Collective Enfranchisement Eligibility

Collective Enfranchisement – a quick guide

When purchasing a property, you can either purchase the Freehold or the Leasehold title and it is most common for owners of a flat to purchase the Leasehold title only. That being said, in recent years, many owners have become aware of the benefits of purchasing the Freehold title from the Freeholder of a block of flats and as such, have come together for ‘Collective Enfranchisement’ i.e. the purchase of the Freehold under the Leasehold Reform Housing and Urban Developments Act 1993 (LRHUD Act 1993).

In order to be eligible for Collective Enfranchisement, you must meet the following criteria:

1. At least two thirds of the flats MUST be owned by people with ‘qualifying leases’ i.e. leases with a term of more than 21 years
2. The block of flats must be used primarily for residential purposes
3. The block of flats must generally be ‘self-contained’
4. At least half of the flats within the block must agree to Collective Enfranchisement

If all of the above can be met, (subject to a couple of exclusions) then you may be in a position to purchase the Freehold by means of Collective Enfranchisement under the LRHUD Act 1993. Purchasing the Freehold has a number of advantages, including but not limited to:-

1. The ability to control the entire building in which you are living or renting out, leading to less complication and involvement from third parties and helping keep communal costs to a minimum
2. The ability to grant yourself a new lease for a longer term and with more favourable conditions, both of which may increase the value of the property

Now the procedure to follow in relation to Collective Enfranchisement is rather ridged and a number of legislative timetables apply, which if not adhered to, will mean that the process does not take effect. In short, the process involves the Leaseholders (or owners of the flats) serving Notice upon the Freeholder (or owner of the building) and this notice should confirm various details, including the proposed purchase price. The Freeholder must then respond by the response date, failure of which will result in the Leaseholders being able to enforce the purchase of the Freehold on the terms set out in the Notice. However, if the Freehold does respond before the response date, a negotiation period will be entered into, with the Leaseholder having the opportunity to take the matter to a Leasehold Valuation Tribunal if matters cannot be resolved within a number of months. In order to pitch the offer in the Notice at the correct level, the Leaseholders will have to have a valuation of the property carried out and the Leaseholders usually have to cover certain costs of the Freeholder in relation to work which they must carry out as part of the application.

Therefore, there is a lot to consider when looking at Collective Enfranchisement and you will see that the process can become rather lengthy and that the timetables associated with the steps are quite strict. As such, it is vitally important that you instruct a Solicitor in relation to Collective Enfranchisement, as they will be able to guide you through the process, deal with all parts of your claim (including the expert valuation) and ensure that all of the important stuff is ticked off in accordance with the law. Most importantly, a Solicitor will be able to advice you as to whether Collective Enfranchisement is even a viable option in the first place, based upon the criteria for such an application, avoiding any unnecessary costs.

Therefore, if after reading this article you too would like to explore the possibility of Collective Enfranchisement, please speak to our Residential Conveyancing team or contact us on 0800 470 0340 and we will be more than happy to assist you through the process.