Collective Enfranchisement: Part 1-the cases

Collective Enfranchisement: Part 1-the cases

In a two part blog we highlight the recent cases on collective enfranchisement and look out for part 2 where we provide a sample checklist from Lexis®PSL Property providing a list of issues to consider when embarking on collective enfranchisement procedure under the Leasehold Reform, Housing and Urban Development Act 1993.

'Artificial' collective enfranchisement claim succeeds

Westbrook Dolphin Square v Friends Life [2014] EWHC 2433 (Ch)

In Westbrook, a scheme (a corporate and leasehold structure) set up specifically to take advantage of the collective enfranchisement legislation under the Leasehold Reform, Housing and Urban Development Act 1993 (LRHUDA 1993) succeeded. The High Court decided that such a scheme did not fall foul of the wording in the legislation. The challenge was made on the basis of the construction of the wording, not on policy grounds.

Other findings of the court included:

  • the special purpose vehicles (SPVs), in the corporate structure set up by Westbrook, were not 'associated companies'--they were not precluded from having qualifying tenancies on this basis
  • the freeholder was entitled to argue a point (that the building contained more than 25% of space occupied for non-residential purposes), even though it did not take that point in its counter-notice
  • the court gave a steer on the meaning of 'residential purpose' (though falling short of formulating a test)--the concept of 'home' or 'only residence' was not inherently built into the concept, nor did the need for such accommodation have to be for any fixed or minimum period
  • the tenants' initial notice was not ineffective on the basis it did not 'specify the proposed purchase price' within the meaning of the legislation. The court decided that the tenant's figure must be a genuine opening offer as opposed to a no

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About the author:

Melissa Moore is a dual qualified in England and Wales and South African lawyer and has 14 years’ experience in property practice in England. She has worked in local government and been a partner at a regional law firm and most recently an associate director at Berwin Leighton Paisner which she joined in 2005. Melissa has wide experience in all areas of property law and specializes in commercial real estate development. She has experience in a number of sectors including hotel, leisure, offices, investment, industrial, motorway service stations and funding. She has worked on large scale strategic developments and government funding initiatives, town centre regeneration schemes and private mixed use developments both for public sector and private developers and investment funds. In 2013 she was ranked by Legal 500 as recommended for local government work.