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Greenhill- The Ultimate Case Study

Enfranchisement actions have become increasingly popular in recent times, especially due to the current conditions of the property market. Over the last five years Colman Coyle’s enfranchisement department have been working with the Residents Association of Greenhill, a block of 140 flats in Hampstead. The aim has been for the leaseholders to collectively acquire the freehold interest of the block from the freeholder. Below is a brief summary of the case.

Colman Coyle’s initial involvement with the block began when we were approached by the very concerned Chairman of the Greenhill Residents Association. This was after the landlord had granted a lease to a mobile phone provider in connection with the erection of a mobile phone mast on the roof of the block.

Thereafter, Colman Coyle’s enfranchisement department were instructed to not only tackle the freeholder and mobile phone provider, but also advice residents of their options to acquire the freehold of the block, which contained their homes and investments.

This action was complicated due to a number of issues including ongoing problems with the mobile phone provider; differing leases within the block; service charge disputes; other interest owned by head Landlords, a porter’s flat and alleged potential for roof development.

Enfranchisement Begins

Despite these problems, Initial Notice, signed by eighty participating leaseholders was served upon the freeholder and head landlords on 11 November 2004. Hearings to determine the many complicated issues that remained in dispute, which saw no hope of being settled took place in 2005 and 2006. The Leasehold Valuation Tribunal (LVT) determined a favourable decision in favour of our client, the leaseholders. The decision however, was immediately appealed by the freeholder.

Sportelli Announced  

In the interim the decision of Sportelli was announced, concluding that the deferment rate, which is the value of the landlord’s right to receive rent; and the property at the end of the lease should be at 5%. The freeholder took the opportunity to argue that the deferment rate in this case should be brought in line with this decision. The decision of Sporteli undoubtedly had an adverse impact on the overall price payable for the freehold interest.

A New Tactic

With the freeholder continually refusing to negotiate terms and therefore exposing our clients to increased costs, a tactical decision was taken by Colman Coyle to invoke the Right to Manage. This would allow the leaseholders to take over the management of the block. The Notice of Claim was supported by over 100 leaseholders. Unsurprisingly the validity of the notice was questioned by the freeholder to such a degree that the matter was heard before the LVT and the Land Tribunal. It was eventually referred to the High Court which confirmed the Notice of Claim was valid and awarded costs against the freeholder.

The End in Sight

In November 2007, the freeholder’s appeal was heard before the Lands Tribunal. Although Colman Coyle’s argument was based on the glimmer of hope provided in the decision of the appeal before the House of Lords, to view the application of the 5% deferment rate referred to in Sportelli as “a starting point”, the Tribunal were reluctant to move away from its decision.

The next few months were spent agreeing other issues; however completion was once again delayed when the freeholder was unable to complete within the prescribed timescales. An application was made to Court to compel the freeholder to vest the freehold interest to our clients upon the agreed terms. This was successfully handled by consent and issues surrounding recovery of costs are still underway. 

Colman Coyle is pleased to report that after approximately 5 years, the acquisition of the freehold interest completed on 20^th January 2009. We are dealing with post completion formalities and are instructed to extend the leases of the 100 or so participating leaseholders in this matter.

The Greenhill case has been widely reported, including Hildron Finance Limited v Greenhill Hampstead Limited 1 EGLR 179.

Author: Hema Anand

Publication: Angel and Northwest Magazines

Date: May 2009