4. Collective
Enfranchisement
• Legislation is in place
– right to compel landlord to sell freehold at a fair price
– Leasehold Reform Act 1967 – leaseholders of houses in England and Wales
– Leasehold Reform Housing and Urban Development Act 1993 – leaseholders of flats in England
and Wales
– Commonhold and Leasehold Reform Act 2002 – expanded the right
• Legislation is complex
5. Qualifying to
Enfranchise
Not every building qualifies
Even if building qualifies – not every tenant may qualify
Important: ensure from the start the building and all potential
tenants are eligible to claim
6. Building Qualification
• Self contained separate structure
• Two or more flats
• At least 2 thirds of all flats in building are held by qualifying tenants – leases over 21 years when first granted
• Not more than 25% of building floor space is commercial
• 50% of the flats in the building are participating
• Landlord is not a charitable housing trust, local authority or Crown
• Has not been converted into 4 or fewer flats with the same person having owned the freehold since before conversion with a resident landlord
7. 7 Main Stages:
1. Preparatory Stage
2. Notice of Claim
3. Landlord’s Counternotice
4. Application to the First Tier Tribunal
5. Hearing and Decision
6. Completion
7. Post Completion Leases
8. 1. Preparatory
• Ensure the building qualifies
• Ensure tenants qualify
• Sufficient numbers on board
• Understand what purchasing the freehold will mean
• Participation Agreement
• Nominee Purchaser
• Valuation
9. 2. Notice of Claim
• Formal process begins
• Clock starts to tick - strict deadline / timetable to follow
• Landlord has the right to:
– Request title documentation
– Access for valuation purposes
10. 3. Counter Notice
• Admit or deny the right
• Counter offer to items not accepted in claim notice
• Negotiation
• Agree terms of acquisition
11. 4. First Tier Tribunal
• Any party may apply
• Between 2 - 6 months after counternotice is served
• Usually do not proceed to full hearing
12. 5. Hearing & Decision
• Unusual to go all the way to a full hearing
• Each party responsible for their own costs of Tribunal proceedings
14. 7. Post-Completion Leases
• 999 years
• Ground rent – usually reduced to “peppercorn”
• Modernise existing leases
• Opportunity to rectify any defects in existing leases
15. Non-Participating Flats
• Whole of the freehold that will need to be purchased
• Internal investors
• External investors
• Overriding Lease
18. Legislation
• Leasehold Reform Housing and Urban Development Act 1993
• Right to extend flat lease
• 90 years at a fair price
19. Qualification
• Not a business or commercial property
• Landlord is not a charitable housing trust, National Trust or Crown
• Long lease – originally granted for more than 21 years
• Registered at Land Registry as owner for more than 2 years
20. Valuation
• Specialist valuation
• Not an estate agents valuation
• Ballpark figure – lease extension calculator on website:
http://www.jpclaw.co.uk/areas-of-law/leasehold- enfranchisement/lease-extension-calculator/
21. Notice of Claim
• “Section 42 Notice”
• Formal process begins
• Served on the landlord and all third parties to the lease
• Propose a price
• Propose apportionment between landlords
• Landlord entitled to request:
– Deposit – 10% or £250
– Title documents
– Access for valuation purposes
23. First Tier Tribunal
• Any party may apply
• Between month 2 and 6 after counternotice is served
• Unusual to go all the way to full hearing
• Each party responsible for own costs of Tribunal proceedings
