Collective enfranchisement and anti-avoidance

Earl Cadogan and another v Panagopoulos and another [2010] EWHC 422 (Ch) concerns the anti-avoidance provisions in s.19, Leasehold Reform, Housing and Urban Development Act 1993. It’s quite a detailed case and, if enfranchisement is something you’re interested in, you’ll need to read it carefully. Since it isn’t pure housing law, I’m going to deal with it quite shortly.

The respondent tenants sought to exercise the right to collective enfranchisement and served an initial notice under s.13, 1993 Act which was duly registered with the Land Registry. It appears that the landlord agreed that the tenants had the right to enfranchise but disputed their proposed price, such that the tenants applied to the LVT for a determination of the same.

Before the LVT hearing came on, the landlord informed the tenants that they intended to (and then did) grant a lease of the basement caretakers flat to a nominee. The tenants objected to this course of action and, after a slightly convoluted process, the case came on or hearing before HHJ Hazel Marshall QC at Central London County Court, who found that the lease was invalidated by s.19, 1993 Act (see below). The landlord appealed to the High Court.

Whether or not the landlord was entitled to grant a lease of the caretakers flat turned on s.19, 1993 Act. This provides that, so long as the initial notice has been registered with the Land Registry, the freeholder may not make any disposal severing his interest (s.19(1)(a)(i), 1993 Act) or grant out of that interest any lease which would be capable of being acquired as part of the enfranchisement process (s.19(1)(a)(ii), 1993 Act). Essentially, this is an anti-avoidance provision to prevent landlords from rendering the enfranchisement process academic by transferring their freehold interest (or creating i.e. a head lease out of the interest) so as to leave the tenants with nothing (or nothing of any value) to purchase.

The appeal was dismissed. The lease was not a disposal severing the landlords interest but it was a lease which, if granted prior to the s.13 notice, could have been acquired by the tenants during the enfranchisement process. It covered “common parts” which would usually be acquired during the enfranchisement process.

About J

J is a barrister in London. He loves service charges and all things leasehold law related. He also likes beating rogue landlords and mortgage companies.
Posted in Housing law - All, Leasehold and shared ownership.

One Comment

  1. Hi

    I am in a property and it’s quite unclear whether there are 3 or 2 flats in the property. It all depends on understanding how to interpret the definition of building. We’re looking at it for collective enfranchisement. I’ve been researching online for ages but can not find guidance on this, it’s all generic rules of the process. If you know of any cases to point me towards that’d be great.

    Thanks

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