- 12 April 2019
Collective Enfranchisement is the right for leaseholders of a building (or part of a building) to join together and buy the freehold of that building from their landlord. Once the freehold is in the hands of the leaseholders they own, run and have control of the building themselves.
The process is governed by the Leasehold Reform Housing and Urban Development Act 1993 (as amended) and certain eligibility criteria have to be met such as whether the building qualifies, does the building pass the 25% non-residential rule and are enough qualifying leaseholders interested in participating for there to be a successful action.
Provided the eligibility criteria is satisfied, a special company has to be set up and it is this company who will acquire the freehold and become the new landlord.
That company then serves a formal notice on the landlord asserting their right to purchase the freehold. That notice will state the price the leaseholders propose to pay. The price is based upon specific formulae laid down in the enfranchisement legislation and it is always recommended that a surveyor is instructed at the outset of the enfranchisement process to work the premium out.
Following service of the notice, the landlord has at least two months’ to respond with a counter notice. If the landlord denies the right (which is uncommon) the leaseholders must seek a declaration from the County Court as to their right. More commonly, the landlord’s counter notice will accept the right but dispute the premium offered. Both parties then have the opportunity to negotiate the price and following successful negotiations exchange contracts and complete the purchase. If the price cannot be agreed however, an application will have to be made to the First-Tier Tribunal.
Our specialist team have a wealth of knowledge dealing with collective enfranchisement cases, from establishing eligibility, to preparing the notice and thereafter dealing with any counter notice through to completion. Our team are also experienced in making any necessary applications whether they are in the County Court or the First-tier Tribunal.
- 12 April 2019
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