Collective Freehold Purchase

There are two main types of home ownership in England and Wales: Freehold and Leasehold. Find out more about these below.

Freehold

You own the building, the land on which it stands and the sky above it and are responsible for its maintenance. Houses are generally freehold.

Leasehold

You own the property for a period of time as specified in a lease agreement with the freeholder (person / company who owns the freehold). The freeholder who may also be the Landlord is responsible for the maintenance of the communal areas and you pay a service charge / ground rent. Flats and maisonettes are usually leasehold.

It may be the case that a leaseholder owns a leasehold flat and also owns a share of the freehold. This is usually where a company has been formed which owns the freehold interest. The owners of some or all of the flats within the building own a share in and are members of that company.

How can we help you?

Collective freehold purchase, or collective enfranchisement, is the right for the owners of flats in a building to join together to buy the freehold of that building. The Act governing the right to do so is the Leasehold Reform Housing and Urban Development Act 1993 (as amended).

It is a requirement that at least 50% of the flats in the building, who are qualifying tenants, must participate. A qualifying tenant is a leaseholder / tenant who has a lease that was more than 21 years in length when first granted.

It is important for the leaseholders to decide how they will obtain the freehold. Usually a company will be formed by the leaseholders for the purpose of purchasing the freehold. The procedure requires that an initial Notice is served on the Landlord informing the Landlord of the intention to purchase the freehold. Once the initial Notice has been served there will be certain deadlines and requirements for information to be provided. For this reason, the procedure can be quite complex.

To qualify for collective enfranchisement, the building must contain two or more flats and at least two thirds of the flats must be owned by ‘qualifying tenants’. As mentioned above, at least 50% of the flats in the building who are qualifying tenants must participate. There are certain leases which may or may not come within the definition of a qualifying tenant.

It is important to note that if more than 25% of the floor space of the building, excluding any common parts, is not used for residential purposes then the building will not qualify.

Our solicitors will be happy to provide further information to help you understand whether you will qualify. We will explain what is involved at each step of the process and provide guidance based on your own individual circumstances.

.

The Act provides a formula which can be used to calculate the premium (price) to be paid by the leaseholders for the freehold. It is recommended that a surveyor is instructed to provide an initial valuation of the property and an estimate of the premium payable. The surveyor will usually provide a ‘best’ and ‘worst’ figure from both the leaseholders’ and freeholder’s perspective. Further negotiations between the parties will determine the exact figure payable. The leaseholders will be liable for the Landlord’s professional fees from the start of the transaction. This will include the Landlord’s surveyor’s fees and the Landlord’s legal fees.

There will be other costs incurred by the transaction including HM Land Registry’s fees for registration.

We advise you to contact us so that we may provide a specific tailor-made quotation based on the information you may provide to us.

The length of time collective enfranchisement takes differs from case to case. It will depend on factors such as the level of cooperation from the various parties involved. For example, if both parties negotiate the premium quickly, then the matter should be resolved within a fairly short period.

We do not like to raise false expectations by promising a precise time frame at the outset, as it is impossible to predict any issues that may arise. That said, we aim to deal with your matter as efficiently as possible and we will always bear in mind any particular time frame to which you might wish to work.

We pride ourselves on our honesty and will always let you know if we think your goals may not be achievable.

If you are seeking advice about an issue that is not shown above, we may still be able to help. Please call or email us to find out more.
+44 (0)20 8852 4433
enquiries@beverleymorris.co.uk

Collective Enfranchisement Team

Angela Stanton

Head of Conveyancing
Blackheath Office
Email Angela

Rita Egan

Blackheath Office
Email Rita

Tony Stafford

Blackheath Office
Email Tony