Lease Extensions and Enfranchisement Claims

What is Collective Enfranchisement?

Collective enfranchisement is a legal process that allows leaseholders of residential properties, to collectively purchase the freehold of their building.

24 Nov 2023

This mechanism empowers leaseholders to gain greater control over their homes, by becoming the freeholder, and therefore being able to exercise a more significant role in the management and maintenance of their property. It is a significant aspect of property law and ownership rights in the context of leasehold properties.

The leasehold system in the UK has attracted considerable scrutiny and debate over the years due to the inherent power imbalance between freeholders (those who own the land and buildings) and leaseholders (those who have a time-limited right to occupy the property). Collective enfranchisement was introduced as a means of redressing this imbalance and giving leaseholders more autonomy over their housing assets.

The legal framework for collective enfranchisement in the UK is primarily governed by the Leasehold Reform, Housing and Urban Development Act 1993 (as amended by the Commonhold and Leasehold Reform Act 2002). The legislation sets out the criteria and procedures for leaseholders to come together and acquire the freehold interest or extend their leasehold terms.

Here are some key elements of collective enfranchisement:

  1. Qualifying Criteria: Not all properties are eligible for collective enfranchisement. Qualifying conditions typically include the building being comprised of a minimum number of self-contained flats, with the majority of leaseholders with long leases supporting the action.
  2. Participation: Leaseholders who wish to participate must agree to collectively enfranchise and appoint a nominee purchaser or form a company to act as the purchaser.
  3. Valuation: An independent valuation process is essential to determine the price for the freehold or lease extension. This valuation considers various factors, including the market value of the property.
  4. Negotiation: Leaseholders must serve notice on the freeholder, who has the right to contest or negotiate the terms of the acquisition. This can involve negotiations, counter-notices, and, in some cases, recourse to the Leasehold Valuation Tribunal.
  5. Funding: Leaseholders need to raise the necessary funds for the purchase, including their legal and surveying costs, as well as the purchase price.
  6. Management: Once the collective enfranchisement is successful, leaseholders may gain control over the management of the building, depending on who the lease states is responsible for this, including decisions regarding maintenance, repairs, and other aspects of property management.
  7. Long-Term Benefits: Collective enfranchisement can provide leaseholders with greater security and potentially increase the value of their properties.

M&P Commentary

Shelley Fitzpatrick, specialist in lease extensions & collective enfranchisement, said:

“In conclusion, collective enfranchisement is a legal avenue designed to empower leaseholders to take control of their properties and gain ownership rights over the land and building they occupy. By allowing leaseholders to collectively purchase the freehold this process seeks to address the imbalances inherent in the leasehold system and grant individuals’ greater autonomy and security in their home ownership. It is a complex legal process that typically requires legal and valuation expertise to navigate successfully. However, acquiring the freehold is not always the answer and so leaseholders should seek advice from a specialist in this field before proceeding.”

OUR CLIENTS SAY ABOUT US

Ranked highly in Romford and Brentwood for solicitor firms

Family
The service I received from Allison was exceptional. Always highly professional and informative.
Virginia
Wills
Mullis and Peake are very efficient, professional and friendly company to deal with. Excellent service throughout.
Brian
Employment
Excellent, swift service from Esther at Mullis & Peake. Showed clear expertise in her field & walked me through everything patiently & thoroughly.
Dan
Company and Commercial
I found the service provided was excellent from start to finish, with our requirements met in a timely manner throughout.
Gary
Wills
Staff very helpful and friendly. Trudi was easy to talk to and to understand the procedure.
Pamela
Dispute resolution
We contacted Martyn to deal with a sensitive Will dispute and we can’t thank him enough for his commitment and hard work.
Salena
Residential Property
Very prompt. Experienced. Expert. Friendly.
Trevor
Commercial Property
Excellent service and far quicker than previous negotiations using a different solicitor.
John
Family
At all times I was kept informed about the progress of the case and everything was completed in a timely fashion.
Melanie
Personal Injury
Martyn undertook and guided me through the lengthy process [of a personal injury case], and after much work, achieved a successful result.
Shirley

Related News insights

Charity & Fundraising, Mullis & Peake
London Legal Walk Completed for 2024
Legal, Wills & Power of Attorney
What Tax May I Have to Pay When I Die?
Movers & Shakers, Mullis & Peake
An Enjoyable Day at the Langtons Summer Concert
Charity & Fundraising, Mullis & Peake
M&P COTY – The Marillac Neurological Care Centre