Sussex Lease Extensions Blog

Lease Extensions Advice: Collective Enfranchisement

Three Things Leaseholders need to consider about Collective Enfranchisement

For leaseholders, when setting out to try to extend their leasehold in a block of flats there is often confusion on the procedure and their rights. The Leasehold Reform Housing and Urban Development Act 1993 and later the Commonhold and Leasehold Reform Act 2002, were brought in to provide rights to leaseholders to extend leases and to purchase the freehold of their blocks (Collective Enfranchisement). This is when the leaseholders of flats in a building collectively purchase the freehold, allowing them to then control the management of the building (and expenditure) and if their leases are short to extend their leases at no cost other than the legal fees. Three things leaseholders should consider are;

Eligibility, Are you eligible?
Eligibility is assessed by a valuation surveyor and eligibility for leaseholders is achieved if;
   •   Their flat is not held on a business lease
   •   They are not leasing from a charitable trust
   •   Can not be leasing two or more flats in the building
   •   Hold a ‘long lease’ of the property, (a long lease is qualified by any lease that is longer than twenty one years).

There must also be a majority of eligible leaseholders participating in the enfranchisement.

What is a Formal Participation Agreement?
It’s a legal contract to enable smooth running of the enfranchisement. This can be drawn up by a specialist enfranchisement solicitor, agreements such as this are important, as expenses are shared between the leaseholders, and a legally binding agreement provides security for individual tenant’s money. No matter how well you get along with your neighbours, we here at Sussex Lease Extensions recommend that anyone considering Collective Enfranchisement has a formal participation agreement drawn up so that all participating leaseholders are formally bound to proceed.

Election of a nominee purchaser
A nominee purchaser can be an individual, an agency or a collective company formed by the leaseholders. Most nominee purchasers are companies with each participating leaseholder having an equal share. When considering enfranchisement you may want to discuss with your fellow leaseholders what would be the best option for you as a collective and this usually depends upon the number of participating leaseholders.

Collective Enfranchisement can appear to be highly complicated but with specialist lease extension advice, the process can be simplified and provide many benefits to leaseholders. Allowing leaseholders to make decisions over their buildings maintenance and repairs, and by increasing the lease terms, it also increases the value of a property. With Sussex Lease Extensions helping to navigate leaseholders through this process, Collective Enfranchisement can enable leaseholders to have more control over their homes and usually a future annual cost saving.

This entry was posted on Monday, June 17th, 2013 at 9:17 am and is filed under Fresh News. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.