In certain circumstances, the tenants of an Apartment
block can buy the Freehold Title, owned by the Landlord. This is known as "Collective Enfranchisement". This
section deals with this process.
- What is a Freehold Title?
The Freehold Title basically gives the owner complete ownership of the property.
It also gives the owner the right to sub-let and Lease parts of the property.
- Who is allowed to buy the Freehold Title?
You qualify if there are tenants of flats under a Long Residential Lease.
The following do not qualify to purchase the freehold title:
- Owners of Business Leases
- Owners of three or more flats in the same building
- Leaseholders who live in a building owned by a charity
- What type of Apartment Building can qualify?
l There must be a minimum of 2 flats
least two thirds of the tenants must be qualifying tenants (see above);
l No more than 25% of the internal
area should be in non-residential use.
- How should the tenants organise themselves?
It is recommended that the tenants should form a group. It is also
highly advisable to create a legal agreement setting out the aims of the group, the negotiation progresses they will use and
any specifications as to costs.
A "nominee purchaser" should then be appointed.
The nominee purchaser will be named on the Initial Notice and who will become the new Landlord. The nominee
purchaser is usually a company formed by the Leaseholders.
- What do the tenants have to pay when buying the freehold
It is strongly recommended that the initial value is ascertained by a professional
valuer or surveyor. They should be somebody with expertise in this area.
The valuer will usually provide a ball-park figure which will then be negotiated
between the parties.
The value will take into account the following:
- Market Value (i.e. what the value of the property would
be as a freehold on the property market)
- Half the Marriage Value (i.e: the value of the combination
of the Leasehold and the Freehold Title)
- Compensation (i.e. a payment made for any loss or damage
caused to the Landlord by the collective enfranchisement).
- How does the process begin?
The Tenants have to serve a Notice on the Landlord. The initial steps before
preparing and serving this notice are to:
Gather the information required in the notice. The tenants
will need to obtain the following information:
- Details about the freeholder, i.e. whether it is a person or a company and their
name and address:
- Details of any head leases or intervening leases granted by the Freeholder, i.e.
to a person that has a Lease who then sub-leases to the tenants;
- The full names and addresses of the other Leaseholders and details contained in
- Details of any flats let by the Landlord on periodic tenancies
Most of this information will already be known to the Tenants.
If not the Tenants are entitled to this information from the Land Registry provided they can prove their Tenancy and by making
the right application. For further advice contact us.
Ensure that the right landlord is being served. The block may be sub-let to another Leaseholder and in this case it is the overall landlord who
has to be served;
It is important to remember that Tenants are
responsible for the Landlord's costs once the Notice has been served and therefore it is essential that the Notice is
correct as further amendments will incur extra expense.
We would recommend that you seek advice from a solicitor about the notice
and that it is prepared by them. If you wish to discuss this with us then please contact us.
- What happens once the Notice has been served?
The Landlord is entitled to request evidence of the Tenants ownership of the flats
and has 21 days to make this request.
If this is not provided then the Notice would be considered to be withdrawn with
the Landlords costs still payable. It is therefore important that documents relating to the ownership of the Lease are
provided as soon as possible.
The Landlord must then serve a Counter-Notice within a time limit stated
on the Notice. This would agree with the notice, disagree or argue that an application should be made to the court on
the basis that the block is due to be demolished or refurbished.
If the Landlord does not serve the Counter-Notice within the correct time the Tenants
can then apply to the County Court for an Order that the matter is decided without the Landlords input. This is called
a Vesting Order.