Leasehold Enfranchisement: Definition & Overview
What is Leasehold Enfranchisement?
We recognise the concerns and complexities that often come with leasehold ownership. Leasehold enfranchisement offers a pathway to greater control and long-term security, allowing you and your neighbours to purchase the freehold of your building collectively. This guide sets out what enfranchisement means, your rights as a leaseholder, and the key steps involved in the process.
Leasehold enfranchisement, often referred to as collective enfranchisement, is a statutory right that allows qualifying tenants of qualifying flats to purchase the freehold of their building. This right is set out in the Commonhold and Leasehold Reform Act.
To exercise it, at least 50% of the flats in the building must participate, and those leaseholders must meet the definition of qualifying tenants. If both the building and the tenants meet the criteria, the landlord cannot refuse the application.
Understanding these basics is the first step towards enfranchisement and gaining greater control over your property.
The Importance of Leasehold Enfranchisement
The value of enfranchisement lies in the empowerment it gives leaseholders. Often, leaseholders consider it when disputes arise with landlords over service charges. By acquiring the freehold, leaseholders gain control of the property, ending the freeholder’s involvement.
Following a successful purchase, the participating leaseholders can grant new leases (within some restrictions) and take a more active role in the building’s management. This transforms tenants into decision-makers and stakeholders, thereby strengthening both their responsibility and sense of ownership.
Common Scenarios for Enfranchisement
There are several situations where leaseholders may pursue enfranchisement:
- Service charge disputes with landlords
- When a property is sold without tenants being offered the right of first refusal
- To gain long-term control and security over the building
Because the process is complex, legal advice from lawyers specialising in leasehold reform is invaluable. Having our experts guide you ensures your rights are protected and your investment is safeguarded.
Qualifying for Leasehold Enfranchisement
Most leaseholders of flats have the right to buy the freehold if they and the building meet the criteria in the Reform Act. A qualifying tenant is usually someone who holds a lease originally granted for more than 21 years. Leases with perpetual renewal clauses or 100% shared ownership also qualify. Some properties, however, are excluded from lease extension and enfranchisement rights.
To move forward, a minimum number of leaseholders must participate in the Initial Notice. It’s strongly recommended that all participating leaseholders enter into a formal participation agreement to manage their joint responsibilities.
Be aware that once the Initial Notice is served, the participating leaseholders become liable for the freeholder’s reasonable professional fees.
Specific properties are entirely excluded from enfranchisement under the Housing and Urban Development Act. If the landlord challenges eligibility in their Counter-Notice, the Nominee Purchaser must apply to court within two months to confirm the validity of the Initial Notice.
The collective enfranchisement process involves several critical stages, including:
- Checking eligibility
- Organising and appointing a Nominee Purchaser
- Instructing professional advisors
- Obtaining a valuation of the freehold
- Serving the Initial Notice (Form S13)
If the freeholder is missing, the Initial Notice cannot be served in the usual way. In such cases, specialist legal support is essential.
Early valuation advice from a chartered surveyor is critical to ensure the offer for the freehold is realistic. Leaseholders must also factor in liability for the freeholder’s reasonable costs, alongside the purchase price itself.
Understanding the complete financial picture helps avoid unwelcome surprises.
Once the Initial Notice is served, strict timelines and information requests follow. Without the proper guidance, delays or missed deadlines can jeopardise the process. Having a team of lawyers with proven enfranchisement experience makes all the difference.
Right to Manage: An Alternative
The Right to Manage (RTM) is another legal route that enables qualifying leaseholders to take over the management of their building without buying the freehold. It requires setting up a right-to-manage company, which then takes responsibility for services, repairs, and insurance. This option can be more straightforward and more cost-effective than enfranchisement if your main goal is management rather than ownership.
Comparing RTM and Enfranchisement
While both RTM and enfranchisement increase leaseholder control, the outcomes differ:
RTM provides management control but leaves freehold ownership with the landlord (who still collects ground rent). Enfranchisement transfers ownership of the freehold to the leaseholders, though it requires greater upfront investment and more complex procedures.
Benefits of RTM
RTM allows leaseholders to choose their contractors, improve transparency, and increase accountability in management. Importantly, RTM does not require landlord consent, provided the eligibility criteria are met. For some, it can be an effective alternative to enfranchisement.
How We Can Help: Seeking Legal Advice for Leasehold Enfranchisement
We advise both landlords and tenants on leasehold enfranchisement and right of first refusal. We also support leaseholders exploring their right to manage.
We understand how stressful and time-sensitive these processes can feel. Our team of specialist lawyers, regulated by the Solicitors Regulation Authority, bring extensive expertise in leasehold reform.
With clear, practical advice tailored to your circumstances, we’ll help you exercise your rights efficiently and with confidence.
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