abolished when it makes its final recommendations next year.

With this concern in mind, I have put clients of mine who own a head lease on 78 flats in a cathedral close in direct touch with the Law Commission and they will now discuss with them s96 over the coming months as it develops its final recommendations for reform in the particular area.

In the meantime, any houses or flats in a cathedral precinct that could pass the test as a ‘house’ may be best to press on and serve notice under the 1967 Act if there are also other more pressing reasons to move forwards such as:

  • Minimise the premium payable by serving notice at the bottom of the market cycle [Brexit],
  • Avoid potential additional marriage value becoming payable if the leases say were to slip shortly under 80 years; and of course
  • Hedge against the Law Commission not recommending to government abolition of the s96 exemption.

The importance of detailed research to reduce the premium payable

When acting for lessees, it is paramount to get back to the condition of the house or flat as at the grant of the lease to determine whether there are any valid improvements carried out by the lessee or a predecessor in title – the value of which falls to be disregarded.

Painstaking research is needed which could include research at the Grosvenor Archive with the estates permission, the London Metropolitan Archives particularly for past historic photographs which can, for example, prove when an additional storey was added if initial planning research draws a blank, and drainage plans as this often reveals changes not picked up on the planning records.

This is even more important in houses where one can look back to the commencement of prior leases by virtue of section 3(3) of the 1967 Act where the tenant of any property under a long tenancy, on the coming to an end of that tenancy, becomes or has become tenant of the property or part of it under another long tenancy …. shall apply as if there had been one single tenancy granted for a term beginning at the same time as the term under the earlier tenancy and expiring at the same time as the later tenancy.

A wonderful example of this provision was where I managed to trace the leases continuously right back to 1831 on a large house in Belgrave Square when the then house was approximately 2/3rds the size of the house as at the date of claim notwithstanding lack of electric light and modern plumbing services. The result was a settlement over 63.5% lower than the landlords quoting premium saving my client nearly £4m off the Grosvenor’s quoting premium.

Research can also be conducted at the RIBA Collections Archive at the V&A where they keep all of the original plans of celebrated architects. This was particularly helpful recently in being able to scale measure as to area in order to advise potential claiming tenants on the (albeit original) layout of the other flats in the building in the landlord’s control (including the porter’s flat) where, for obvious reasons, ‘Mum was the word’ as to my clients intentions. As a result access would not have been possible to physically inspect and measure and report back on value. Nevertheless I was able to give them a for more considered idea of the additional space and consequent cost they may have to collectively purchase the additional space  if the landlord subsequently did not elect to take a voluntary 999 year leaseback at a peppercorn rent. Fortunately I have been around long enough to possess an old imperial scale rule in order to complete this task!