Collective Enfranchisement
This is a statutory right for qualifying tenants in a purpose built or converted block of flats to purchase their Freehold (and Headlease) subject to certain qualifications.
To qualify for collective enfranchisement:
- The building must be independent or part of a building capable of independent development.
- The building must contain two or more flats with a minimum of two thirds of the total number of flats held by qualifying tenants. (A qualifying tenant has to hold a lease that, when it was granted was for a term of more than 21 years).
- Qualifying tenants cannot own more than two flats and do not qualify if they hold a commercial lease.
- Buildings do not qualify if (i) they comprise 4 or less units and have a resident freeholder who converted the building (ii) more than 25% of the building is used for non – residential purposes (iii) the building is above a railway line.
Procedure for collective enfranchisement
- Prior to making a claim, it is usual for tenants to enter into a Participation Agreement before preparing the formal Notice which is done by solicitors. A minimum of 50% of the number of flats in the building is required to make a claim.
- Once the notice is served the landlord serves a counter-notice in return within two months.
- As with lease extensions and house enfranchisements, there is then a period for negotiations, with a referral to the Leasehold Valuation Tribunal if agreement on the premium can not be reached.
- Completion of the freehold purchase – either by negotiation or by determination of the courts. This usually takes place two months after agreement or determination of the price.
The Enfranchisement Price is broadly based on the investment value to the Freeholder together with 50% of the marriage value and compensation for any other loss. We can advise you in detail on the price to be paid and how it should be apportioned between the participating tenants.
Collective enfranchisement can be a complex process and the legal procedures are inflexible. Specialist advice from both expert surveyors and solicitors is strongly recommended.
For an initial discussion please contact one of our team and see our list of enfranchisement solicitors.