Purchasing your Freehold
When you buy a leasehold property, you are essentially purchasing the right to live in the property for a certain number of years, after which the assumption is that the property will revert to the freeholder, unless the lease can be extended. Leaseholders are also legally responsible for certain associated costs, including ground rent and service charges. In past years, media reports have told stories of leaseholders stuck in properties with escalating ground rents and charged huge amounts of money for collective repairs and refurbishment.
However, leaseholders do have the legal right to buy their freehold – also known as ‘collective enfranchisement’ – giving them greater control over their property and freeing them from ground rent and service charge obligations. We can provide them with the help and advice they need if they are thinking of going down this route.
What is collective enfranchisement?
This is the process by which a group of leasehold tenants can act together to collectively purchase the freehold of their block of flats at a fair price. Once they have purchased the freehold, they can grant themselves new leases or extend their length, change the terms of their current leases and control the management of the building.
In order to claim collective enfranchisement, leaseholders must currently* satisfy a number of requirements, which include:
- At least two-thirds of the properties must be owned by tenants whose flats were sold on ‘long’ leases – i.e., at least 21 years when first granted
- At least half the building’s leaseholders must participate
- A leaseholder cannot participate if he/she owns three or more flats in the building
- If the property is partly non-residential, leaseholders cannot proceed if the non-residential element is more than a quarter of the building
- A building converted into four flats or less with a resident landlord may not qualify for enfranchisement.
Proposed reforms of the leasehold system
In January 2021, Secretary of State for Housing, Robert Jenrick, announced plans for sweeping reforms of the leasehold system which, in addition to providing leaseholders with new rights, are set to make the process of collective enfranchisement quicker and cheaper. Whilst it is not yet known when the promised legislation will be introduced, we welcome these proposals and hope to see the collective enfranchisement process become easier for leasehold tenants in the future.
Here to help
If you’re interested in purchasing your freehold, then our specialists can help. Our familiarity with local management companies and freeholders, in addition to decades of expertise in the area of leasehold extension and collective enfranchisement, mean that we can negotiate on your behalf to secure the best possible outcome. Our team, which operates separately to our Residential Property team to enable us to focus our full attention on assisting our leasehold clients, offers straightforward advice delivered in plain English, whilst our transparent fee structure allows you to budget effectively across the transaction.