Enfranchisement or buying the freehold of your development is a very good idea if the majority wish it and it will give you more protection for the future, rather than being at the mercy of a rogue landlord. Owning the freehold will make it easier for you to sell your flat and transfer your share of the freehold to your prospective buyer. (Sometimes a deed of trust is more appropriate.)
You will need to obtain a valuation on the freehold purchase price and there will be some necessary negotiation to carry out with the current freeholder, who may argue that their valuation (higher) is more accurate. This can be difficult depending on who it is, or relatively plain sailing if you are fortunate.
If you tell a Leasehold Enfranchisement Lawyer how many flats there are in your block or house, and the full address, they will be able to quote for carrying out this process. Further explanatory details of the process, including prices for the various elements of the process, setting up the company etc. can be obtained from the Association of Leasehold Enfranchisement Solicitors, see http://www.alep.org.uk.
Most flats and a few houses are owned under long leases, in other words, longer than 21 years. This means that “owner” in fact is renting the property for a very long term from a freeholder. The freeholder technically owns the ground beneath the property from the centre of the earth to the top of the sky.
Leasehold enfranchisement is the collective term for the process of democratising what is effectively a thousand-year-old feudal system. Successive governments have implemented laws starting with the 1967 Leasehold Reform Act, through the 1987 Landlord and Tenant Act, 1993 Leasehold Reform, Housing and Urban Development Act and most recently the 2002 Commonhold and Leasehold Reform Act. These have made it progressively easier for owners to buy out the freeholders, extend their leases or replace the managing agents, among other things.
The lease is a document that governs this relationship. For most owners (for the purposes of this article, the “owner” is the lessee or long leaseholder) this is a rather impenetrable and complex document that they never read. CarlEX and ALEP encourage every owner to make sure they DO read their leases and understand the various agreements under which they are bound.
Here is an article written by Yashmin Mistry, ex Brethertons, now a partner at JPC Law about Tripartite Leases. The document consists of two pages and is a pdf so can be printed for future reference if required.
ALEP members are specialists in helping particularly owners of flats to make changes to the tenure of their flats. Some also act for freeholders in these transactions. This broadly falls into three categories:
- Lease extension
- Freehold acquisition
- Right To Manage
The option chosen depends on the individual circumstances. If the lease length is getting to around 80 years or below, then this needs addressing. An extension needs to be obtained and this can be done broadly two ways. You can either do this as an individual directly with the freeholder, or you and your neighbours can look to buying the freehold or extending leases as a group.