Council freeholder ordered to pay leaseholders costs of £4205 in collective enfranchisement claim
May 28
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In this case study, we explore how a determined group of leaseholders in Winchester successfully enforced their statutory rights to acquire the freehold of their building under the collective enfranchisement provisions of the Leasehold Reform, Housing and Urban Development Act 1993 (“the 1993 Act”).
Despite facing over a year of delays and lack of engagement from the freeholder—Winchester City Council—the leaseholders, represented by Ricky Coleman, solicitor at Peppercorn Law, were able to obtain a County Court order compelling the council to transfer the freehold at a fair price and deduct the legal costs of the leaseholders from the purchase price. If you are a leaseholder group looking for legal representation, Peppercorn Law would be pleased to assist on a fixed fee basis
Background: Initiating the Collective Enfranchisement Process with a section 13 notice
The process began with the service of a Section 13 Notice under the 1993 Act, which formally initiates a collective enfranchisement claim. The property in question was a block of four flats, three of which were held under long residential leases with two of the flat owners participating in the claim, meeting the eligibility criteria under the Act.
What made this case unusual is that the fourth flat was still owned by the council and formed part of the freehold. Ricky Coleman was able to advise on some little known provisions within the 1993 Act that mean the freeholder is required to take a leaseback over this flat, to ensure the leaseholders didn't have to effectively buy a flat in order to also buy the freehold
As required under the 1993 Act:
The qualifying leaseholders served the Section 13 notice on Winchester City Council proposing a premium for the freehold
The freeholder served a section 45 counter notice which accepted the claim and accepted that in this case a 999 year lease at a peppercorn rent was appropriate for the flat that wasn't held on a long lease. The Council made counter proposals for the price payable however.
The Agreed Terms—and the Delay
Following the Section 13 process:
The purchase price for the freehold was agreed at £8,100.
The terms of the freehold transfer deed (TP1) and 999 year leaseback were also settled after some negotiations between the legal advisors.
The council, however, failed to provide a completion statement and simply ceased engaging with the leaseholders altogether.
The cause of delay may have been administrative—perhaps due to understaffing—but the impact on the leaseholders was significant, with the transaction stalling for several months. It also meant that an FTT application was required initially to prolong the time for negotiations. The delays also meant a real risk of the collective enfranchisement claim being deemed withdrawn for failure to complete in accordance with the statutory timetable.
Legal Action: County Court Claim Issued
Faced with the prospect of deemed withdrawal and wasted costs for the flat owners, Ricky Coleman, acting solicitor, issued a County Court claim on behalf of the leaseholders. The claim sought to enforce the leaseholders' statutory rights under the 1993 Act and included the following key requests:
An order compelling completion on the previously agreed purchase price.
A requirement for the Council to provide a completion statement within a set time frame.
A ruling that the legal costs of the claim (£4,205) be deducted from the premium payable to the freeholder.
An order that, in the event of continued non-cooperation, the freehold transfer could be signed by the leaseholders’ solicitor, bypassing the Council entirely and allowing for completion to take place without further obstruction.
The Outcome: A Victory for Leaseholders
The case was listed for hearing at Winchester County Court, with a barrister attending on behalf of the leaseholders. The Council did not attend.
The County Court granted all the orders sought:
The freehold must be transferred without further delay.
The purchase price of £8,100 stood, but the leaseholders’ legal costs of £4,205 were deducted.
The transfer could be executed by Ricky Coleman, solicitor, if the freeholder continued to ignore the leaseholders. Meaning completion would happen with or without the co-operation of the freeholder.
Effectively, the leaseholders secured the freehold without having to pay for the court claim, meaning they were not out of pocket in enforcing their statutory rights—a rare but just result. This perhaps will also serve as a warning to the freeholder that it cannot deny leaseholders their legal rights, without incurring significant costs if it is held to account, as was the case here.
Key Takeaways: Enforcing Leaseholder Rights
This case illustrates that:
Collective enfranchisement rights are enforceable, even when the freeholder is a public authority.
There are leaseback provisions that may apply if a flat within a building isn't held on a long residential lease, clearing the way to buy the freehold without purchasing that property
Delays or non-cooperation from a freeholder can be overcome with decisive legal action from an experienced leasehold solicitor, such as Brighton based solicitor Ricky Coleman
Courts can award cost deductions from the premium where necessary to achieve fairness.
Under the 1993 Act, leaseholders have clear rights to acquire the freehold of their building—rights which, as this case shows, must be respected and can be upheld through the courts when necessary. Its understandable that most would prefer to avoid the stress and expense of a court claim however it can be a useful backstop.
For more information on collective enfranchisement or advice on enforcing your leasehold rights, contact Peppercorn Law.