How shoudl one split freehold purchase costs in collective enfranchisement

[coffeegrind]

Hello,

We are some way down the road in a collective enfranchisement and some of owners of the 30 flats are questioning, the method used to split costs of the freehold purchase between the participants.

I have considered the methods below and would appreciate others views on the relative merits of these and suggestions as to others.

1. Split by sq footage.
2. Split by market value
3. Split evenly
4. Split by the portion of the maintenance costs that each pay as specified in the lease.

Thanks for any help

[Corinne Tuplin]

Hi Coffeegrind,

The actual statutory calculation works on a per flat basis and takes into consideration:-

1. Length of lease
2. Term of years remaining
3. Ground Rent phases
4. Market value of leasehold flat

If your flats have identical leases and there is not a remarkable difference in market values, arguably the premium should be split evenly. Your Chartered Surveyor (presuming you have one) should be able to talk you through this. If the premium is split evenly, it makes sense to divide the costs evenly as well.

I hope this assists.

Regards,


CORINNE TUPLIN
SOLICITOR
PRO-LEAGLE
www.proleagle.com

[jeffrey]

Evenly (=no.3) sounds simplest.
However, is each flat-owner paying same amount towards total purchase price? If not, you could split fees in same proportions as splitting price.
Really, leases should split service charge proportionate to square footage which itself should more or less correspond to market values.
Nothing in lease is binding re how f/r price and fees are split, of course.

[NewHouse]

But I doubt whether you will get buy-in from all 30 flats, so you have to take into account the non-participating flats. If all the flats are essentially the same, I'd keep it simple and go for an even split. Going by market value is a nightmare waiting to happen, as everyone will consider their own flat best or worst, and the market is so fast-moving at the moment the value one day is out of date a few weeks later.

[coffeegrind]

Thanks all - we went with an even split.

[Gordon999]

That sounds like a good result . Did all 30 leaseholders participate ?

[jeffrey]

Thanks all - we went with an even split.
Three years?

[coffeegrind]

It took about 3 months but I never said thanks. I was back to post something else and realised I had been remiss.