Collective enfranchisement notice cannot be amended to include subsequently granted leases - register initial notices as estate contracts

Collective enfranchisement notice cannot be amended to include subsequently granted leases - register initial notices as estate contracts

In Wiggins v Regent Wealth  [2014] EWCA Civ 1078 the Court of Appeal decided that an initial notice could not be amended to include leases granted after it was served.

What were the facts of the case?

The leasehold structure of the property was fairly complex, with a headlease, a management lease, occupational underleases of the seven flats, overriding leases of those flats and an ‘enforcer lease’ above the management lease to allow enforcement of it despite the grant of the overriding leases. The initial notice specified all these leasehold interests as interests to be acquired, other than the occupational underleases.

The freeholder served a counter-notice admitting the participating tenants were entitled to exercise the right of collective enfranchisement.

The initial notice was not registered against the titles of the landlords of the overriding leases of the third, fourth and fifth floors (the old leases). Subsequently, the landlords of each of the old leases granted further long underleases (the new leases) which were registered at the Land Registry.

The solicitors for the landlords of the old leases claimed that the new leases were not liable to acquisition, and that, if the enfranchisement went ahead, the participating tenants would acquire the old leases subject to the new leases, but for a price which disregarded the existence of the new leases. They argued the participating tenants should pay nearly £7m for the old leases which now only gave the right to possession for 10 days in 2122.

The participating tenants asked the landlords to agree an amendment to the initial notice to include the new leases. They refused.

Subsequently the participating tenants acquired the freehold, headlease and the enforcer lease.

In the county court it was held that:

  • the participating tenants in a collective enfranchisement claim were permitted to amend the initial notice to specify additional intermediate leasehold interests – granted after service of the initial notice - as liable to acquisition
  • the tenants of these new leases did not take free of the initial notice and the collective enfranchisement claim

The immediate landlords of appealed this decision and the Court of Appeal allowed the appeal.

What is the law in this area?

Section 1 of the Leasehold Reform, Housing and Urban Development Act 1993 (LRHUDA 1993)  provides that subject to various qualifying criteria, ten

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About the author:
Joanna is a commercial property specialist. Prior to joining the LexisPSL Property team, she was a transactional lawyer. She qualified in 1995 at Shoosmiths and subsequently worked at Nabarro, Charles Russell, Bircham Dyson Bell and Pemberton Greenish. She has wide-ranging experience of all non-contentious property transactions, with a particular emphasis on landlord and tenant work.