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How does leasehold enfranchisement work?

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Are you interested in extending the lease on your property or buying the freehold? The process for doing so is called leasehold enfranchisement and there are many things that you will need to know in order to successfully navigate the process.

In this article, we cover:

  • What is leasehold enfranchisement?
  • How do you qualify for leasehold enfranchisement?
  • How long can you extend your lease by?
  • The 5 steps in the leasehold enfranchisement process

For immediate assistance with leasehold enfranchisement, please speak to a member of our team by contacting our London office or making an enquiry online.

What is leasehold enfranchisement?

Buying a leasehold property is different to buying a freehold property. Instead of owning the property outright, you enter into a leasehold agreement which gives you ownership of the property for a fixed period. Ultimate ownership of the property remains with the landlord, also referred to as the ‘freeholder’.

A lease will typically be granted for anywhere up to 999 years. When you buy a leasehold property, you will be buying the time remaining on the existing lease.

Leasehold enfranchisement is the procedure one would follow to extend a lease or buy the property’s freehold (or a share of the freehold if your property is a flat).

There are many benefits to extending your lease, for example:

  • Increasing the value of the property
  • Making it easier to get a mortgage
  • Making it easier to sell

Buying the freehold or a share of the freehold can also be incredibly beneficial as it gives you control over more matters regarding the care and maintenance of the property.

The Leasehold Reform, Housing and Urban Development Act 1993 gives leaseholders the right to extend their lease. However, this is subject to meeting a specific set of requirements.

How do you qualify for leasehold enfranchisement?

If you want to extend your lease or buy the freehold, you will need to have owned the property’s lease for a minimum of two years. If you have not owned the leasehold for two years, you may still be able to qualify for leasehold enfranchisement but you will need to negotiate this with your landlord.

Other things to consider when applying for leasehold enfranchisement is if the original lease was over 21 years and if you were granted the lease through a ‘right to buy’ scheme as this will also affect your rights.

If you are thinking about purchasing a property with a short lease (generally considered to be where there are fewer than 83 years remaining), you should always request that your landlord extends the lease before you commit to buying it.

How long can you extend your lease by?

If you have the leasehold for a flat, you will have a statutory right to extend the lease by a minimum of 90 years. However, for a house this number will drop to a 50-year extension. Longer extensions can potentially be negotiated voluntarily with your landlord.

The 5 steps in the leasehold enfranchisement process

Step 1: Contact your landlord

If you are interested in leasehold enfranchisement to extend your lease or buy a share of the freehold, you will first need to informally speak to your landlord to discuss the potential terms. You should always take the time to contact a professional first. By doing so you can be sure that you are fully aware of your rights and those of your landlord.

Step 2: Get a valuation for the property

You will need to have the property independently valued by a qualified surveyor. They will provide a report that establishes the value of the property as a basis for negotiating the price of the lease extension or purchasing the freehold.

You should also speak to a solicitor at this stage to help with negotiations moving forward.

Step 3: Making an offer

Generally, when attempting to extend a lease, you and your landlord will be able to come to an informal decision that suits both parties. However, in the event that an agreement can’t be reached, you and your solicitor will need to serve a Section 42 notice. This is a formal request to the freeholder or landlord for an additional 50 or 90 years on top of the current lease.

Your solicitor and valuation surveyor will be able to help you ensure that the notice you provide reflects a fair price for the extension. Additionally, it’s important to note that your landlord will have the right to access your property after being served a Section 42 notice in order to get an accurate valuation.

In the case of purchasing a share of a freehold, you and any others involved in purchasing the freehold will need to send a ‘tenants notice of claim’ to the landlord.

Step 4: Receiving a counter notice

After being served a Section 42 notice or a ‘tenants notice of claim’, your landlord must serve a counter notice. This has to be received a minimum of two months after the initial notice of claim was delivered.

Within the counter notice your landlord will state whether they agree to your terms or include a counter proposal if necessary

Step 5: Negotiations

Following a counter notice, you and your landlord will engage in negotiations. This allows you to iron out any details and address concerns regarding the extension of a tenancy or buying a share of the freehold. Having the professional support of a solicitor will make it much more likely that you will walk away with an agreement that suits you.

In the event that a final agreement cannot be reached, both you and the landlord have the right to apply to the First-tier Tribunal (Property Chamber) for a final decision.

Get expert help with leasehold enfranchisement in London

While the process might seem daunting, leasehold enfranchisement can be very straightforward if you have the right professional support.

At HPLP Solicitors, our leasehold enfranchisement solicitors in London can help with lease extensions and buying the freehold on your property, making the process as quick and straightforward as possible.

To speak to a member of our team, please contact our London office or you can make an enquiry online and we will get back to you shortly.