What is Collective Enfranchisement?

Collective Enfranchisement is a right granted by the Leasehold Reform Housing and Urban Development Act 1993, whereby the Leaseholders have a right to acquire the Freehold. The Leaseholders have the right to force the Landlord to sell them the freehold title, even if the Landlord does not agree.

The Leaseholders would therefore own the building collectively as a Share of a Freehold and their own separate flats (Leasehold).

Eligibility

In order to be eligible to apply for collective enfranchisement the following must be satisfied:

• 2/3rds of the flats in the building must be “long” leases (over 21 years)
• No more than 25% of the floor area can be for commercial use.
• At least 50% of the flats in the building must participate.

Procedure

• The Leaseholders should instruct a surveyor to assess the premium. The “premium” is the amount of money paid to buy the Freehold of the building. The premium will not necessarily be split equally between all leaseholders, especially on occasions when someone’s flat is worth more or there is a shorter lease.
• We produce a “participation agreement” that each participating flat owner will sign.
• The notice of claim is served on the landlord and the “unilateral notice” is registered against the freehold title at the Land Registry.
• The freeholder has 2 months to serve a counter notice, which will trigger a negotiation period with the 2 surveyors in order to agree on a premium.
• Once an agreement has taken place and the freehold is transferred to the leaseholders we must register the transaction at the Land Registry.

What happens if there is no agreement between the Leaseholders and the Freeholder?

• We can make an application to the tribunal if the premium has not been agreed upon.
• There is a 6-month timeframe to apply to the tribunal from the date of the counter-notice.

Benefits of Collective Enfranchisement

• The Leaseholders have direct control of the building’s management.
• The Leaseholders have direct control over the maintenance of the building.
• The Freeholders would be able to grant themselves a lease extension and abolish ground rents. Therefore, there would be no need to go through the statutory lease extension.

Costs

You will have to pay your valuation, the landlord’s valuation and legal costs.

Please feel free to contact us with any questions regarding our Legal Fees.

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