What Is A Nominee Purchaser In Leasehold Enfranchisement?

When purchasing the share of freehold of a block of flats using the leasehold enfranchisement

processes, for bigger blocks it could be that a body is supposed to be formed that is to purchase the freehold from the existing freeholder or reversioner. This entity is the nominee purchaser and you will find a number of significant things to consider.

In the event that 4 or more flat owners would like to own the freehold jointly then they have to set up a corporate entity to do so. This is for the reason that the Law of Property Act 1925 states that no more than four individuals are able to be listed as the owners of 1 property.

If you are a flat-owner in a small development with 3 or fewer leaseholders then you do not automatically need to set up a nominee purchaser company. On the other hand, a number of people choose to establish a limited company because it assists with operating the flats and allocating responsibilities, in particular when properties change hands. Flat owners are able to furthermore select the same company to organise the management of the maintenance of the building, even though in larger developments you will need discrete entities for management and freehold acquisition.

The nominee purchaser might be a person, one of the tenants, or a corporate person, a trust or, more than likely, a company formed by the leaseholders for the function. There is not a legal prerequisite dictating who or what is the nominee purchaser, so you and your neighbours have a uninhibited choice of directors, according to circumstances. Then again, the directors hold legal obligations and it is worth considering a value for money directors' and officers' liability insurance policy.

This group can be a company or a society and the cost of establishing this and all the legal and professional overheads fall to the flat owners, not the freeholder. This procedure does not need to be costly - a few hundred pounds is common - although you should be watchful to make certain that the body is properly established.

It can be pricey and take some considerable time to have your Initial Notice rejected by the freeholder because you follow the guidelines. For that reason, we would advise you consult an accountant or qualified enfranchisement solicitor to set up the nominee purchaser company even though you may purchase off-the-shelf limited companies without restriction. The pros would need to create the articles of association to reflect the purpose of the company and to govern voting rights of the participants and control of shares.

The nominee purchaser ought to be decided upon at an early stage, in that he or she conducts the later phases of the procedure and, on completion, will be responsible for the management of the building. Making a decision about the nominee purchaser should be one of the early actions together with setting up a participation agreement and choosing your professional advisers in the enfranchisement process.

Any negotiations or measures concerning neighbours in a leasehold development are loaded with difficulty. You need to be prepared for repeated lengthy negotiations with give-and-take on all sides to settle upon people that as many tenants as possible are content with. The foundation work you perform here ahead of the notice serving starts is likely to reap dividends in the future for all the flat owners.

by: Andrew Szebeni

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