In this article, Leasehold Property Expert Niki Adkins gives you an update on when we might see the leasehold reform act come into force.
A group of leaseholders can force their freeholder to sell the freehold title of their building to them, as long as they can meet certain criteria. This is known as enfranchisement and, usually, it removes your existing freeholder’s involvement and allows you to manage your own building.
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We can put you in contact with a specialist valuer in your local area to advise on how much the freehold is likely to cost. Then you and your neighbours can decide whether enfranchisement is a viable option for you.
If an enfranchisement is not possible, we can assist you as individual leaseholders in protecting your investments by instead obtaining Lease Extensions.
We have a team of experienced professionals with expertise in enfranchisements and lease extensions. We would be happy to help with questions on your specific property.
Free initial appointment
We offer all new clients a free initial chat with one of our bright lease extension experts. This can be over the phone, through video call or in person at our Christchurch or Ringwood offices.
Although the team are based in Ringwood, we deal with matters from all over the UK, such is our reputation.
Where a face-to-face meeting is necessary, we have put the required safety measures in place.
Call us on 01202 499255 or fill in your details, and one of our friendly team will be in touch to arrange your free meeting.
Our leasehold enfranchisement solicitors can help you with…
All aspects of the process, including:
- Advising whether you are eligible for collective enfranchisement and whether your building qualifies
- Drawing up the notice to be served on your landlord
- Establishing the cost – by putting you in contact with a specialist valuer
- Making a formal offer to your landlord
- Negotiating terms
- Setting up a management company for you and your fellow leaseholders to take on the freehold
- Advising you of any tax implications
- Setting up a regulated structure such as a participation agreement to govern how you and the other leaseholders will deal with the enfranchisement process together
- Drawing up the necessary documentation for a lease extension or freehold purchase
If an enfranchisement is not possible, we can assist you as individual leaseholders in protecting your investments by instead obtaining Lease Extensions.
We have a team of experienced professionals with expertise in enfranchisements and lease extensions. We would be happy to help with questions on your specific property.
Download our factsheets on lease extension & enfranchisement
Download our director's guide on freehold management
Our expertise with lease enfranchisement
Accessing eligibility for lease enfranchisement
To qualify for enfranchisement, a leaseholder will need to hold a long lease, which is one that had at least 21 years on it when it was first entered into.
The building must have two or more flats that are held by qualifying leaseholders.
A minimum of two-thirds of the flats must be held by qualifying leaseholders.
No more than one-quarter of the property can be in non-residential use, excluding communal areas.
Informal negotiations with the landlord to buy the freehold
Once you have established that you have the right to ask for enfranchisement, you should notify the landlord. If they are open to negotiations, you can suggest a price that you and the other freeholders are prepared to pay for the freehold.
This will be calculated by looking at the aggregate value of:
- The building’s investment value
- The increase in value to the freehold because the leaseholders are able to grant long leases to themselves
- Compensation for any loss in value of other property that is owned by the freeholder, for example, adjacent property that cannot now be developed in conjunction with the property being enfranchised
Calculating and agreeing the price can be a complex process and a surveyor will generally need to be instructed.
Making a formal offer
Serving a formal initial notice on the landlord commences a formal process for acquiring the freehold.
The leaseholders will be liable for the landlord’s reasonable legal costs from this point onwards, so it is advisable to ensure that the process goes as smoothly and efficiently as possible to minimise the time involved.
The notice can be registered with HM Land Registry to ensure that if the landlord tries to sell the freehold, any purchaser has notice of the impending enfranchisement. Service of the notice also fixes the valuation date as the same date as the notice. The valuation date is the date when the variables used in calculating the price of the freehold are set.
Landlord’s counter-notice
The landlord will be given time in which to serve a counter-notice. This notice will generally accept your right to buy the freehold and either accept the proposed terms or propose alternatives.
It is open to the landlord to reject your right to buy the freehold if they believe they have grounds for this.
Alternatively, they can ask the court to make an order that enfranchisement be prevented if they intend to redevelop the property. For this to be a possibility, at least two-thirds of the leases must be due to end within five years of the date of the initial notice.
Contested lease enfranchisement proceedings
If the acquisition cannot be agreed within two months after the date of the counter-notice, it is open to either party to make an application to the leasehold valuation tribunal for determination of the terms of the deal, including the price to be paid.
Application must be made within six months of the date of the counter-notice.
The landlord may also contest the enfranchisement if it believes that either the leaseholders or the property do not qualify. To avoid this issue, it is important to ensure before starting the process that you definitely have the right to enfranchise.
Lease enfranchisement conveyancing
Once the terms have been agreed, which is usually dealt with by negotiation, the conveyancing of the transaction needs to be carried out.
This involves the drawing up of a contract for sale, including all of the agreed terms such as the price. The contract will also include a date for completion.
We can deal with this aspect of the transaction on your behalf, as well as the negotiations beforehand.
We will also explain the tax situation to you as there could be a tax liability on completion of the purchase. This is more likely if the property is a second home for any of the leaseholders.
Leaseholders often set up a management company to own the freehold, and we can incorporate this on your behalf and ensure that it is legally sound.
Once funds have been transferred to the landlord’s solicitor to complete your purchase, we will arrange for registration of the leaseholders’ ownership of the freehold at HM Land Registry.
Amending leases after enfranchisement
Once you and your fellow leaseholders have purchased the freehold, it will be easier for you to amend and extend your leases, however there is still a strict process to follow and it is always essential to make sure that any crucial legal documents such as leases are correctly drafted.
We can advise you on the correct procedure to be followed and ensure that each lease remains enforceable and fit for purpose to protect both you and the property as a whole.
Expert enfranchisement advice in Bournemouth, Poole, Christchurch, Ringwood and the New Forest
When does the right to enfranchisement apply?
The right to enfranchisement exists once you have held the lease to your property for two years, and provided it was originally granted for at least 21 years.
What are the benefits of lease enfranchisement?
There are several benefits to enforcing these rights. Firstly, as a group, you and the other leaseholders will have far more control once you own the freehold.
You will be able to decide on the amount of service charges payable, shop around for the best value when paying for insurance, building and maintenance works and decide how much money to put aside for major repairs, such as a new roof.
You will be able to decide what works to have done and whether you want to take on a managing agent and employ people to maintain communal areas, such as a shared garden or entryway.
You will also be able to grant long leases to yourselves.
This can be valuable, as once the length remaining on a lease falls below a certain level, usually 80 years, mortgage companies will not lend against the purchase of the property, meaning it will be difficult to sell and its value will fall substantially.
Can the freeholder refuse to sell the freehold?
A freeholder can refuse to sell the freehold if the qualifying requirements are not met. You have a collective enfranchisement right with the other leaseholders to buy your freehold but not an individual right.
At least half of the leaseholders must want to exercise this right, or all of the leaseholders where there are only two flats in the building.
How can you buy the freehold with an absent freeholder?
It is still possible to purchase a freehold, even if the landlord cannot be traced. The leaseholders can apply to the county court for a vesting order.
It will be necessary to demonstrate to the court that all reasonable efforts have been made to trace the freeholder, including placing advertisements in a local paper as well as in the Gazette.
The court then has the power to order the sale of the freehold to the tenants. The price will be assessed by the First-Tier Tribunal (Property Chamber) and the money paid to the court.
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Get in touch with our lease enfranchisement solicitors in Dorset
We offer a free initial appointment to all new clients. This is your chance to find out more about lease enfranchisement, explain your situation and see how our expert team can help.
To set up your free initial appointment with one of our Dorset-based lease enfranchisement solicitors, please contact your local Frettens branch in Christchurch or Ringwood.
