Collective Enfranchisement (buying the freehold of your property)

This guide concerns buying the freehold of your property (“enfranchisement”).  We talk through some of the benefits and potential risks, explain who qualifies and outline the journey.

This guide is also available as a PDF download.
 

Index
Introduction
Why you might want to consider Enfranchisement
Why you might not want to consider Enfranchisement
Eligibility
Next steps
Further reading
Appendix: More information about Camden Leaseholders’ Forum
 

Introduction
Enfranchisement is the legal right of leaseholders to group together and buy up the freehold of the property, so they own shares in it and become the landlord (freeholder). A leaseholder who was previously paying service charges and capital works charges to Camden Council would pay them to the new owners who would be all the leaseholders including Camden Council which would have leases on any tenanted flats so the tenants would remain as before. Council tax would remain payable to Camden Council.

Some Camden Council leaseholders have the right to enfranchise. This guide explores this and associated considerations in more detail.
 

Why you might want to consider Enfranchisement
1. Responsibility for your own maintenance and building investment (potentially saving money) and allowing you far greater control and say over any issues.
2. Greater rights to develop the property, for your own benefit. Owning the freehold gives you greater control over proposed modifications to the building.
3. Lower management charges. As a freeholder, you save this money if you manage the property yourselves, or have more control over the property managers who now work for you.
4. To make it more attractive when you want to sell a flat (the psychological benefit of having a flat with share of freehold).
5. The (new) owners can decide to extend or change leases, but they have to balance any such proposal against the need to get sufficient funds to maintain the building.
 

Why you might not want to consider Enfranchisement
1. Responsibility for your own maintenance and building investment (which typically involves liaising and agreeing with your neighbours on a regular basis)
2. Legal costs involved in the enfranchisement process (such as solicitors)
3. The work involved in shepherding the enfranchisement process along
4. Your building doesn’t meet the eligibility criteria
 

Eligibility
Eligibility is based on the type of property. The criteria are:
1. At least two flats in the property.

2. At least half of the flats let to qualifying tenants such as those granted under the “right to buy” or “right to acquire on rent to mortgage terms” (which applies to the majority of Camden Council leaseholders; a shared ownership lease where the tenant’s share is 100% is also ok) and two thirds of the flats must have a lease length in excess of 21 years.

3. But, even if the tenant satisfies the above criteria, they will not be a qualifying tenant if any of the following cases apply:
a. the tenant owns more than two flats in the building. This is either jointly with others or solely in their own name. Please note where this applies these flats will be discounted from the two-thirds
b. the tenant has a business or commercial lease
c. if more than 25% of the internal floor area of the building, excluding any common parts, is neither used or intended to be used for residential purposes then the building will not qualify. This could be shops, offices etc. Please note garages and parking spaces specifically used by flats in the building are classed as residential for the purposes of this check.

4. There is no right of collective enfranchisement where the freehold includes any track of an operational railway, including a bridge or tunnel or a retaining wall to a railway track.

A full eligibility guide is available on the Leasehold Advisory Service’s website, including some criteria and exemptions that do not apply to Camden Council leasehold properties.
 

Next steps
Once the eligibility has been sorted out, then the real work begins.

The basic process is as follows:
1. Organising for Enfranchisement
2. Choosing the Nominee Purchaser
3. Selecting and Instructing professional advisers (solicitors and surveyors)
4. Assessing the Purchase Price
5. Serving the Initial Notice
6. Preparing for the subsequent procedures

The Leasehold Advisory Service has an excellent guide for the remaining steps but you will probably find it useful to get legal advice to help you along the way.
 

Further reading
This is a highly complex area with important considerations and implications. This document has only summarised some of the main issues.

Sources of information for this article and potential sources of further information are as follows: these links go directly to the relevant pages of the websites
Leasehold Advisory Service
Leasehold Guidance Service from the Ringley Group whilst the guidance provided by the Ringley Group is helpful, we have not verified their service and therefore we provide no endorsement for any (paid for) services that they provide.
Camden Council
 

Appendix: More information about Camden Leaseholders’ Forum
We are a volunteer group representing all the leaseholders in Camden Council properties and freeholders paying service charges to Camden Council. We scrutinise Camden Council proposals, examine working practices and lobby on behalf of leaseholders to Camden Council.

More information is available at https://www.leaseholdersforum.org.uk

If you know of anyone who would like to receive updates from Camden Leaseholders’ Forum please direct them to https://www.leaseholdersforum.org.uk/mailing-list where they can sign up. Subscribers can also adjust preferences by clicking on the link at the bottom of any email we send.

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