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Elliot Mather LLP has a dedicated enfranchisement and lease extension team with the specialist knowledge and experience required to handle:

  • The purchase and disposal of Freeholds (to leasehold property)
  • Lease Extensions
  • Lease variations 
  • Right to Manage claims
  • Collective Enfranchisement
  • Leasehold Enfranchisement
  • Other issues concerning leasehold apartments and houses.

 

The Enfranchisement Team undertakes a wide variety of work in this specialist area, dealing with large blocks of apartments, smaller conversions and detached, semi-detached and terraced houses.

We are able to cover the whole of the UK and continue to assist many clients in London (where often our charges are much lower than those of London solicitors) and the South Yorkshire area where leasehold property is common.

Our clients include substantial investment companies holding portfolios of freehold reversions, residents’ associations and individual house and apartment owners.

What is Collective Enfranchisement?

Collective Enfranchisement is the right (subject to certain conditions) for the owners of apartments with leases having been granted for terms in excess of 21 years to join together to force their landlord to sell  the freehold of their block of apartments to them.

When the flat owners have bought the freehold to their properties they may of course grant themselves 999 year leases rather than the 90 + term, (see below) and they can do so at whatever price they agree, and at a peppercorn rent (again, see below).

Leasehold Enfranchisement applies only to residential (leasehold) property, and is the right (under certain circumstances) for the leasehold owner of a property to be able to force their landlord (the freehold owner) to grant to them a lease extension or to sell to them the freehold of the property.

A lease extension would be for a term equal to the unexpired residue of the existing lease plus 90 years. The new lease (for although it is generally referred to as a lease extension, it is actually the right to be granted a new lease) would reserve a ground rent of a peppercorn (i.e would be ground rent free) and otherwise would generally be granted on the same terms as the existing lease.

The right to a lease extension or the purchase of the freehold to a property usually arises after the owner has been registered at the Land Registry as the owner for a minimum period of two years. Note, the period of two years runs from the date the owner of a property becomes registered as such, not the actual date of ownership. The registration following the purchase of a newly built property could take up to six months to be completed and the two year period would run from the completion of the registration.

The extension of the lease to an individual apartment is sometimes undertaken where there is not enough support among the individual owners for the right for Collective Enfranchisement to be exercised, and so is pursued on an individual basis.

A premium would of course be payable to the existing landlord.


What is the benefit of Leasehold Enfranchisement for apartment owners?

  • Buying a freehold enables tenants to take direct control of the maintenance and management of their building – avoiding the risk of overpriced service charges and creating the chance to improve the quality of management services by removing the need for external management companies. Service charge disputes are one of the main reasons why tenants often decide to go ahead with Leasehold Enfranchisement
  • exercising your right to ‘enfranchise’ allows you to grant yourself a long lease extension, eg for 999 years, at a ‘peppercorn rent’ (i.e. your lease effectively becomes rent free) and therefore your asset stops deteriorating
  • The building’s value is likely to increase as some purchasers avoid buying a leasehold property with a relatively short remaining lease term.


Don’t let your lease term drop below 80 years

The cost of the freehold purchase where the lease of any property has less than 80 years remaining rises sharply, and continues to rise dramatically as the lease in question become shorter. Once the lease term drops below 80 years, the freeholder is entitled to claim what is known as ‘marriage value’, and this generally accounts for the largest part of the premium payable to the freeholder. The marriage value is the profit element of the increase in value of the flat through extending the lease (or purchasing the freehold) and, under statute, the freeholder is entitled to 50% of this profit.


Enfranchisement – Do I Really Need A Specialist Solicitor?

Enfranchisement is a complicated area of law and the formal or statutory route involves a specific process and time-table that must be followed.                                                                                                                                                                                                                                                                                                               

However the vast majority of solicitors rarely, if ever, come across enfranchisement – so it is really important to instruct a solicitor who really understands this subject.

Wherever the property is situate, our specialist team can help. For an initial telephone consultation and to see if we can assist you please do give us a call.


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Stan Wrigley

Stan Wrigley

Chartered Legal Executive

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August 5th 2019 at 9:15am