Freeholder's enfranchisement leaseback avoidance scheme succeeds

Freeholder's enfranchisement leaseback avoidance scheme succeeds

The Upper Tribunal (Lands Chamber) (UT) has decided a freeholder could circumvent the determination of the terms of the leasebacks by the leasehold valuation tribunal (LVT) by granting new leases of the same flats.

In Queensbridge Investments Limited v 61 Queensgate Freehold Limited [2014] UKUT 0437 (LC) eight qualifying tenants in a building of 11 flats served a collective enfranchisement notice on the freeholder requiring it to sell the freehold to the nominee purchaser it specified. The notice identified two of the remaining three flats as those where it was mandatory for the freeholder to take a leaseback on enfranchisement. The freeholder served a counter-notice accepting the proposals, but not agreeing the terms of the two leasebacks and confirming it required a leaseback of the third remaining flat. In fact, both parties were mistaken and all three leases fell into the category where it was optional for the landlord to take a leaseback, rather than mandatory.

The UT had to decide whether there should be leasebacks of the three flats or whether the nominee purchaser should acquire the freehold subject to and with the benefit of the leases granted by the

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