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Bukola Obadun-Craigs - partner

Collective Enfranchisement

Collective Enfranchisement it is a right, subject to qualification, for the owners of flats in a building, and sometimes part of a building, to join together and buy the freehold of that building.  It's a right that requires the freeholder to sell the freehold of the property to them and was given under the Leasehold Reform Housing and Urban Development Act 1993.

Do I Qualify?

The right to collective enfranchisement is a ‘no fault’ one.

You will qualify for this right if:

  • The building is a self-contained building or part of a building. A self-contained building is one which is either structurally detached; or part of a building attached to another building but can be divided vertically from the whole so that the structure of it is capable of being independently redeveloped, and have independent services, or services which could be provided without significant interruption of any services for occupiers;
  • Not more than 25% of the building is non-residential;
  • Two or more of the flats are held by qualifying tenants i.e., tenants of flats let on leases for more than 21 years;
  • The total number of flats held by those tenants is not less than two-thirds of the total number of flats;
  • The premises must not include a track of an operational railway; and 
  • There must not be a resident landlord (only relates to premises which are not purpose-built blocks).

Where applicable there will also be the costs of setting up the management of a company to acquire the freehold. In addition to those costs, you will have legal and other professional costs such as surveyors’ fees .

Once the claim is triggered by service of an Initial Notice the nominee purchaser (usually a company incorporated to acquire the freehold on your behalf) will be liable for the reasonable costs of the freeholder and any relevant landlord. These costs are limited to certain matters and do not include costs incurred by the freeholder should an application be made to the First Tier Tribunal if terms cannot be agreed.

The Law Commission published its report on 21 July 2020 on leasehold reform. (see our blog here)   It included changes to leasehold enfranchisement rights, proposing to make it quicker, easier, and cheaper.  

Should you wait for the reforms to be enacted or should you proceed with our collective enfranchisement claim now?   

It really does depend on your circumstances. We do not know when the reforms will become law and the exact form the legislation will take, however it was announced on 7 January 2021 that the Government plans to begin implementing the reforms around lease extensions (read about Lease Extensions here) and collective enfranchisement and expects to enact the first part of the reform legislation within the current session of Parliament. 

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