Jargon Buster

Collective Enfranchisement: The right for 50% or more leaseholders in a block of flats to collectively purchase the freehold of the building from their landlord.

Conveyancing: Transferring a legal title to property from one party to another. It often involves a solicitor when buying or selling a property.

Counter-notice: The Landlord’s response to the initial Notice of Claim served by the Leaseholder during a lease extension or multiple Leaseholders in a collective enfranchisement.

First-tier Tribunal (Property Chamber): A part of the courts and tribunals service in the UK that settles disputes related to leasehold property and the private rent sector. They deal with numerous matters, including service charge disputes, lease variations and the determination of premiums for freehold purchase and lease extensions.

Freehold: A property title which specifies ownership of a building and the land it stands on.

Freeholder: Also referred to as a landlord, the freeholder is the outright owner of the building and the land it stands on. The freeholder is usually responsible for the upkeep of the communal areas of the building.

Ground Rent: A payment made by the leaseholder to the freeholder under the terms of a lease. The rent varies from property to property, accounting for factors like location and size.
The Leasehold Reform (Ground Rent) Act 2022 abolished ground rent on all new leases across England and Wales.

Initial Notice: A notice sent by the leaseholder in the early stages of a lease extension to inform the freeholder of the commencing lease enfranchisement. This notice conforms to the 1993 Leasehold Reform Housing and Urban Development Act.

Lease: The legal document that allows the holder to occupy a property for a set period and decreases year by year. It should include the contractual terms, such as service charges and any restrictions to which the leaseholder must agree to adhere.

Leaseholder: The owner of a property on a lease. They can typically occupy the property for 99, 125 or 999 years, although they can extend leases.

Leasehold Property: A property sold with a lease contract is known as a leasehold property. Tenants are permitted to own it for a set period.

Long Lease: A lease initially granted for more than 21 years.

Marriage Value: The increase in the property’s value following the completion of the lease extension, reflecting the updated market value of the longer lease. The leaseholders’ potential profit must be shared equally with the freeholder.

Premium: The sum of money that the leaseholder pays to extend their lease.

Peppercorn: In law, a ‘peppercorn’ represents a small cash payment. It is something of value (but low value) that you can exchange to bind a legal contract effectively.
For example, The Leasehold Reform (Ground Rent) Act 2022 meant that ground rent on new leases would never be more than a ‘peppercorn’, which set the rate to zero.

Professional (or Legal) Fees: The expenses for professional or legal help, such as solicitors, conveyancers and surveyors. Leaseholders must cover their freeholder’s professional fees and their own.

Right of First Refusal: A right that states that the freehold of the building must be offered to the leaseholders before it’s presented to a third party.

Right To Manage (RTM): A right which allows leaseholders in a block of flats to take over the management of their building as a collective.

Service Charge: A monetary contribution payable by a leaseholder to a freeholder or management company to cover repairs and maintenance for the building.

Valuation: The market value of the existing leasehold in its current condition with its current lease length and terms. An experienced surveyor should ideally determine the valuation.