Collective Enfranchisement (Buy Your Freehold)
Collective Enfranchisement Valuation
Collective enfranchisement gives leaseholders the right to join together and purchase the freehold of their building, and is often considered as an alternative to lease extension. In exchange for a premium, homeowners can benefit from having greater control over the management and maintenance of their property, and add to their home’s value by eliminating the expense of lease extensions for future owners.
The premium compensates the landlord for their loss of income from future ground rent, their inability to resume possession of the flats and their portion (50%) of the increase in property value due to the enfranchisement. The exact sum will differ between properties and should be calculated and negotiated with the expertise of a Chartered Surveyor.
At Foundation Chartered Surveyors, we have helped numerous clients across London with collective enfranchisement, and have represented both freeholders and leaseholders in their negotiations over premiums. For more information about the benefits of enfranchisement, and to understand the eligibility criteria for an enfranchisement application, please see our dedicated Collective Enfranchisement Guide.
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Calculating a Collective Enfranchisement Premium
Once you have established that you have enough eligible tenants to proceed with a collective enfranchisement, an essential step is determining how much each leaseholder will need to pay.
Collective Enfranchisement FAQs
What is the eligibility criteria for collective enfranchisement?
To be eligible for a formal leasehold enfranchisement, the building must contain at least two flats, and at least two-thirds of those flats must be owned by qualifying tenants. For example, these tenants must be in possession of a lease that was originally granted for more than 21 years. If you would like more information about whether your building is eligible, please check our Collective Enfranchisement Guide or call our team directly on 020 8133 9517.
Do all leaseholders have to take part in the collective enfranchisement?
No, not all homeowners within a freehold building need to be involved. The landlord cannot refuse a request for collective enfranchisement as long as at least 50% of the flats are prepared to take part (providing they are eligible under the 1993 Act to do so).
What is ‘marriage value’?
If a homeowner purchases the freehold for their property or extends their lease, it results in an increase in their property’s value. According to the legislation, this increase in value needs to be split equally between the homeowner and the landlord – the landlord’s 50% is known as ‘marriage value’.