Collective Enfranchisement is the legal term for the owner of a leasehold property to join together with another or other leaseholders and purchase the freehold of that building from their landlord (the freeholder).
The law that governs collective enfranchisement is the Leasehold Reform Housing and Urban Development Act 1993 (as amended).
What is Collective Enfranchisement?
Collective Enfranchisement Specialist
Jaswinder Veratch
Jaswinder Veratch joined Sanders Witherspoon LLP in 2020 and heads up the Conveyancing Department. Jaswinder deals with property related matters, including sales, purchases, transfer of equity and remortgages.
The law that governs collective enfranchisement is the Leasehold Reform Housing and Urban Development Act 1993 (as amended).
The rules are complex and it is strongly recommended that you engage the services of a conveyancer, experienced in such transactions to guide you through the process and make sure you tick all the boxes, otherwise the process could fail. It is also important to instruct a surveyor to obtain a proper valuation.
Do You Qualify For Collective Enfranchisement?
There are a few things you need to claim for collective enfranchisement
You Qualify If:
You Do Not Qualify If:
Benefits of Collective Enfranchisement
When you own the freehold of your flat or apartment, you also own the structure and ground of the building along with the other participating owners. You therefore have more control and avoid additional costs in future for things such as ground rent.
Step by Step:
A valuation is obtained. This is a specific process using a formula detailed in the legislation as well as the surveyors own expertise. The price of the freehold is called the ‘Premium’. This is what the freeholder can expect to receive in return for transferring the freehold to the leaseholders.
The leaseholders would need to decide how to own the freehold – whether ‘on trust’ for each other, or by way of a Limited Company. Your solicitor will advise on the pro’s and con’s of each but generally a Limited Company is considered to be the best way.
A Participation Agreement will be drafted by the solicitor dealing which is essentially a contract between the leaseholders setting out the terms i.e the percentage paid by each towards the premium, who pays the costs of the process, and any other terms that should be incorporated.
A Notice is served on the freeholder in a prescribed form, complying with the legislation and confirming the price that the leaseholders are prepared to pay for the premium.
The freeholder has two months to reply either with an acceptance of the offer or whether there is a dispute either to the leaseholders’ right to buy the freehold or whether the premium is incorrect.
If the freehold disputes the validity of the leaseholders’ right to purchase the freehold then the leaseholders have no choice but to apply to the County Court for a declaration of entitlement.
If the freeholder has disputed the premium, there are two further months to negotiate. If agreement still cannot be reached, either party can apply to the First Tier Tribunal to determine the terms. Thereafter either party can apply to the County Court to enforce the transaction.
Who pays the freeholders costs?
As well as paying their own legal and surveyors costs, the leaseholders are required to pay the freeholder’s reasonable legal and surveyors costs. (Though if the matter goes to the First Tier Tribunal each party pays their own).
Your solicitor will talk you through the whole process during an initial consultation
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