Key contacts

Request a valuation

Frequently asked questions

Below we answer some of the key questions around leasehold reform and enfranchisement

What is lease extension and leasehold enfranchisement?

  • Leasehold Enfranchisement refers to the process of buying the freehold of a house, a process which is enshrined in the Leasehold Reform Act 1967. If you own a flat, you are not entitled to buy the freehold, but are entitled to extend your lease by a further 90 years, or to cooperate with your neighbours to purchase the freehold of your block. 

Why should I consider buying my freehold or extending my lease and what benefits do I get from it?

  • A lease is a wasting asset. With every year that passes, the term remaining on the lease is reduced, as is its value. By extending your lease or buying your freehold, you protect your asset from erosion of value due to time.
  • When a lease term runs to around 40 years or below one can find that it is harder to obtain a mortgage. This can therefore affect the saleability of the property, as the market for short leases is smaller than for longer leases or freeholds.

How do I start the process of extending my lease or buying the freehold of my house?

  • We would advise that you instruct a solicitor and a surveyor who has plenty of experience in the process. It is a relatively complex process which, if mistakes are made, can be costly in terms of time and money.
  • To get the ball rolling, you serve a Notice of Claim on the landlord and any intermediate landlord. For lease extension claims you are obliged to propose a premium to be paid and will have to pay a deposit amounting to 10% of that premium to the landlord.

How do I start the process for collectively buying the freehold of my building?

  • Establish whether there is a sufficient number of tenants in the building willing to participate. As a rough rule of thumb, you need at least half the total number of tenants to participate, but it is preferable to involve as many people as possible.
  • Establish whether your building qualifies. For mixed use buildings, the area occupied by commercial premises must not exceed 25% of the floor area of the building as a whole (excluding common parts). It must also be capable of vertical division.
  • Have the premium valued and apportioned between the participating tenants.
  • Have a participation agreement setting out the terms on which it is agreed the freehold interest is acquired. This will include an agreement on the future management of the building, the form of the new leases to be granted to the participants and the treatment of non-participating flats amongst other matters.
  • Set up a vehicle for owning the freehold. This will normally be in the form of a limited company.
  • Serve a section 13 Initial Notice under the Leasehold Reform, Housing and Urban Development Act 1993 on the freeholder proposing a realistic price for the freehold. If the figure is not realistic, the claim can be deemed invalid. On this basis we would recommend that you employ a surveyor who specialises in this field.

What is a ground rent?

Ground rent is usually a small annual rent paid by a leaseholder to their landlord. The terms of this payment should be expressed in the lease. Ground rents can remain the same throughout the term of the lease or can be reviewed on terms set out in the lease.

What does it mean if sales particulars state a flat as having a ‘share of freehold’?

The term ‘share of freehold’ is used when the leaseholder of a flat also owns a share of the freehold interest in the building. Normally in such circumstances an individual lease of a flat is on preferable terms, such as a 999 year term at a peppercorn rent.

Does the freeholder have to grant a lease extension or sell the freehold?

Provided that the leaseholder and the property qualify and a valid Notice has been served under either the Leasehold Reform Act 1967 or the Leasehold Reform, Housing and Urban Development Act (as amended) 1993 then the freeholder is obliged to extend the lease or sell the freehold.

What is the surveyor’s job when instructed on leasehold enfranchisement issues?

  • The surveyor is valuing the compensation payable to the freeholder for the loss of his interest. The valuer will firstly need to inspect the property where the floor area will be measured and notes on condition will be made.
  • The surveyor must calculate the loss to the freeholder of ground rents over the whole term of the lease. Secondly, the reversionary interest will be assessed (this is the value to the landlord of his right to receive the flats back at the end of the lease). Thirdly, the amount of marriage or hope value payable must be calculated (only if a lease has less than 80 years remaining).
  • Following the valuation, the surveyor will often be required to negotiate the premium payable with the surveyor acting on the other side.
  • If a settlement cannot be agreed between the parties then the surveyor may be required to provide evidence in the First-Tier Tribunal.

Is it worth appointing specialist surveyors and solicitors for advice?

Yes, this is a specialised area of property valuation and law which is constantly under review and changing with time. It is therefore recommended that you seek the advice of a solicitor and surveyor well versed in what is considered a very specialist area. In particular, failure to comply with the statutory timetables can often lead to the claim failing and additional costs being incurred.

Qualifying for a lease extension

Do I qualify for a lease extension?

To qualify for a lease extension you must fulfil the following:

  • Own a long lease, i.e. a lease which was originally granted for a term of at least 21 years.
  • Owned the property for a minimum of two years. If buying a property, the vendor can serve the Notice of Claim before the sale. This right can then be transferred to the purchaser in the sale.

Do I qualify to buy the freehold of my leasehold house?

  • You must own a long lease, i.e. a lease which was originally granted for a term of 21 years or more.
  • You must own a qualifying house, being one which is separate and does not lie over or under another property demised to anyone else.
  • The leaseholder must have owned their leasehold house for a minimum of two years.
  • There is no longer a residence test.

Do I and the other tenants/leaseholders in my building qualify for a collective enfranchisement claim?

  • Two-thirds of the flats in the building must be owned by qualifying leaseholders. To be a qualifying leaseholder, one must own a long lease of the flat (21 years +).
  • No more than 25% of building’s internal floor area can be in non residential use.
  • At least 50% of the qualifying leaseholders have to participate in the purchase of the freehold.
  • There must be at least two flats in the building. If there are only two flats, both must be participating leaseholders.

Do I have to pursue a claim through the relevant Act?

  • No, you can approach the freeholder and go through the process outside of the Act if the freeholder is willing.
  • However, if negotiating outside of the Act, the leaseholder does not have any rights and therefore has no statutory protection. This could result in the freeholder proposing a higher premium or unsatisfactory changes to the lease terms.

Process of lease extension

How long does the enfranchisement process take?

  • If proceeding under the Act, the process will usually take between 9 and 12 months if the claim is settled prior to the Tribunal. Going to the Tribunal may add a further 6 months to a year to the process.
  • If however, you are able to agree terms to extend your lease or buy the freehold outside of the Act, the process can be considerably quicker.

By how many years can I extend my lease?

  • If proceeding with your claim under the Leasehold Reform, Housing and Urban Development Act 1993 (as amended), the lease will be extended by 90 years.
  • If extending outside of the Act, you may be able to agree a different length of extension.

I served a notice of claim on my freeholder through my solicitor but the freeholder has not served a Counter Notice. What happens now?

  • If you own a flat, then if the freeholder does not serve a Counter Notice, you can acquire the freehold or extend your lease on the terms proposed in the leaseholder’s Notice of Claim. However, the leaseholder’s proposed figure must be realistic, if it is not, the notice could be deemed invalid.
  • If you own a house, then in the absence of a counter-notice you will have to apply to the Court for a declaration that the claim and Notice are valid. If the landlord is absent, then the matter may be referred to a valuation tribunal for a determination on the premium.

Costs of a lease extension of enfranchisement

How much will I have to pay to extend my lease or buy the freehold of my leasehold house?

  • The premium will vary for every property. It will depend on the freehold value of the property, the number of years remaining on the lease and the level of ground rents being paid now and due to be paid in the future.
  • The difference between the amount that you would pay to extend your lease by the statutory 90 years and the amount you would pay to buy the freehold is minimal, i.e. 1-2%.
  • We would advise you seek a professional valuation by someone like us who carries out valuations under the Leasehold Reform legislation on a regular basis.

How do valuers calculate the premium payable?

  • Capitalise the current and future ground rents payable to the landlord until the end of the lease.
  • Determine the value of the deferred reversionary interest, i.e. what someone would pay today to receive the empty property at the end of the lease.
  • Assess the amount of marriage value payable

Other than the premium, are there other costs that I will have to pay?

  • If you instruct a surveyor and a solicitor to act for you, their fees will have to be paid.
  • The leaseholder is also responsible for the freeholder’s ‘reasonable costs’. This includes the freeholder’s professional fees incurred in valuing the premium, processing the Initial Notice and serving Counter Notice and drafting the new lease (if appropriate).
  • However, a leaseholder is not liable for the freeholder’s costs incurred in negotiating the premium, nor any costs incurred in preparing for, and attending a Tribunal.

Solicitors for lease extension

The process involved in extending your lease, enfranchising your house and purchasing the freehold of your block of flats can be complex and we would always recommend that a specialist solicitor acts on your behalf in conjunction with us to create a strong team.

We have listed below solicitors that we act with on a regular basis and who are experts in enfranchisement claims.

Other lease extension questions

If I extend my lease, will the ground rents remain the same?

If you extend your lease under the Act, the ground rent will become a ‘peppercorn’ rent until the end of the lease term, i.e. nil.

I cannot afford to buy the freehold, will a lease extension be cheaper?

The difference in price between acquiring the freehold and extending your lease is so small that it is unlikely to make it unaffordable. The difference is usually between 1 and 2%.

I want to buy the freehold of my house but I cannot find the freeholder, how can I go about proceeding with my claim?

The Leasehold Reform Act 1967 enables you to apply to the County Court to buy the freehold if the freeholder cannot be found. You must show however, that all reasonable attempts have been made to find the freeholder.