Leaseholders can opt for the collective purchase of the freehold of the block which is known as Enfranchisement. This can be particularly useful if leaseholders are unhappy with the freeholder’s maintenance and management arrangements for the block.

Leaseholders Rights

The 1993 Leasehold Reform, Housing and Urban Development Act, amended by the Commonhold and Leasehold Reform Act 2002 allows most leaseholders to purchase the freehold of their building. The conditions being:

• The building must have a minimum of two flats
• Purchase is not possible if the Freeholder lives in the building, which was originally converted by him and there are less than 5 flats
• The Leaseholders’ original lease terms must be greater than 21 years
• There is no minimum ownership period
•  Leaseholders need not be resident
• At least 50% of Leaseholders must participate
• Up to 25% of the building floor area may be non-residential

It is often possible to achieve negotiated agreements without resorting to the prescribed notice process, as this can be expensive. In the event that the terms fail to be agreed the legal notice process is still available.

You will need to instruct a surveyor to carry out an Enfranchisement Valuation. A surveyor will establish the likely cost of purchasing the freehold and then a solicitor needs to serve the appropriate notice on the freeholder.

What does it the cost?

• The value of the ground rent income
• The value of the Freeholder’s reversion at the end of the leases.
• 50% of the ‘marriage value’. Marriage value is the increase in value when the Freehold and Leasehold interests are combined or ‘married together’.
• The leaseholders would cover the landlords reasonable legal, Surveyors costs and Stamp Duty.

How is the price agreed?

The Leaseholders form a ‘right to enfranchise company’ and their solicitor serves a notice making a monetary offer for the freehold.  The Freeholder either accepts or serves a counter notice giving his asking price.
The surveyors then negotiate a reasonable price acceptable to both parties, if no agreement is reach than an application will need to be made to the First-Tier Tribunal to determine a price.

How we can help?

Enfranchisement is a specialist subject and Valuations should only be undertaken by Surveyors with relevant expertise.

Nationwide surveyors have many years of experience of undertaking such valuations and negotiations. We can assist with:

• Calculate the price required to purchase the freehold.
• Negotiating with the Freeholder or Leaseholder depending on who we are representing.
• Present the case at the First-Tier Tribunal if required.

We will provide guidance on how best to proceed with the options available and advise you through the complex process of the Enfranchisement.

Our services are tailored for each and every individual circumstance.
We can act on your behalf weather you are a Leaseholder or Freeholder.