Leasehold Enfranchisement

Under The Commonhold and Leasehold Reform Act 2002 this process is called collective enfranchisement, but it is also known as leasehold enfranchisement and more colloquially as buying the freehold.

Qualifying lessees of qualifying flats have the right to acquire the freehold of their building. Although leasehold enfranchisement may be an attractive option, it brings with it the burden of responsibility. Lessees should consider what they actually want to achieve. It might be in their interests to extend their leases and/or acquire the right to manage. There is a lot to be said for having a third party as a landlord rather than yourself and your neighbours.

Then deciding whether to buy the freehold consideration should be given to whether the freehold has recently been sold and whether the lessees were given the right of first refusal. It might be less expensive to purchase from a willing landlord than to exercise the right to acquire the freehold; and if the tenants were not given the right to first refusal they will have the right to acquire the freehold from the purchaser on the same terms as he acquired it. If it is decided to acquire the freehold consideration should be given to whether to apply to extend some or all of the leases at the same time, particularly if the unexpired terms of the leases are about to fall below 80 years, which is the point when the price will increase.

It is advisable for all the lessees who want to buy the freehold to enter into a participation agreement which sets out the basis on which they are collectively making the purchase. Amongst other things it will deal with the contributions to the price, what happens if a contribution is not paid, and the terms on which the new freeholder will extend leases.

We can advise lessees and freeholders of their rights, represent them in an acquisition and make any applications to the Court or the Leasehold Valuation Tribunal that may be necessary.