Collective Enfranchisement: When the Parties Cannot Agree
If, after service of the Counter-Notice the two sides do not agree on price, then either the leaseholders or the landlord file an application with the nearest regional First Tier Tribunal, a judicial body that decides on the price at which the landlord will sell (month 5).
Any application to the FTT must be made a minimum of 2 months from and within 6 months of, the date of service of the Counter-Notice. It will usually be the leaseholder that applies (through their solicitor). By making this application, the leaseholder is asking the FTT to decide on the price at which the landlord must sell the lease extension.
Note: The reason that the law bans an application being made to the FTT sooner than 2 months after the counter notice is to allow enough time for both parties to hold negotiations and reach an agreement on the price. A large majority of lease extension cases are concluded in this way, after the leaseholder has served notice, and before an FTT hearing is held.
HEARING AT THE FTT
This phase (month 8) begins when a hearing is held at the FTT. It usually takes 3 to 4 months from the time an application is sent for a hearing to take place, which usually takes a maximum of 1 day (or two days for a large building). The LVT panel usually comprises 3 members, a lawyer, a surveyor and a layperson, although a panel can also comprise just 2 people.
It is not a legal requirement that the leaseholder be represented by professional advisers although they may choose to have a solicitor and or a surveyor to speak on their behalf. Some leaseholders may also instruct a barrister to be present.
After the FTT has reached its decision it sends its written determination to both parties. The document will contain the price at which the landlord must sell the lease extension. This determination becomes final after 21 days of being sent but if the leaseholder finds that price is too high he is not obliged to buy it. Any appeal must be made within this period to the Lands Tribunal (with leave of the FTT).
The landlord must prepare a draft contract within 21 days of the FTT’s determination and the parties are expected to enter into the contract within a period of 2 months after the FTT’s decision becomes final (the appropriate period).
If the appropriate period elapses without exchanging contracts, then the participating leaseholders must apply to court within a further 2 months for a Vesting Order.