freehold enfranchisement

A lease is a wasting asset. Although a flat owner may have spent hundreds of thousands of pounds acquiring their lease, in fact it becomes less valuable each year. This is because the term of the lease expires by one year annually. To remedy this inherent unfairness, individual flat owners have the right to ask the building owner to extend their lease. In addition, a group of flat owners acting together can collectively ask to purchase the freehold from the building owner. Owners of residential flats can now force their freeholder to sell the freehold provided at least 50% of the tenants participate. This is known as freehold enfranchisement or collective enfranchisement.

After enfranchising, each participating flat owner owns a share in the freehold and will usually receive a lease extension at no extra cost. Purchasing the freehold or extending a lease will come at a cost, but also serves to protect the value of the property.

In order to participate in a freehold enfranchisement the tenancies must originally have been over 21 years in length and at least two thirds of the flats must be qualifying tenancies. Less than 25% of the building can be commercial space. The building must be self contained and structurally detached.

A freehold enfranchisement can be made unsuccessful or more difficult by such factors as a resident landlord or where three or more flats are held by one individual.

Freehold enfranchisement is a complex matter and requires careful planning and expert advice so if you would like to take advantage of a free initial consultation please call Charles Tellerman MRICS on +44 207 792 9950.