Collective Enfranchisement Explained

Property personnel talking to a lease holderIf you hold a long lease on your house or flat, you may be entitled to join together with other residents to take over the freehold from the freeholder. This is called collective enfranchisement.

Collective enfranchisement is a complicated business and the assistance of an experienced mortgage solicitor in London, like Saracens Solicitors, is really helpful.

Some terms and roles explained

First, let’s be clear about the terms involved:

  • Leasehold property, this is where someone has a long-term lease or ownership of a property but not the land on which it stands. The property is usually a flat but could be a house, especially if there is shared ownership involved;
  • Leaseholder, the leaseholder is the occupant of the property. They normally pay a fee to the freeholder for the upkeep of the common ground;
  • Freehold, outright ownership of a property or piece of land;
  • Freeholder, the owner of a property or land on which it stands.

To learn about everyone’s rights and responsibilities in these cases, it’s helpful to have a mortgage solicitor in London.

The steps involved in collective enfranchisement

The exact procedure depends on the group and buildings involved. The conditions are quite specific, which is why it’s handy to have a mortgage solicitor in London to help with the details.

Generally speaking, half or more of the leaseholders within a block of 4 or more flats join together and instruct a surveyor to produce a valuation. This is used to make an application to the freeholder for purchase. The mortgage solicitor then advises on the best way to enact co-ownership of the property. This normally entails setting up a company for the purposes of sharing the leasehold. An agreement between this many parties needs to be very clear to avoid future struggles. The solicitor makes an application to the freeholder, which they then accept or challenge through the courts.

The leaseholders are required to pay the costs involved, including reasonable costs incurred by the freeholder.

Advantages of collective enfranchisement

Collective enfranchisement, while fraught with its own issues, is often a good solution to the experience of poor management of a building. It can also raise the value of a property because tenants can make enhancements without relying on a freeholder.