The Right of Collective Enfranchisement entitles the Leaseholder to purchase the Freehold of a property under the Leasehold Reform, Housing and Urban Development Act 1993.
In order to qualify for ‘Collective Enfranchisement’, the Leaseholder and the property under which the lease is granted need to meet certain criteria.
Leaseholder qualification for Collective Enfranchisement
All Leaseholders must have a lease that is:
- A long lease defined as at least 21 years long on the date of grant of lease.
- The continuation of a long lease under the Housing act 1989 (following the expiry of the original lease term).
Are there any circumstances when a Leaseholder meeting the above conditions still doesn’t qualify?
- The Leaseholder owns 3 or more flat leases in the building.
- The lease is a commercial lease.
- The Freeholder is a charitable housing trust and the flat is provided as part of the charity’s functions.
Building qualification for Collective Enfranchisement
In addition to the Leaseholder criteria, the building must also meet certain conditions:
- There must be two or more leases on the freehold.
- Two thirds or more of the flats must be leasehold.
- No more than 25% of the gross internal floor area can be in non-residential use.
- The building is not within a cathedral precinct.
- The building is not a National Trust or Crown Property.
In the following circumstances there is no right of Collective Enfranchisement but the Leaseholder may have a right to extend the lease:
- The freehold demise includes any track or structure of a railway (in operation).
- The building is a conversion rather than a purpose built block of flats and the same person has owned the freehold since before the conversion of the building and they or any member of their family over 18 years old has lived there in the past year.
Once you ascertain that you qualify for Collective Enfranchisement, what will it cost to buy the Freehold?
The cost of buying the freehold will include:
- Valuation fees
- The cost of the premium (as ascertained by a Surveyor)
- Legal fees
- Disbursements; e.g. setting up management company with other leaseholders
Most freehold purchases do not go to the LVT, however if you do there will be further costs in addition to those set out above. These include:
- Additional legal fees for managing the LVT appeal
Step 1 – Get a Freehold Valuation