Leasehold Enfranchisement

Our valuers specialise in leasehold enfranchisement, the collective freehold acquisition of flat developments. We act on behalf of leaseholders or freeholders.

Experts in leasehold enfranchisment

What do we do?

We have an experienced team of RICS registered valuers specialising in the valuation and negotiation required for leasehold enfranchisement, the collective acquisition of freeholds in flat developments. Acting for either the leaseholder or the freeholder, we operate throughout London, Buckinghamshire, Berkshire, Surrey, Hampshire, Oxfordshire and Hertfordshire.

The Leasehold Reform, Housing and Urban Development Act 1993 gives leaseholders (also known as the tenants), the right to join forces to buy the freehold of their building. Collective enfranchisement gives tenants more control over the management of their building, compared to traditional leases where the freeholder (also known as the landlord), is responsible for managing the property.

If you are looking to apply for collective enfranchisement, speak to a member of our specialist team.

We act and advise on

The Right to Enfranchise (RTE)

Purchasing freeholds (under the Leasehold Reform Act 1967)

Key things for leaseholders to consider

Collective enfranchisement gives leaseholders a legal right to join together to buy the freehold of their building.

The right to enfranchise is dependent on the number of qualifying and participating leaseholders. At least 50% of all leaseholders must participate

Buying the freehold gives tenants more control over the building

There are a number of criteria that need to be met, in order to apply for collective enfranchisement:

  • The building must be a self-contained block, with a minimum of two flats
  • Two thirds of the flats must be held by qualifying tenants
  • The building must have no more than 25% non-residential use
  • At least 50% of all the leaseholders in the building must participate
  • Each participating leaseholder must have a long lease – with an original term of at least 21 years, or with a right to renewal
  • There is no requirement to have a minimum period of ownership.

What is the process for collective enfranchisement?

  1. Talk to the other flat owners. At least 50% of the tenants need to participate in order to qualify for collective enfranchisement. Some very large blocks will appoint a representative to handle this task.
  2. Find a solicitor. The Leasehold Advisory Service and the Association of Leasehold Enfranchisement Practitioners have lists of solicitors who are specialists in collective enfranchisement. Costs can vary, so it’s important to do your research beforehand – check whether the fee is fixed or an estimate.
  3. Value the freehold. You will need a surveyor to value your property and determine the likely premium. The cost of the valuation will vary depending on the size and value of your block. To receive a formal quote, call Kempton Carr Croft on 01628 771221.
  4. Set up a vehicle in order to purchase the freehold. You will need a nominee purchaser who will buy the freehold – this can be a person or a group of people, but it’s usually a limited company set up by the group of leaseholders. Your solicitor can help with all of this – Companies House provides advice on starting and running a company.
  5. Initiate negotiations. Once you have read your surveyor’s report, you can start negotiating with your landlord. This can be done informally through written correspondence, but it is recommended to negotiate formally by sending a ‘tenant’s notice of claim’ to the landlord. Every participating leaseholder must sign this notice.
  6. Your landlord will then serve a Counter Notice which will include their counter premium proposal. This must be served within two months from the date you served your initial notice.
  7. Once the Counter Notice has been served, negotiations will take place between the surveyors of the two parties. If all goes well and both parties can agree on the premium, the new lease form will be agreed by the solicitors and completed.
  8. If the surveyors are unable to agree on a premium, you can apply to the First-tier Tribunal to have the matter settled. The applications must be made within six months of when the freeholder’s Counter Notice was due. Once you apply, you will be notified of the hearing date and timescales for producing reports. Your surveyor and solicitor will work together in order to submit any reports and attend the tribunal on your behalf, if necessary. The Tribunal will then consider both parties’ evidence and determine the final premium.

FAQs - A guide for leaseholders

Organising collective enfranchisement can be a complex process, so it’s important you receive professional advice and understand your rights. To help you gain a better understanding of the process, we’ve answered some of the most frequently asked questions below.

  • What is collective enfranchisement?

    Collective enfranchisement gives leaseholders (also known as the ‘tenants’) a legal right to join together to buy the freehold of their building. This is enabled by The Leasehold Reform, Housing and Urban Development Act 1993.  Once acquired, the leaseholders will own the freehold, typically each owning one share. 

  • Is it worth buying the freehold?

    Buying the freehold gives the leaseholder control over their building. They can appoint their own managing agents, or manage the property themselves. There is also peace of mind in being part of a tenant-owned building, and this is usually a good selling point for buyers. It provides leaseholders some form of control over the block, which can be appealing.

  • Who can apply for collective enfranchisement?

    The right to enfranchise is dependent on the number of qualifying and participating leaseholders.

    In order to apply for collective enfranchisement

    • The building must be a self-contained block, with a minimum of two flats
    • Two thirds of the flats must be held by qualifying tenants
    • The building must have no more than 25% non-residential use
    • At least 50% of all the leaseholders in the building must participate
    • Each participating leaseholder must have a long lease – with an original term of at least 21 years, or with a right to renewal Unlike individual lease extension or enfranchisement of a leasehold house, there is no requirement to have a minimum period of ownership.
  • How much will it cost?

    The price depends on several variables, such as:

    • The value of the flats
    • The ground rent provision for each flat
    • The length of the current lease for each flat – especially if any flats have less than 80 years remaining
    • Whether there is any development potential at the property that the freeholder will lose
    • Whether there are parts of the property that the leaseholders will acquire, which will add value to the property (e.g. loft spaces or basements) You will need a Chartered Surveyor to carry out a valuation of your property and determine the premium payable, and a specialist solicitor to deal with the legal issues. Other costs to factor in include:
    • Legal fees – the cost of hiring a solicitor
    • Valuation fees – the cost of the surveyor’s report
    • Stamp duty – this applies to lease extensions in the same way as any other home purchase.
    • The freeholder’s fees – you’ll need to cover the freeholder’s ‘reasonable’ legal costs and valuation fees. This does not include the freeholder’s costs for negotiating.
  • Do we need to form a company?

    Although there is no legal requirement to do so, we would always recommend this unless the block has fewer than four participants. This is because only four names can be registered at the Land Registry as the freeholder. To avoid disputes over who becomes a trustee or beneficiary, forming a company means that all participating individuals can become shareholders or members.

  • How long will it take?

    On average, the process could take between six to twelve months, but this could be longer if an agreement cannot be met between you and freeholder. You will need about two to three months to obtain legal advice and a valuation, report back to the other residents, and then organise yourselves to be in a position to go forward with the claim. If the freeholder is prepared to co-operate, then the claim can be concluded quickly – usually within three months of the Counter Notice being served.

  • Buying the freehold vs right to manage

    Leaseholders who want more control over their block have two options. One option is to buy the freehold – but under the Commonhold and Leasehold Reform Act 2002, most leaseholders can also apply with other leaseholders for the ‘right to manage’ their building. This enables the leaseholder to manage the block themselves, or appoint a managing agent on their behalf. The benefit of this compared to collective enfranchisement is the cost; the main costs are professional fees. However, the right to manage does not give you control of the freehold, nor does it grant you lease extensions with further premiums payable to the freeholder.

  • My property is a leasehold house – can I acquire the freehold?

    The leaseholder of a house only has the right to enfranchise if certain qualifications are met.

    These include:

    • The house – the building must be reasonably considered a house. If it has been divided into flats, the leaseholder must own the whole house. 
    • The lease – it must be a lease with an original term of more than 21 years
    • The leaseholder – they must own the lease of the house at the time the enfranchisement claim is made. They must also have held the lease for the past 2 years, or 2 years in the past 10 years. The valuation method which is used to determine the price the leaseholder will pay is required by the law to value the freeholder’s interest as if the house were being sold in the open market. Therefore, the valuation of the property will fairly compensate the landlord for the loss of their house.

FAQs - a guide for freeholders

 

Collective enfranchisement can be a complex process. If you have been approached by your tenants regarding the purchase of your freehold, it’s important that you meet the right requirements and receive professional advice. To help you gain a better understanding of the process, we’ve answered some of the most frequently asked questions below.

  • Do my tenants qualify for leasehold enfranchisement?

    The Leasehold Reform, Housing and Urban Development Act 1993 gives leaseholders – also known as the tenants – the right to join forces to buy the freehold of their building.

    In order to qualify for collective enfranchisement, this is dependent on a number of factors:

    • The building must be a self-contained block, with a minimum of two flats
    • Two thirds of the flats must be held by qualifying tenants
    • The building must have no more than 25% non-residential use
    • At least 50% of all the leaseholders in the building must participate
    • Each participating leaseholder must have a long lease – with an original term of at least 21 years, or with a right to renewal

    As long as the above criteria are met, the freeholder cannot refuse the sale of the freehold.

  • What are my rights as a landlord?

    Once the initial Notice of Claim has been served on the freeholder, they have a period of 21 days from which to request evidence of the participating tenants’ title to their building and period of ownership. The freeholder also holds the right to inspect the tenants’ properties, subject to 10 days’ notice given to the occupiers. If this is not supplied by the leaseholder within 21 days then the ‘tenant’s notice of claim’ can be withdrawn, and the leaseholders must pay costs incurred to the landlord.

    The freeholder then responds with a Counter Notice which will include their counter premium proposal. This must be served within 2 months of the date of the initial Notice of Claim.

    If a freeholder owns a property where two-thirds of the leases in the building have a lease of less than 5 years from the service date of the notice, then they can claim the right of redevelopment against the leaseholders’ request for enfranchisement. In this circumstance, the landlord must prove indefinitely that they intend to demolish and redevelop the building, therefore voiding the enfranchisement claim.

    If the event arises whereby the leaseholder and the freeholder cannot come to an agreement within 2 months of the freeholder’s issue of the Counter Notice, either party can apply to the Leasehold Valuation Tribunal to have the matter settled by an independent body.

  • What are my responsibilities as a landlord?

    The leaseholders should initiate negotiations with the freeholder once their surveyor has valued the property and calculated the likely premium. This can be done informally to start – however if no progress is made, then the leaseholder can issue a ‘tenant’s notice of claim’. The freeholder then responds with a Counter Notice which will include their counter premium proposal. This must be served within 2 months of the date of the initial Notice of Claim. Negotiations will then begin between the surveyors of the two parties. If the surveyors of the two parties are unable to agree on a premium, then either party can apply to the First-tier Tribunal to have the matter settled by an independent body. This can be done within 6 months from when the freeholder’s Counter Notice was due.

  • Who is liable for the fees involved?

    The leaseholders who wish to collective purchase the freehold of their building must cover the freeholder’s reasonable legal costs and valuation fees. This does not include the freeholder’s costs for negotiating the price or for dealing with Leasehold Valuation Tribunal procedures.

For guidance on your individual options, please get in touch

CONTACT US

Our Team

Nathan Hall

BSc (Hons) MRICS

Head of General Practice
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Paula Harrington

MRICS

Chartered Surveyor & RICS Registered Valuer
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