Collective enfranchisement is the process through which leaseholders or tenants of a building can acquire the freehold of the property they are letting within that building. This procedure is governed by the Leasehold Reform Housing and Urban Development Act 1993, as amended.
There are many stages involved in the process, which formally begins when the Nominee Purchaser serves the Initial Notice on the Landlord. The Nominee Purchaser is usually made up of the tenants wishing to participate in the collective enfranchisement process. However, before this process can be set in motion, it is necessary to check whether the building and the tenants that live in the building are eligible to qualify for enfranchisement
Does the building qualify for enfranchisement?
In order for the building to qualify for enfranchisement the building must not:
- Have fewer than two flats
- Have fewer than four flats if it also has a resident landlord
- Have less than 75% ofits floor area being used or being intended to be used for residential purposes (this excludes any common parts of the building)
- Be within a cathedral precinct
- Be a National Trust property
- Be a Crown property
- Be a conversion into four flats or less when the building isn’t purpose built, the freehold was owned by the same person before and after the conversion and this person or an adult member of his family has lived in the building for the past 12 months
Do the tenants in the building qualify for enfranchisement?
In order to qualify for enfranchisement:
- Those wishing to take part must be qualifying tenants.
- There must also be a minimum of two-thirds of qualifying tenants living in the building as a whole.
A qualifying tenant is a tenant which:
- Has a lease which exceeds 21 years
- Has a shorter lease allowing for perpetual renewal
- Has a lease terminable at an unknown date
- Has a lease granted under a ‘right to buy’ scheme or under the ‘right to acquire on rent to mortgage terms’
- Has a continued long lease under the Local Government Housing Act 1989 following the expiry of the original terms
- Has a shared ownership lease where the tenant owns the whole share
A qualifying tenant, a tenant must also not:
- Own more than two flats in the same building
- Have a businessor commercial lease
- Be resident in a flat provided by a charity (for instance by a charitable housing trust
Do enough qualifying tenants want to participate in the collective enfranchisement process?
Participating tenants must own at least half of the flats in the building to qualify. If the building has only two flats, both must be owned by participating tenants and if the building has three flats, again at least two must be owned by participating tenants.