The document summarizes key aspects of leasehold enfranchisement in the UK, including lease extensions and collective enfranchisement. It discusses the rights of leaseholders to acquire new extended leases or purchase the freehold of a building. The summary outlines the qualification criteria, valuation process, and typical steps involved, including serving notices, negotiations, and potential tribunal proceedings. Examples are provided showing how long lease terms and property value increases can significantly impact enfranchisement valuations and premiums over time.

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2. Southwark Homeowner
Conference 2018
Tom Olden MRICS
Olden Property Consulting
Leasehold Enfranchisement
o
www.oldenpropertyconsulting.com

3. Leasehold Enfranchisement
The Leasehold Reform, Housing and Urban
Development Act 1993
Lease extension :
The right to
acquire a new
lease in
substitution for
the existing lease
Collective
enfranchisement:
The right for
certain tenants of
flats to acquire
the freehold of
the premises
containing those
flats
o

4. Lease Extension : What Do You Get ?
You will be entitled to acquire a new extended lease in
substitution for your existing lease
The extended lease will be for a term expiring 90 years after
the end of the current lease
You will reserve a peppercorn rent throughout the term
Broadly, the lease will otherwise be on the same terms as
the existing lease

5. The length of the new lease will
be for the outstanding term of
the existing lease plus 90 years
E.g. if you have 85 years
remaining, the new lease will
be for 175 years

6. Protect the value of your leasehold interest
Enhance the value of your leasehold interest
Difficulty on sale or mortgage of short and medium term
leases
Why Extend ?

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8. Do You Qualify?
• You must be the registered leaseholder (known as a tenant) of
the flat for two years before the date of the claim
• You must hold a lease that had a fixed term of more than 21
years when it was originally granted
• The assignee of a tenant’s notice served by a tenant who has for
the previous two years been a qualifying tenant of the flat also
qualifies
• There is no limit to the number of flats you may own in the
building. You may extend any or all of them

9. • Not a qualifying tenant if you hold a business lease, lease from a
charitable trust, Crown or a sub-lease which is in breach of terms
of a superior lease
• Personal representatives of a deceased tenant can make a claim
provided that the right is exercised within a period of two years
from the date of grant of probate
• You do not need to be an occupier of the flat
Do You Qualify?

10. Lease Extension Steps Involved
1. Instruct a properly qualified
surveyor and solicitor
2. Your surveyor will under take
a valuation for you
3. Solicitor serves the tenants Section
42. notice of claim on the landlord
4. A second surveyor will under take a
valuation for the landlord

11. 8. If any terms of acquisition remain in dispute an
application to the First-Tier Tribunal can be made
for the matter in dispute to be determined.
Lease Extension Steps Involved
7. Once the counter notice is received both sides
surveyors will aim to negotiate a settlement.
6. The landlord must serve a Section 45.
counter-notice on the tenant.

12. The Valuation
Loss of the Flat at the End of the Term (Reversion)
Lost Ground Rent (Term)
Compensation
Professional Fees
Share of Marriage Value

13. Lease Extension Valuation 81 Years Remaining
£13,500
1 London Bridge : 81 Year Lease Term Remaining. Long Lease
Value £500,000. Ground Rent £150 per annum.
Ground Rent (Term) £2,000
Loss of Flat (Reversion) £11,500
Marriage Value £0
Total £13,500

14. Lease Extension Valuation 79 Years Remaining
£26,000
1 London Bridge : 79 Year Lease Term Remaining. Long Lease
Value £500,000. Ground Rent £150 per annum.
Ground Rent (Term) £2,000
Loss of Flat (Reversion) £12,500
Marriage Value £11,500
Total £26,000

15. Why Collective Enfranchisement ?
• Taking control
• Grant yourself a 999 year lease
• Maximising assets
• Winding up head leases
• Owning the freehold can
increase values

16. Collective Enfranchisement Qualification Criteria
Leaseholder Qualification Criteria
• Long leasehold interest in excess of 21
years when granted
• Non commercial lease
• A single leaseholder can not own three or
more flats in the building
• Do not qualify if you have a landlord who is
a charitable housing trust
• 50% of qualifying tenants must participate

17. Collective Enfranchisement Qualification Criteria
Qualifying Building
• Independent building or independent development
• Two or more flats in the building
• Two-thirds of the flats must be leasehold
• Less than 25% commercial space
• Operational railway, cathedral precinct, National
Trust or Crown property excluded.
• Four or fewer flats with resident freeholder.

18. Collective Enfranchisement Steps Involved
1.Instruct a properly qualified surveyor and solicitor
2.Enter into a participation agreement
3.Serve a preliminary notice to obtain information
4.Ascertain whether a sufficient number of tenants want to
participate & have sufficient finance
5.Inspection and valuation to determine the premium
6. Establish the vehicle or nominee purchaser to buy the freehold e.g.
company or trust

19. Collective Enfranchisement Steps Involved
7. Serve a Section 13 tenant’s notice of claim
8. The landlord’s surveyor inspection and
valuation to determine the premium
9. The landlord serves a section 21 his
counter-notice
10.Negotiation
11.First-Tier Tribunal

20. Collective
Enfranchisement
Valuation
Diminution
of
Landlords
Marriage
value
Common
Parts
Development
Value
Non-
participating
tenants
Premium
split

21. Collective Enfranchisement Additional Points &
Pitfalls
• Finance – Non-participating tenants.
• Tax implications to the transaction.
• Freeholder may request a leaseback.
• The participating tenants will become responsible for the
management of the building
• You may well find yourself left out.

22. • Collective enfranchisement
• Southwark council denied the
right to acquire the freehold
• 16 months later court
determines leaseholders have
the right
• Leaseback to council and
wording of covenants
• Southwark’s valuation fees
£9,000 V £900
Southwark Case

23. • Four flats in a block, collective enfranchisement
• December 2008 valuation for premium of £23,175
• Did not proceed
• Took over management via Right to Manage Company
• January 2018 instructed Olden Property Consulting
• January 2018 valuation for premium of £155,000
• Property values have doubled
• Lease length 10 years shorter
• In 2008 leases were 81 years, no marriage value
Hackney Example

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