If you are a tenant (leaseholder) in a residential flat, you may have heard of collective enfranchisement. In this article, we take a brief look at some of the most frequently asked questions regarding this area of law.
What is Collective Enfranchisement?
The Leasehold Reform, Housing and Urban Development Act 1993 gives leaseholders (also known as the tenants), of long leases of flats (granted for a term of over 21 years) the right to join forces to jointly acquire the freehold of a building or part of a building. This right is called Collective Enfranchisement and is available to residential tenants where they fully meet the qualifying criteria and where the relevant legal claim process is followed.
What is a Qualifying Leaseholder?
Before serving formal notice, there are several factors to consider before starting a claim for collective enfranchisement. Leaseholders must establish that the building is eligible for collective enfranchisement and that the tenants are eligible to make a claim. Eligibility rules can be complex. However, basic rules state that a qualifying tenant is one whose lease meets one of the following conditions:
- The participating Leaseholders must own at least two-thirds of the building’s flats where leases were granted initially for 21 years or more.
- All individual participating Leaseholders must own fewer than 3 of the building’s flats.
- Part of the building can be non-residential, so long as the non-residential part comprises less than 25% of the entire building.
- The building may not meet the qualifications for enfranchisement if the building has undergone a conversion in to 4 flats or less and where there is a resident landlord.
- If the lease was originally a shared ownership lease, the owner must have “staircased” up to 100% ownership to qualify as a long lease.
What is the basic process for the Collective Enfranchisement Process?
If the eligibility of the leaseholders has been established and the building qualifies, then in most cases, a landlord cannot refuse a collective enfranchisement claim. However, the process involves complex legal procedures, and the correct notice needs to be served to the landlord. It is vital that you use a specialist solicitor and surveyor to ensure the process is completed correctly.
The basic outline of the process is as follows:
- Checking Eligibility (of the building, the tenants etc.)
- Organising for Enfranchisement
- Choosing the Nominee Purchaser
- Selecting and instructing professional advisers (solicitors and surveyors)
- Assessing the Purchase Price
- Information notice to be served to the Freeholder who will then have 28 days to respond
- Section 13 Notice served on the Freeholder by the Nominee Purchaser
- Landlord has 2 months to respond to the notice and can also request additional information within 21 days of the notice being served
- Counter-Notice served by Freeholder within 2 months of receiving the Section 13 Notice
- If two months pass without a Counter-Notice being served, the Nominee Purchaser must apply to the County Court within six months
- If a Counter-Notice is received, the Freeholder and Nominee Purchaser have six months to negotiate
- If negotiations fail, either the Nominee Purchaser or the Freeholder can apply to the First-Tier Tribunal within six months of the Counter-Notice being received
- Premium agreed and freehold is purchased
The Collective Enfranchisement procedure requires specialist advice, and the above is just a basic outline of the processes involved.
What if the Landlord is missing?
If the freeholder (landlord) is missing, it is still possible to obtain a share of the freehold, however, this involves a separate procedure, either by making an application to the court, under the Landlord and Tenant Act 1987 or the Leasehold Reform Housing and Urban Development Act 1993. Either way, the leaseholders must demonstrate an attempt to trace the missing landlord before applying. Seeking early legal advice is important to ensure all correct procedures are followed.
Collective Enfranchisement Solicitors
This is a very complex area of the law and requires expert advice. Our expert property team has in-depth knowledge of purchasing freeholds and can offer legal advice and guidance on all Collective Enfranchisement matters and other leasehold enfranchisement rights.
Please get in touch with one of our specialist solicitors below – Ryan Senior & Nick Roots – to discuss the best way forward for you. We will provide you with further and specific advice tailored to your circumstances.
This blog post is not intended to be taken as advice or acted upon. If you are seeking legal advice, please get in touch with our team of solicitors