Collective Enfranchisement Solicitors

Collective enfranchisement is the legal process through which long residential leaseholder who own flats can join together and collectively buy the freehold of their building from the freeholder. This process effectively allows leaseholders to become their own freeholder and grants them direct control over their property, but there are a number of legal requirements that must be met.

At JMW, our property litigation team provides specialist legal support for leaseholders seeking to take control of their building through collective enfranchisement. This is a highly technical area of law that is governed by strict procedures and deadlines, but our collective enfranchisement solicitors can take control of the process on your behalf. We have a thorough knowledge of this complex and niche area, and a track record of success, which means that we can guide you towards the successful acquisition of your freehold.

If you need advice on purchasing a freehold from a residential freeholder, or support with the legal process, JMW's leasehold enfranchisement solicitors are ready to help. Call us on 0345 872 6666 or use our online enquiry form to request a call back at your convenience.

How JMW Can Help

JMW's experienced property litigation team has a wealth of experience and knowledge in leasehold enfranchisement efforts. We stay up to date with the latest developments and can advise you on the changes to collective enfranchisement procedures, or discuss alternative options like the right to manage.

We work closely with groups of leaseholders to manage the entire collective enfranchisement process from start to finish. Our team provides clear, practical advice on your rights and obligations at every stage. We act decisively to protect your interests, from confirming eligibility and serving the initial notice to negotiating the purchase price and finalising the transfer of ownership. Our focus is on delivering a seamless service that empowers you to achieve control over your property.

Many members of JMW's team have been recognised in the Legal 500 for their commitment and high-quality legal support. As a full-service law firm, you can also benefit from our insights into contract law, employment law as it relates to your nominee purchaser company, and a range of other important matters that newly appointed freeholders must consider. Working with JMW's leasehold enfranchisement solicitors means choosing a team that will enable you to buy your freehold and realise your ambitions of managing it successfully.

Meet Our Team of Property Litigation Solicitors

Our team of specialist enfranchisement solicitors has a proven track record of guiding leaseholders through purchasing their freehold. With extensive expertise and knowledge of collective enfranchisement procedures, our leasehold property team can offer the guidance and support you need.

What Is Collective Enfranchisement?

Through collective enfranchisement, qualifying tenants of flats can join together to buy the freehold of their building from the landlord. This right was established by the Leasehold Reform, Housing and Urban Development Act 1993, and became more straightforward and accessible through the Leasehold and Freehold Reform Act 2024.

There are several key benefits of purchasing the freehold for tenants in these cases, which include:

• Control of the property: Leaseholders gain control over the management and maintenance of the building. This means you can appoint your own managing agents, choose your own insurers, and make decisions about repairs and improvements. In some circumstances, changing service providers leads to a reduction in service charge costs.
• Elimination of ground rent: Once you own the freehold, you no longer have to pay ground rent. The 2024 Act is also paving the way for future caps on existing ground rents, which will impact the premium payable for a freehold.
• Ability to grant lease extensions: The new freehold-owning company can grant long lease extensions (up to 990 years) to itself and other participating leaseholders for no premium, significantly increasing the value and marketability of each flat. Otherwise, the need to extend a lease can seriously affect the market value of a property and lead to difficulties with mortgage lenders.
• Freedom from a difficult freeholder: Particularly in cases where tenants have issues with an absent, unresponsive or unreasonable freeholder, purchasing the freehold removes them from the process.

While many of these benefits are clear, the collective enfranchisement process is detailed and demands specialist legal advice to ensure it is handled correctly. Our team of collective enfranchisement solicitors is here to provide the expert guidance you need to successfully manage this transaction.

What Are the Eligibility Criteria for Collective Enfranchisement?

While the Leasehold and Freehold Reform Act 2024 has made it easier for more leaseholders to qualify for collective enfranchisement, there remain certain qualifying criteria that must be met before a purchase can go ahead. The key eligibility criteria include:

• The property must be a self-contained building (or a self-contained part of a building) and contain at least two flats. Any non-residential or commercial part of the building must not exceed 50% of the total internal floor area.
• At least two-thirds of the flats in the building must be held by ‘qualifying tenants’, which generally means the lease was originally granted for a term of more than 21 years.
• At least 50% of the total number of flat owners in the building must participate in the collective enfranchisement claim. For buildings with only two flats, both leaseholders must participate.

As of the introduction of the new legislation, these are the only requirements, as the 2024 act abolished the requirement for a leaseholder to have owned their property for two years before they can participate. You can join a claim as soon as you are registered as the owner.

If you are interested in learning more about leasehold enfranchisement, our solicitors can assess your building's eligibility before the process begins, so you will know what to expect and the outcomes that may be available from the outset.

What Is the Leasehold Enfranchisement Process?

At JMW, our solicitors will manage the entire legal process on your behalf in compliance with all statutory requirements and deadlines. From the initial stages of assessing your eligibility to purchase the freehold, to the legal process of transferring ownership and clarifying the ownership and management structure, we can support you at every stage of the collective enfranchisement process. While each case is different, this typically involves the following key steps:

Step 1: Initial assessment and confirming eligibility

The first step for our collective enfranchisement solicitors is to undertake a thorough assessment. We need to make sure that the building and the participating leaseholders meet the qualifying criteria as required by the law and outlined above. From there, we will advise on the eligibility of all parties before the matter progresses.

Step 2: Forming a 'nominee purchaser' company

The participating leaseholders must set up a company to act as the 'nominee purchaser'. This company will acquire, own and manage the freehold on your behalf. JMW’s corporate team will handle the formation of this company and draft the necessary articles of association for you.

Step 3: Professional valuation

Before starting the process, you must instruct a specialist surveyor to prepare a professional valuation report. This report determines the premium (the purchase price) you should offer the freeholder for the freehold. We will speak to experienced valuers and verify that the proposed price is fair, which can prevent disputes from arising later.

Step 4: Serving an initial notice

Our team prepares and serves a formal initial notice (a Section 13 notice) on the freeholder, which outlines your wish to purchase the freehold and states your proposed price. This officially starts the collective enfranchisement process and triggers a strict statutory timeline within which it must take place.

Step 5: The landlord’s counter-notice

The freeholder has a minimum of two months to respond with a counter-notice. In this notice, they will either accept your right to enfranchise and the proposed terms, dispute the price, or reject your claim on legal grounds. In most cases, the landlord will accept your right to purchase the freehold but ask for a higher purchase price.

Step 6: Negotiation

Following the counter-notice, there is a statutory negotiation period (typically between two and six months). Your team will negotiate the premium payable for the freehold and other key terms with the freeholder’s valuer and legal representatives.

Step 7: Application to the First-tier Tribunal

If an agreement on the purchase price cannot be reached, we will make an application to the First-tier Tribunal (Property Chamber). The tribunal will hear evidence from both sides and make a legally binding determination on the premium and other terms of the acquisition.

Step 8: Conveyancing and completion

Once the price is agreed or determined, our solicitors manage the conveyancing process to transfer the ownership of the freehold to your Nominee Purchaser company. We handle the payment of the premium and register the company as the new owner at the Land Registry. From the date of completion, the freehold will be transferred into the ownership of your company, and you can begin to make decisions about management alongside your fellow co-owners.

How Much Does Collective Enfranchisement Cost?

Leaseholders should budget for several costs when embarking on a collective enfranchisement claim. While JMW will provide a clear estimate of the potential legal costs and fees from the outset to help you and the other leaseholders plan effectively, there are several types of cost that may be subject to change during the process.

1. The premium: This is the main cost and represents the purchase price of the freehold. The amount is determined by a statutory valuation formula and is negotiated between surveyors.
2. Valuation fees: You will need to pay for a specialist surveyor to conduct the valuation, advise on the offer price, and negotiate with the freeholder.
3. Legal fees: These are the fees for our collective enfranchisement solicitors to manage the legal process for you.
4. The freeholder’s costs: You may have to cover some of the landlord's costs in specific situations, although a general requirement to pay the freeholder's legal and valuation costs no longer applies.
5. Other costs: You should also budget for the cost of setting up the Nominee Purchaser company, Land Registry fees, and potentially Stamp Duty Land Tax if the premium is above the current threshold.

JMW's leasehold property experts can advise you on the relevant costs for a range of collective enfranchisement matters, and offer legal support to minimise expenses wherever possible - for example, during negotiations.

How Long Does the Collective Enfranchisement Process Take?

The process of buying a leasehold can take a long time. A straightforward claim where the landlord is cooperative could take 6-12 months. However, if the premium is disputed and negotiations extend or the case must go to the First-tier Tribunal, the process can take 18 months or longer. JMW's collective enfranchisement team manages the process efficiently to avoid unnecessary delays and set realistic expectations

Q

Are there alternatives to collective enfranchisement?

A

While collective enfranchisement offers the most comprehensive control, there are other options available to leaseholders seeking to improve their position. We can advise you on the options available in your specific circumstances and enable you to determine the best strategy.

While collective enfranchisement offers the most comprehensive control, there are other options available to leaseholders seeking to improve their position. We can advise you on the options available in your specific circumstances and enable you to determine the best strategy.

Lease extensions

If a collective claim is not feasible, an individual leaseholder can pursue a statutory lease extension if their lease is due to expire. Currently, a statutory lease extension allows you to extend your lease by 90 years from the end of the current term and reduce the ground rent to zero. This can improve the value and security of your own property, as well as its market value, but it does not grant any control over the building's management.

Right to manage

The right to manage allows leaseholders to take over the management of their building without having to buy the freehold. This gives you control over service charges, maintenance, repairs, and the appointment of managing agents. The right-to-manage process is separate from enfranchisement and is more cost-effective initially, particularly as the recent changes to the law removed a requirement to pay the landlord's legal costs. Eligibility has also increased, which can make this a suitable alternative to leasehold enfranchisement. Speak to our team for expert guidance on the legal requirements involved in a right-to-manage acquisition.

Q

What is the right of first refusal?

A

Under the Landlord and Tenant Act 1987, if your freeholder decides to sell the freehold of your building, they must first offer it to the qualifying tenants before they can sell it on the open market. This is known as the Right of First Refusal. Our enfranchisement solicitors act quickly to enable you to accept the offer and secure the freehold if this arises.

Q

What happens if one of the participating leaseholders drops out?

A

If a leaseholder dropping out means you fall below the 50% participation threshold, the claim will fail. This is a risk that you should prepare for from the outset, as it is a common issue when the process takes longer than expected. Our solicitors can draft a formal participation agreement between the leaseholders from the start of the process, which can commit participants to paying their share of the costs, even if they later withdraw. This can incentivise leaseholders to remain in the process until its conclusion.

Q

Can we force other leaseholders in the building to join the claim?

A

Participation is entirely voluntary and you cannot compel other leaseholders to take part in purchasing the freehold or join your nominee purchaser company. However, you only need to meet the minimum 50% threshold of all flats in the building to proceed, and it is not necessary to have all leaseholders join the company.

Q

What are the main responsibilities after we buy the freehold?

A

Once your company owns the freehold, it becomes the landlord and takes on all the landlord's legal responsibilities. This includes managing the building, arranging insurance, collecting service charges, and ensuring compliance with all relevant health and safety legislation. Most new freeholders appoint professional managing agents to handle these day-to-day tasks.