Owners of long leases of flats who are dissatisfied with the management of their buildings, or need to extend their leases, can act together to exercise their right to purchase the freehold of their building under the Leasehold Reform Housing & Urban Development Act 1993. This process is more formally known as ‘collective enfranchisement’.
The main advantages to purchasing the freehold are that:
- a) the participating tenants will have more control over how their building is managed because they can appoint their own managing agent who will answer directly to them, and;
- b) the participating tenants will own a share in the freehold company, and in return for their investment in the freehold they can authorise the company to grant extended leases of up to 999 years and reduce the ground rent to a peppercorn.
Collective enfranchisement is particularly advantageous if your Landlord’s presence is lacking and they are failing in their duties in the management and upkeep of the building, or if a number of people in the block need to extend their leases.
Of course the purchasing of the freehold is not without its drawbacks; the process can be costly and time consuming, and with the management of the building comes certain obligations and responsibilities. The process should not be entered into blindly, however, collective enfranchisement does enable flat owners the ability to regain some form of control over their building if they want it.
If you are considering collective enfranchisement of your building, Mayo Wynne Baxter has a dedicated Leasehold Enfranchisement team who would be pleased to discuss any queries you have regarding the enfranchisement process.