What is collective enfranchisement, and how do you qualify?
Collective enfranchisement is a legal right that allows leaseholders to collectively purchase the freehold of their property should 50% of the tenants agree to participate. This can give tenants greater control over the freehold they live within and is often prompted by poor quality management or expensive service charges.
Am I eligible for collective enfranchisement?
To be eligible for collective enfranchisement you must first be a qualifying tenant and live in a qualifying flat. To be a qualifying tenant you must have either:
• A fixed-term lease for more than 21 years
• A shared ownership lease where the tenant’s share is 100%
There are some other less common leases which will also qualify (business leaseholders or leaseholders from a charitable housing trust are excluded from qualifying):
For the property to qualify it must:
• Be a self-contained building or part of a building
• Be that at least two-thirds of the flats in the building are owned by qualifying tenants, this must amount to at least 2 tenants (joint leaseholders sharing a flat count as a single tenant)
• Not be a Crown or National Trust owned building
• Not have over 25% of the space used for commercial purposes
That being said, these are only the major qualifying factors. To be certain about your circumstances, contact us for a professional assessment.
What are the benefits of collective enfranchisement?
Owning a share of the freehold comes with many benefits, including complete control over the management of the building and its service charge expenditure. You also gain greater control over your lease, so you can remove ground rent or increase the lease length, for example. Additionally, buying your freehold through collective enfranchisement tends to greatly increase the value of your property and its future saleability.
Are there any drawbacks?
The upfront costs of this process can be steep as you have to consider the cost of the freehold in addition to the legal and surveying fees. If the freeholder is reluctant to sell, and the sale has to be forced, these costs can increase as we would need to refer it to the Tribunal and the process can take up to a year or more.
Additionally, collective enfranchisement comes with it the responsibility for managing the building itself once the freehold has been purchased. This responsibility lies with the tenants who now own a share of the freehold, so this will require communication and organisation between tenants.
How we can help
Our property litigation solicitors have a wealth of experience acting on behalf of tenants in collective enfranchisement cases. Only recently, Daniel Stern successfully led a collective enfranchisement case for a prominent block in South Manchester whereby the landlord was inflating development value. The case was challenged at Tribunal – but the tenants were successful in their case, and now collectively own the block.
If you’re considering organising collective enfranchisement in your block and you would like advice or legal representation then give us a call at 0161 969 3131 or fill in our contact form and one of the team will get back to you.