Buying the Freehold

Information on buying the freehold

Collective Enfranchisement

 

Collective Enfranchisement is the legal term for a group of leaseholders buying the freehold of a block of flats. Furthermore, the Leasehold Reform, Housing & Development Act 1993 allows a leaseholder to club together with other leaseholders in the block of flats and collectively purchase the freehold. In order to do this there are certain criteria and qualifications to meet.

  

What are the Qualifications for Collective Enfranchisement?

To purchase the freehold to a block of flats both the building and the leaseholder must meet the following criteria:

The BuildingThe Leaseholders
Must have a minimum of 2 flatsWhere there are only 2 flats in the building both leaseholders must participate
At lease two-thirds of the flats must be leaseholdAt least half of the leaseholders must participate in the purchase
No more than 25% of the internal floor space should be in non-residential leaseMust have a unexpired lease of a term more than 21 years
Cannot be a conversion of 4 or less flatsA shorter lease which contains  a clause providing a right for perpetual renewal
Cannot be a purpose-built block and the same person has owned the freehold since before the conversion of the building into flats and he or an adult member of his family has lived there for the past 12 monthsA leaseholder cannot own more than 2 flats in the building
The freehold does not include any track of an operational railway, including a bridge or tunnel or a retaining wall to a railway trackCannot be a a commercial or business lease

Source: www.lease-advice.org 

Considering the qualifications in the table, for example, if there are 10 flats in the building at least 5 of the flats of the qualifying leaseholders must participate in the Collective Enfranchisement process.  If there are only two flats in the building, both leaseholders must participate.

What are the Procedures for Collective Enfranchisement?

Once it is established that the building and the leaseholders in the block of flats meet the criteria, to exercise the right to purchase the freehold the leaseholders must form a Right To Enfranchise (RTE) Company and the number of leaseholders mustequal at least half the total number of flats in the block.  A series of steps must be adhered to.  These include:

  • Checking Eligibility
  • Organising for Enfranchisement
  • Establishing the Finance and Cost Fund
  • Selecting and Instructing Professional Advisers
  • Assessing the Purchase Price
  • Gathering the Information
  • Arranging the Nominee Purchaser
  • Serving the Participation Notice
  • Serving the Initial Notice
  • Preparing for subsequent procedures

For more comprehensive information on Collective Enfranchisement please go to The Leasehold Advisory Service, which is an Executive Non-Departmental Public Body (ENDPB) funded by the Government. Their website is www.lease-advice.org.

How much does Collective Enfranchisement Cost?

It is important that leaseholders who are contemplating purchasing the freehold seek independent valuation advice. Also, it is worth seeking advice and assistance of a solicitor to help prepare and set up the process for purchasing the freehold.
 
Also, please note that any leaseholders seeking to pursue Collective Enfranchisement must pay their own costs as well as the costs of the landlord.

Is buying the freehold worth it?

The Leasehold Advisory Service comments that, "The procedures to collective enfranchsiement are straightforward and there is no reason why any group of leaseholders should not be able to successfully complete enfranchisement action."