Collective enfranchisement gives tenants of flats the right to act together to purchase the freehold of the building.
In order for tenants to qualify for this right, they must hold long leases (leases originally granted for a term of over 21 years).
The building must also qualify before the right can be exercised. In order for the building to qualify, it must contain two or more flats and have at least two thirds of the flats held by qualifying tenants.
It is important to check the criteria to ensure that the building and tenants qualify as there are a number of exclusions.
Prior to Proceeding with the Collective Enfranchisement Procedure
You will first need to establish what it is going to cost by obtaining a valuation. You should take the advice of a qualified expert surveyor. All of the participating tenants will then need to establish how to finance the cost of the acquisition.
An important issue to consider is the way in which the participating tenants will work together in order to acquire the freehold and also once they become responsible for the management and administration of the building in accordance with the obligations in the original leases.
It is important to consider all of the above issues before serving any notice on the freeholder to acquire the freehold.
The formal procedure for collective enfranchisement is started by the service of an initial notice on the freeholder. The timescale thereafter must be strictly adhered to.
The initial notice must be served on behalf of all the participating tenants. Normally, a company is formed by the participants to be the nominee purchaser.
The freeholder has a period of 21 days from giving the initial notice, to request information. The freeholder must serve a counter notice within the prescribed date specified in the tenants’ initial notice.
After service of the freeholder’s counter notice, if the parties cannot agree on the price or some other aspects of the acquisition, then after the initial two months following service of the counter notice, either party may apply to the First-tier Tribunal for a determination on the issues in dispute.
The participating tenants are liable for the freeholder’s reasonable professional fees from the moment they serve the initial notice, whether or not they complete the process.