Collective and Leasehold Enfranchisement

The Leasehold Reform, Housing and Urban Development Act 1993 (as amended) gives the leaseholders of residential flats the right to purchase the freehold of their building from the freeholder. The lessees can then run and have control of the building themselves.

Bullet the building must be self contained and structurally detached,
Bullet the commercial space in the building must not exceed 25%,
Bullet the leases must have originally been for more than 21 years,
Bullet at least 2 flats in the building must be held by qualifying tenants,
Bullet at least two-thirds of the total flats in the building must be held by qualifying tenants,
Bullet at least 50% of the flats in the building must be the qualifying tenants that sign the notice.

The collective enfranchisement can become more difficult or unsuccessful in the case of a resident landlord or where one individual owns three or more flats in the building.

As per Schedule 6 of the 1993 Act, the calculation of the premium will take account of the following;

Bullet the freeholder’s loss of income, of reversion and of any premises not let on long leases for which leasebacks are not claimed,
Bullet any intermediate lessee’s loss of profit rent, of any reversionary interest and of any premises not let on long leases,
Bullet 50% of the Marriage Value (only for the participating flats with less than 80 years unexpired lease term),
Bullet compensation for damage to other property retained or for any other loss or damage resulting from the sale of that interest.

Also see our comments in the previous section: Lease Extension.

Our Collective Enfranchisement report will include the premium that should be offered to the freeholder for the purchase of the freehold. Our report will also include an appendix with a detailed calculation of how we arrived at the premium to be paid. We would also provide within the report, a 'best and worse case' scenario valuation (i.e. valuations and detailed calculations from the point of view of the leaseholders and from the point of view of the freeholder). This would give you the minimum and maximum figures to enter into negotiations with. In most cases, our report should enable you to negotiate and reach an amicable agreement with the freeholder or leaseholders. In the unlikely event that you are unable to reach an amicable agreement with the other party, we would be able to negotiate with the freeholder/leaseholders/their representatives on your behalf and if necessary take the matter further to the Leasehold Valuation Tribunal for a decision.