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E p.kiddle@bentleypugh.com

Regulated by the Royal Institution
of Chartered Surveyors (RICS)

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Collective Enfranchisement

As well as the right to a new lease under The Leasehold Reform, Housing & Urban Development Act 1993 leaseholders also have a right to collectively purchase the freehold of a building comprising two or more flats. This is known as Collective Enfranchisement.

Bentley Pugh & Associates undertake undertake both Lease Extension and Collective Enfranchisement valuations and can assist with negotiations and representing clients at Leasehold Valuation Tribunal Hearings.

We can provide general guidance at the outset on how best to proceed and the options available for each individual set of circumstances.

Under the Leasehold Reform, Housing and Urban Development Act 1993, as amended by the Commonhold and Leasehold Reform Act 2002, a group of long leaseholders is entitled to apply to the freeholder of the building to purchase the freehold (Collectively Enfranchise) provided they fulfil the following criteria:

  • The building must have a minimum of two flats. If the building was originally a single house which has been converted into less than five flats and the freeholder carried out the original conversion and lives in one of the flats then the leaseholders will need to seek legal advice as they may not “qualify”.
  • Leaseholders who wish to participate must qualify by holding leases that were originally granted of more than 21 years. There is now no minimum ownership period and no residency requirement.
  • The number of leaseholders who wish to participate must represent at least 50% of the number of flats in the building.
  • There must not be more than 25% of the internal floor area of the building in non-residential use, for instance a shop or office.
  • Resident’s parking spaces are not included in calculating the floor areas.

The premium payable for the freehold interest will be made up of the following:

    • Loss to the freeholder of his ground rent income from the flats.
    • Loss to him of his reversion, i.e. his entitlement to the building at the end of the existing leases, and any other loss to him (if any).
    • 50% of the marriage value. The marriage value is best defined as the increase in the value of the property arising from the leasehold and freehold interests being combined. Marriage value is not payable when the applicants un-expired lease term is 80 years or more.

The leaseholders also have to pay the freeholder’s valuation costs and his solicitor’s costs and stamp duty.