Buying the freehold on your block of flats can give you control over the management of your building, allow you to set your own service charges, let you cheaply extend your lease and change its terms, as well as many other benefits.
However, there is a strict process you must follow and a lot of information you need to gather, so it is essential to seek specialist legal advice from the outset. This can help the process to run smoothly while increasing your chances of successfully buying your freehold.
At HPLP Solicitors, we are highly experienced in guiding leaseholders through the collective enfranchisement process. We can advise you on your right to buy your freehold along with the other long leaseholders in your building, help you work effectively with the other leaseholders and make sure all of the legal details are taken care of, making it faster, simpler and less stressful to buy your freehold.
We can also advise you on what happens once you have acquired the freehold, including issues such as how the building will be managed, setting service charges and other fees, and dealing with lease renewals.
As one of the leading specialists in leasehold property law in London, we can offer the exceptional legal expertise and close personal service you need for a successful collective enfranchisement.
Speak to our London leasehold solicitors today
Why choose HPLP for collective enfranchisement in London?
As a specialist property law firm, we offer a detailed understanding of every area of leasehold property law, including for collective enfranchisement. Our team can help you to quickly establish whether you qualify for collective enfranchisement and guide you through the entire process swiftly and cost-effectively.
HPLP is an award-winning firm, accredited by both the Association of Leasehold Enfranchisement Practitioners (ALEP) and the Lexcel practice management standard. This reflects the high level of our specialist leasehold property law expertise and the exceptional quality of the service we provide.
You will have a dedicated contact at the firm who will work with you every step of the way, making sure you can always speak to someone who knows you and your situation when you have a question or need an update. They will explain everything you need to know in plain English, giving you confidence that everything is being handled the right way.
How collective enfranchisement works
What is collective enfranchisement?
Under the Leasehold Reform, Housing and Urban Development Act 1993, leaseholders have the power to come together to buy the freehold on their building from the freeholder (also referred to as “the landlord”) under certain circumstances.
Leasehold enfranchisement allows you to collectively own the building, giving you the authority to grant lease renewals and make decisions about how the building is managed, including setting service charges and other fees.
Who qualifies for collective enfranchisement?
To be eligible for collective enfranchisement, the following conditions must apply:
- At least 50% of the flats in the building agree to buy the freehold
- Each of these flats must be occupied by a qualifying tenant
- The building must meet the criteria for collective enfranchisement
To be a qualifying tenant, you must normally:
- Have held the lease for a minimum of 2 years
- Have a lease that, when originally granted, was for at least 21 years
- Not own more than 2 flats in the building
- Not hold a business or commercial lease
- Not hold your lease from a landlord that is a charitable housing trust where the flat is provided as part of the charity’s operations
A qualifying building is one where:
- At least two thirds of flats are held by qualifying tenants
- At least 75% of the internal floor area (excluding common areas) is used for residential purposes
There are certain exceptions that may apply, meaning you are not eligible for collective enfranchisement, including where the building is:
- Not a purpose-built block of flats and all of the following apply:
- It has been converted into 4 or fewer flats
- The same person owned the freehold before the conversion into flats
- The freeholder or an adult family member has lived in the block within the last 12 months
- Within a cathedral precinct
- A National Trust property
Your landlord can also object to the enfranchisement on the basis that they intend to demolish and redevelop the building or a substantial portion of it AND where at least two thirds of the leases in the building are due to end within 5 years of the Initial Notice being served.
Making a participation agreement
You will need to make a legally binding participation agreement with the other leaseholders who wish to take part in the participation. This will set out how decisions will be made between you, the terms of the purchase you wish to negotiate and what financial contribution each leaseholder will be making.
You should also set out what will happen after the freehold is acquired e.g. that the new freeholder will grant new leases to all participating tenants.
Choosing a nominee purchaser
This is the person or entity that will purchase the freehold and become the new landlord. This can be an individual, a trust or, more commonly, a company set up specifically for the purposes of holding the freehold. If you are setting up a company or a trust, you will need a solicitor to help you with this.
Financing collective enfranchisement
You will need funds to cover the legal costs involved in your enfranchisement, as well as to cover the cost of buying the freehold itself. You will need to work with all participating tenants to make sure you have sufficient funds in place before serving the Initial Notice on your landlord informing them of your intention to buy the freehold.
Valuations for lease enfranchisement
It is a good idea to have the property valued by a qualified surveyor or specialist valuer. This will give you a strong basis for negotiating the purchase price (or “premium”) for buying the freehold with the landlord.
There is a formula set out in the Leasehold Reform, Housing and Urban Development Act 1993 to calculate the value of the premium for buying a freehold, but ultimately this and the price suggested by your surveyor/valuer are only estimates. The final cost will depend on how effectively you are able to negotiate with your landlord.
Serving the Initial Notice
You will need to notify the landlord of your wish to purchase the freehold with a formal written notice referred to as the Initial Notice. This will need to set out key details such as:
- Who the freeholder is
- Who all of the leaseholders in the building are
- Who is participating in the enfranchisement
It is critical that the Initial Notice is drafted correctly with all of the necessary details as failing to do so could hold up the enfranchisement process or see your Notice rejected as invalid.
The freeholder is required to respond to the Initial Notice in one of the following ways:
- Agreeing to your right to buy the freeholder and accepting your terms
- Agreeing to your right to buy the freeholder but suggesting their own terms
- Disagreeing with your right to buy the freeholder and setting out their reasons for doing so
- Stating that they intend to apply to a court to redevelop the property and this your right to enfranchise does not apply
If the freeholder fails to respond within 28 days of receiving the Initial Notice, you can apply to a court for a Vesting Order allowing the court to sell the freehold to you.
Dealing with absent landlords
If the landlord cannot be found after you have made all reasonable efforts to do so, this does not mean you cannot acquire the freehold on your building.
If the freeholder was a company which has gone into receivership, ceased trading or been struck off, you may need to contact the Receiver or Treasury Secretary who will be able to authorise the sale.
If the freeholder simply cannot be identified or contacted, you can apply to a court for a Vesting Order, allowing the court to sell the freehold to you.
What happens after successful collective enfranchisement
This will depend on your goals, but typically you will need to take care of issues including:
- Appointing a managing agent for the building
- Granting new leases to the participating leaseholders
- Setting service charges and other fees
- Setting up a sinking fund or making other provisions to cover the cost of any future works need to improve or maintain the building
- Making provisions for how any disputes between leaseholders will be resolved
You should always consult a specialist solicitor for advice on dealing with these types of issues, the solutions to which should normally be agreed between all participating tenants before you serve the Initial Notice.
Get in touch with our collective enfranchisement solicitors in London
For swift advice and representation on all aspects of collective enfranchisement, please contact our London office to speak to member of our team now or make an enquiry online and we will get back to you shortly.