Leasehold Enfranchisement

Owners of leasehold flats have the right to group together and collectively purchase the freehold of their building, this is called leasehold enfranchisement.  This right is subject to certain conditions which include:

• at least two thirds of the leases must be let to qualifying tenants;
• the building must be self contained with no more than 25% being non residential (i.e. common parts); and
• at least 50% of the leaseholders must participate in the enfranchisement

Exercising the right to purchase the freehold is more expensive than exercising the right to manage which is also available to tenants, as the tenants must compensate the landlord for it’s loss of the freehold interest.  The actual amount the tenants have to pay to the freeholder depends on the amount of ground rent payable, the number of flats in the building and the length of term remaining on the leases.  As with lease extensions, if any of the leases at the building have less than 80 years remaining on the term, the cost will increase.

Once the flat owners have bought the freehold, they can have full control and management of the building and the service charge.  Those that have participated are able to grant themselves lease extensions, removing any ground rent liability for no premium.  Furthermore, they can share the premiums that any non-participating tenants pay should they apply to extend their leases.

Please contact a member of our team if you would like more information.