© 2025 News On The Block. All rights reserved.
News on the Block is a trading name of Premier Property Media Ltd.
© 2025 News On The Block. All rights reserved.
News on the Block is a trading name of Premier Property Media Ltd.
Many lessees and certainly readers of News on the Block may have heard the term “enfranchisement” without really knowing what it means. Basically enfranchisement is a group or collective right for leaseholders of flats, subject to certain requirements and qualifications under current legislation, to buy the freehold of the building they live in, regardless of whether the landlord wants to sell. Seeking a lease extension on the other hand, is an individual right for leaseholders to buy a new, extended lease which adds on 90 years to the unexpired lease with no ground rent.
Although the rights and qualification requirements are slightly different, the procedures are fairly similar.
For both collective enfranchisement and lease renewals, the leaseholder(s) must first serve upon the landlord an initial notice of claim. It is the formal service of these initial notices that triggers the strict timetable as set out by statute.
Once the initial notices have been served, the landlord must then serve upon the leaseholder(s) his Counter-Notice within two months of service of the initial notice. Negotiations will then ensue and if agreement cannot be reached, various applications will invariably be made to the Leasehold Valuation Tribunal for determination of the all/any of the contentious issues.
Although the procedure sounds fairly simple and straightforward, there are many pitfalls and traps for the unwary and legal advice should be sought.
What is Hope Value?
To understand the concept of “Hope Value”, consideration must first be given to another familiar valuation concept : “marriage value”.
When a leaseholder is buying the freehold or extending their lease, he has to pay something for the value of the leasehold and freehold interests coming together i.e. the effective merging or “marrying” together or these two interests.
It is presumed the only person who will ever want to bring the freehold and leasehold interests together is the leaseholder. Where however at the time of the sale, the leaseholder is not in the market, marriage value will not be realised and therefore will not be included in the valuation price. Valuers have however recognised that even if the tenant is not in the market at the time of the sale, there is still the prospect or the “hope” of this at sometime in the future. The prospect of being able to realise that future marriage value is called “hope value”.
Is there Hope in Marriage?
On 10th December 2008 the House of Lords handed down its Judgment in the group of appeals fondly known as the “Sportelli Appeals”. The appeals questioned whether landlords were lawfully entitled to take into consideration “hope value” in the valuation of houses under the Leasehold Reform Act 1967 (‘the 1967’ Act) for houses and for flats under the Leasehold Reform, Housing and Urban Development Act 1993 (‘the 1993 Act’).