Leasehold Enfranchisement

We offer highly experienced, cost effective and efficient advice and services on collective enfranchisement.

Enfranchisement is the legal term for the statutory rights of long leasehold flat owners to buy the freehold or take control of the management of their block.

Many leaseholders become frustrated with management by the freeholder or it’s appointed managing agents and/or they feel that they are not getting good value for money. Another reasons for enfranchising is to ensure the leaseholder do not pay a premium if they need to extend their leases.

Please call or email us to discuss costs, our experience or with and any questions you still have.

Are there any major drawbacks?

Aside from the quite complicated legal issues and process, the biggest stumbling block in enfranchisement tends to be securing sufficient backing from enough leaseholders to force through the transaction under the statutory rules.

Whilst many flat owners may be disgruntled, apathy can still be a big issue, as can the fact that many flat owners do not live in the flats but rent them out.

How we can help

We are highly experienced in advising and dealing with :-

• Right of first refusal where freeholder is selling  – under the Landlord and Tenant Act 1987 where the freeholder decides to sell the leaseholders get the right of first refusal. To be a qualifying property, the premises must comprise at least 2 flats and must be at least 50% residential and 50% or more owned by qualifying tenants. Where the landlord decides to sell he/she/they are required, 2 months before they would like to sell, to serve on the tenants an “Offer Notice” to start the process.

• Collective enfranchisement – this applies where, regardless of whether the freeholder wants to sell, long leaseholders are able to force the freeholder to sell to them under statutory tights contained in the Leasehold Reform Housing and Urban Development Act 1993. The key qualifying criteria to force the purchase of the freehold are that the leases in the block were granted for 21 years or more and over 50% of long leaseholders want to buy

• Right to manage – The right to manage (RTM) for tenants is a statutory right contained in the Commonhold and Leasehold Reform Act 2002. The qualifying conditions are very similar to the qualifying conditions for collective enfranchisement.

Key practical steps and considerations

Before going ahead with any of the types of enfranchisement, pay close to attention to :-

• Get formal consent from other leaseholders - With all forms of collective enfranchisement of a large block, there will be a small group of leaseholders that take the lead. A lot of work will be involved and it is key to ensure that you secure sufficient formal commitments from other leaseholders who indicate they will participate. So, you will need a participation agreement, a contract which formally commits enough other leaseholders to go ahead.

• Setting up the company to buy the freehold - The usual way to proceed with buying or managing the freehold is to set up a limited company as the vehicle. This is the best way of avoiding problems later but we strongly recommend that there is clarity and agreement on rules and so standard articles of association for any company may need to be amended.

• Valuation - In order to try to agree a valuation when buying the freehold, you will need a professional valuation from a surveyor and the freeholder will likely also appoint a different surveyor. If an agreed price for the freehold cannot be negotiated, the statutory purchase can be forced through with the value being determined by the First-tier Tribunal Property Chamber.