Landlord Counts Cost of Obstructing Collective Enfranchisement

The Leasehold Reform, Housing and Urban Development Act 1993 gives leaseholders the right to buy the freehold of their properties in certain circumstances, a process known as collective enfranchisement. While landlords may not welcome leaseholders exercising this right, they would be well advised to cooperate as fully as possible. In a recent case, a landlord that was found to have delayed the collective enfranchisement process was hit with costs of nearly £15,000.

The landlord owned a building containing three flats. The leaseholders of two of the flats sought to buy the freehold of the building and served two notices under Section 13 of the Act, both of which the landlord claimed were invalid. They subsequently applied to the First-tier Tribunal (FTT) under Section 24(1) of the Act for a determination of the premium to be paid.

The landlord sought an extension from the FTT on the grounds that it had de-instructed its solicitors and was in the process of finding new legal representatives. It later sought a further delay to instruct a new surveyor. The day before the final hearing, it confirmed its agreement to a premium offer the leaseholders had made in their first Section 13 notice, 18 months earlier. The leaseholders refused this as they had discovered that a new lease had been granted in respect of the third flat in the building. The terms of the leaseholders' acquisition of the freehold were eventually determined by the FTT.

The leaseholders made an application for costs on the basis that the landlord had repeatedly and deliberately delayed the collective enfranchisement process. The FTT noted that the landlord had failed to provide evidence explaining its conduct. It had been its own choice not to be represented by solicitors at the hearing, and it had deliberately suppressed the fact that the lease on the third flat had been extended. Upholding the leaseholders' application, the FTT concluded that there had been 'a deliberate and calculating delay in an effort to avoid the inevitable enfranchisement'. The leaseholders were awarded costs of £14,704.