Enfranchisement

Choosing Enfranchisement

Why choose Enfranchisement?

Enfranchisement has been made possible as a result of The Leasehold Reform Housing and Urban Development Act 1993 (as amended by the Commonhold and Leasehold Reform Act 2002). It gives leaseholders the right, upon qualification, to force the sale of the freehold of their building, or part of their building, and purchase it collectively.

Enfranchisement often comes about as a result of seemingly unresolvable disputes between leasehold owners and their freehold landlord(s). The completed process allows occupying tenants to establish a new management company that has complete control of their residential building.

Benefits & Qualifying

Benefits

Enfranchisement gives power of determination back to leaseholders and can increase transparency and service charge value. Maintenance and repairs can often be conducted more efficiently as there is a vested interest in ensuring that repairs are carried out.

In addition, re-mortgaging of individual properties may become easier as lenders may prefer the additional security of freehold over leasehold properties.

Why Choose James Andrew Residential for your Enfranchisement?

The enfranchisement process is frequently complex and frustrating. James Andrew Residential's experienced property professionals can assist you in managing the whole process, offering professional guidance and advice throughout.

JAR can also recommend and manage the professional advisers that will be required; for example, solicitors and surveyors. In addition, the business is uniquely placed to advise on the future management of the building by assessing the condition of the building and the implications for future maintenance costs and service charges.

"Meeting and exceeding the needs of our clients and their property is our only aim." Fiona Docherty, Managing Director

  • Regular communication and meetings with RTM Directors
  • Resident customer communication
  • Online customer information and contractor management services
  • Maintenance contracts preparation and control
  • Supervision of building works and decorations
  • Regular monitoring standards of maintenance
  • Appointment of contractors to carry out cleaning, gardening, repairs, maintenance and redecoration
  • Ensuring appropriate Buildings Insurance Policy is in place
  • Estimating annual Service Charges
  • Service Charge collection
  • Regular site visits
  • Preparation of Service Charge Year End Accounts
  • Recruitment, management, salary, tax and National Insurance matters for on-site staff
  • Company Secretarial Services
  • Company Director Services
  • Dealing with Consents and Notices
  • 'Out of Hours' Emergency Helpline available 24/7 every day of the year

Qualifying for Enfranchisement

The Enfranchisement Process

In brief, there are 7 key stages to the process:

  • Checking Eligibility
  • Organising for Enfranchisement
  • Choosing the Nominee Purchaser
  • Selecting and Instructing Professional Advisers
  • Assessing the Purchase Price
  • Serving the Initial Notice
  • Preparing for the Subsequent Procedures

Checking Eligibility

The starting point is to ensure that there are enough leaseholders/ tenants who wish to proceed with the process:

  • 50% of the buildings tenants are required.
  • Those tenants must be eligible to proceed, as follows:

Eligible Tenant

Non Eligible tenant

The term of the lease in excess of 21 years  
A shorter lease which contains a clause providing a right of perpetual renewal If the landlord is a charitable housing trust and the flat is provided as part of the charity's functions
A lease terminable on death or marriage or an unknown date (including the so-called 'Prince of Wales' clauses); If the tenant owns more than two flats in the building. This is either jointly with others or solely in their own name.
The continuation of a long lease under the Local Government Housing Act 1989 following the expiry of the original term If the tenant occupies under a business or commercial lease.
A shared ownership lease where the tenant's share is 100%  
A lease granted under the 'right to buy' or 'right to acquire on rent to mortgage terms'  

Then the building itself must be eligible:

  • If more than 25% of the internal floor area of the building is used for non-residential/ commercial purposes then the building will not qualify.
  • There must be at least two flats in the building.
  • Some buildings have no right to collective enfranchisement. JAR can advise you if this is the case.

Once it has been established that the tenants and building are eligible for Enfranchisement, the leaseholders create a Nominee Purchaser. This is a company formed of the participating leaseholders to ultimately acquire the freehold. The Nominee Purchaser must be formed before serving the initial notice on the landlord.

The Nominee Purchaser must appoint a solicitor and valuer for professional guidance and support. The valuer has a key role; to assess the purchase price of the freehold. James Andrew Residential can assist in the selection and management of external consultants.

At this stage the Initial Notice can be served on the landlord. This triggers the statutory procedures for acquiring the freehold and it is important that the Notice is complete and contains no inaccuracies or misdescriptions.

After the the Initial Notice has been served the landlord is entitled to request evidence of the participating tenants' title to their flats and it is important that the appointed solicitor is fully equipped with all necessary information and documents to enable response within the time limits.

After this time, the landlord is likely to serve a Counter-Notice either agreeing, not agreeing or neither agreeing or not agreeing to the right and/or terms proposed by the tenants. At JAR, we aim to prepare and guide you through these complexities to reach the desired outcome.

The Outcome

Successful Enfranchisement results in the creation of new/extended tenancies, with nominal or no ground rents to pay and full transparency and control over service charge levels.

This can result in potentially more cost effective and efficient maintenance and repairs and an increase in value of the tenants asset.

Choosing Enfranchisement

How much does the Enfranchisement process cost?

As with RTM, the costs involved are dependent on a number of factors, including the size of the building, number of intermediate landlords and the total number of participating leaseholders. Clearly, the more leaseholders that participate the less the costs will be for each participant.

It is important to note that the participating tenants are liable for the freeholder's and any other relevant landlord's "reasonable" professional fees from the moment they serve Initial Notice, regardless of whether or not they complete. However, should the costs be deemed unreasonable they would be challenged.

Please contact us to discuss in more detail.