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Leasehold Enfranchisement

The term ‘leasehold enfranchisement’ includes someone’s rights to extend a residential lease, and acquire the freehold. The purpose of this is to enable tenants to continue living in their residential property at a fair price and on fair terms.

We can advise both Landlords and Tenants on all aspects of the transaction and work closely with surveyors to make the process as straightforward as possible.

We are able to advise on all aspects of leasehold enfranchisement and below are some of the key considerations:

Right to Manage

What is the Right to Manage and why would this benefit me?

Most of you will have heard of the term ‘A Right to Manage’ but what does this actually mean?

A Right to Manage (RTM) allows leaseholders to take over their management of the building with or without the Landlords consent. This was introduced through the Commonhold and Leasehold Reform Act 2002.

In order to do so there is a strict eligibility criteria.

The Benefits:

Being responsible for collecting and managing the service charge.
Maintaining the communal areas in the building and grounds.
Maintaining and controlling the repairs to the structures of the building.
Having overall control will mean that costs can be monitored and repairs commissioned in a timely manner.

Lease Extensions

Why Extend Your Lease?

A long lease is far more valuable and if action is not taken to extend the lease, the lease will expire and you may no longer have rights to remain in occupation. This situation is rare but not impossible and if you find yourself in this situation you may have to rely on rights contained in section 10 of the Local Government and Housing Act 1989.

It is far better to extend the lease as early as possible as the process/premium payable to extend a short lease will be far cheaper if there is a longer term lease term left.

What is collective enfranchisement and what are the benefits

Collective enfranchisement is the right for the tenants upon qualification to buy the freehold of the building or part of the building.

Once it is established that you qualify, a nominated purchaser will need to be appointed, this can be a group of tenants as individuals or an incorporated company. Band Hatton Button can deal with the incorporation of a company if this is necessary.

Please note that all participating tenants will be responsible for paying both the Landlords and Landlords surveyor’s costs.

Landlord and Tenant

Section 5 Notices and the implications

The Landlord and Tenant Act 1987 makes it a criminal offence for freeholders to sell the freehold of your building to a third party without having first offered it to you as the flat owners on the same terms and premium.

If a Section 5 notice has been received by you, the clock is ticking and you have a limited time to respond to the freeholder confirming your interest in purchasing the freehold.

There are many benefits to purchasing the freehold:

  1. Savings on the service charge - by controlling the costs of maintenance.
  2. Savings on the ground rent - by reducing the rent payable in the lease to a peppercorn.
  3. Having control – owing the freehold will give you more control on the day to day running of the estate.
  4. Variations to the lease – such as increasing the term to make it a more valuable asset.

The process is not a simple one and you can only take the benefit as a majority group.

We can also advise on Lease Variations relating to doubling ground rents. This article discusses this in more detail.

Leasehold Enfranchisement Information Pack

Our various teams have compiled the below PDF documents & articles for you to read, which we hope are useful for those interested in Leasehold Enfranchisement.