Collective Enfranchisement

The Leasehold Reform Housing and Urban Development Act 1993 gives tenants the right to buy the freehold of their building.

‘Collective Enfranchisement’ means, simply, that the lessees of flats have the right to acquire the freehold of the building containing their flats. The ‘collective’ element is important, as it means that the participating lessees, as a group, will acquire the freehold of the whole building containing their flats.

Before beginning the process, the premises must meet certain qualifying criteria:-

• They consist of a self-contained building or part of a building
• They contain two or more flats held by qualifying tenants
• The total number of flats held by such tenants is not less than two-thirds of the total number of flats contained in the premises
• No more than 25% of the building can be used for commercial space

Qualifying requirements for the tenants (lessees) of the building also need to be met. Generally, lessees will qualify if they are tenants of a flat held on a long lease. This will usually mean that the lease was initially for a term of at least 21 years. As most flat leases were initially for 99 years or longer, the majority of lessees will be qualifying tenants for the purposes of the Act. Incidentally, if the lease is in joint names, the lessees are regarded as jointly constituting the qualifying tenant of the flat.

At least 50% of the tenants in their building must participate or 100% if the building consists of two flats only.  These tenants will form a company that will purchase the freehold.  If only half of the tenants participated, the tenants of the company will, in effect, become the “landlord” of the tenants that are not participating in the acquisition.  Each participating tenant can then be granted a new 999 - year lease with a peppercorn ground rent along with their share in the new freehold owning company. Call us today on 01926 491 181 to find out more.