Leasehold enfranchisement (also known as Collective Enfranchisement or the Right to Enfranchise) gives flat leaseholders the right to join together (under the Leasehold Reform, Housing & Urban Development Act 1993) to force their landlord to sell the freehold to their block of flats to them. Leasehold Enfranchisement applies only to residential property. When you buy the freehold, you become both landlord and tenant and can extend the lease of your flat by granting yourself a new lease of up to 999 years. This article addresses some frequently asked questions and includes links to previous articles on this topic.
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What is enfranchisement?
Enfranchisement refers to a transaction in which a leaseholder purchases or extends their lease to the freehold of their house. This is a legal right provided to leaseholders under the Leasehold Reform Act 1967 as amended by the Commonhold and Leasehold Reform Act 2002.
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What is collective enfranchisement?
Collective enfranchisement refers to the purchase of the freehold of a building containing multiple flats/apartments. It is the right outlined in the Leasehold Reform Housing & Urban Development Act 1993, for leaseholders of a building or part of a building that contains flats to collectively buy the freehold of that property.
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What types of property qualify for enfranchisement?
For the property to qualify, the house must be a building which is reasonably considered a house, divided vertically from any adjoining house. It does not matter if the building has been divided into flats as long as you have the lease of the whole house.
Certain buildings which contain commercial premises can qualify as a house within this definition. For example, the lease of a building which is a shop with a flat above, may qualify for enfranchisement.
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What is a qualifying leaseholder for collective enfranchisement?
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.
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Can a freeholder refuse to sell the freehold?
Typically, a freeholder cannot refuse to sell the freehold, but it is possible to challenge the proposed purchase price or eligibility of the leaseholders in court. The correct notice must also be served to the landlord who then has two months to formally respond with counter-terms, or they will be bound by the terms proposed by the tenant. The procedure for buying the freehold is set out in the 1967 act and in the Enfranchisement Regulations (the regulations). For Collective enfranchisement the process is different, but, in both cases, it is vital that you use a specialist solicitor and surveyor to ensure the process is completed correctly.
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How are disputes over enfranchisement claims resolved?
If disputes regarding enfranchisement claims cannot be resolved through negotiation or mediation, they can be referred to the First-tier Tribunal (Property Tribunal), and this should take place within six months of a counter-notice being received by the freeholder.
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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.
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What is the right to manage?
The Right to Manage is a legal provision allowing leaseholders of flats to take control of the management of the building where their flats are situated. It was introduced as part of the Commonhold and Leasehold Reform Act 2002 with the aim of giving leaseholders greater control over the management of their homes. By exercising the Right to Manage, leaseholders can ensure that their building is managed in a way that meets their needs and priorities.
Further Information on Enfranchisement
Read our previous articles on leasehold extension, right to manage, enfranchisement and collective enfranchisement for further information:
- Enfranchisement – How tenants can buy their rental property
- Collective Enfranchisement FAQs
- How Long Does a Lease Extension Take?
- An Inside Look at the Right to Manage – Leaseholders Guide
Lease Purchasing, Collective Enfranchisement & Freehold Acquisition Solicitors
The process of lease enfranchisement involves complicated time limits and procedures, and it is essential you get the right legal advice. Rest assured that our team will provide that advice. Not only can we help flat owners to exercise their rights, we can also assist Landlords to minimise the adverse effects of the new changes. If your lease has less than 90 years remaining you should consider extending it, especially if the purchase of the freehold with the other flat owners is not an option for you. If your lease is between 80 – and 90 years, you must act urgently before it drops under 80 years and marriage value is payable to the freeholder.
We can help with all enfranchisement and leasehold extension matters, including:
Please get in touch with one of our specialist solicitors 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.
