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Collective Enfranchisement

collective enfranchisement

The Leasehold Reform Housing and Urban Development Act 1993 (as amended by the Commonhold and Leasehold Reform Act 2002) gives tenants of flats the right, under certain circumstances, to compel the sale of the freehold of the building or part of their building. This right is more commonly known as collective enfranchisement. With our experts in leasehold enfranchisement, we can help clarify any questions you may have.

Why should you enfranchise?

If tenants are unhappy about the way their block is being run, generally speaking (although not always), it is ownership of the freehold which gives control over things such as repairs, service charges, appointment managing agents, placing the insurance and other management issues.

In addition,

  • tenants that participate can grant themselves very long leases without payment of a further premium and may eliminate or reduce the ground rent payable for the remainder of the term of the lease
  • It is possible to use the process as an opportunity to rectify defects in the standard lease for the flats
  • There is, or at least is perceived to be, an enhanced saleability of flats in the building

The procedure

The formal procedure for collective enfranchisement is started by the service of the Initial Notice on the landlord; it then follows a prescribed route.

The Notice must be served by a “Nominee Purchaser” on behalf of the participating tenants.

The Nominee Purchaser is usually a company formed by the collective participating tenants to acquire the freehold.

Although this is the beginning of the statutory procedure, prior to serving notice there should be a period of preparation to ensure that the participating tenants are fully equipped and advised to complete their action.

Once notice is served, the landlord has two months (or just over) to respond with a counternotice. If the terms of the transfer are not agreed within two months of the counternotice being served both parties have a further four month period in which to make an application to the Property Chamber for a determination.

Do we qualify?

Prior to serving notice there should be a period of preparation to ensure participating tenants are fully equipped and advised on the process of enfranchisement.

This period of preparation must also include checking the qualifying criteria.

Broadly speaking for the building to qualify it must be:

  • a self-contained building (or part of a building); and
  • must contain at least two flats; and
  • at least two-thirds of the flat must be let to “qualifying tenants”; and
  • the floor space of the building must not be more than 25% non-residential But, even if the building qualifies there are special rules when:
  • the building is a conversion into four or fewer flats
  • the freehold includes any track of an operational railway, including a bridge or tunnel or a retaining wall to a railway track
  • buildings are within a cathedral precinct
  • National Trust properties
  • Crown properties

Assessing whether the qualification criteria for collective enfranchisement has been met is complicated and specialist advice should always be taken.

How do we manage the process?

JPC Law offers a non-obligatory and non-chargeable preliminary meeting either at our offices or at the building to answer questions, to explain what is involved and to advise on the pros and cons of the process.

Please contact us if you are a tenant or group of tenants and wish to discuss your case.

Collective Enfranchisement department