Leasehold Enfranchisement (freehold purchase) Solicitors

We don’t currently offer this service but please do speak to us as we can recommend people who can assist you.

Would you like to purchase your freehold or extend your lease? Leasehold enfranchisement helps leaseholders, it gives you the opportunity to either extend the lease of your flat (or house) or buy the freehold of your building, offering you more security and raising the value of your property.

Why choose Birkett Long for your leasehold enfranchisement?

We have a dedicated enfranchisement and lease extension team of solicitors, with extensive experience in this complex area of law (there are 50 Acts of Parliament governing this process overall!), dealing with large blocks of flats through to smaller flat conversions, throughout the local area and London.  

Our clients include substantial investment companies holding portfolios of freehold reversions, resident management companies and individual flat owners.

We recognise the tension leasehold law creates with investor landlords trying to seek a return on their investment and tenants exercising their legal right to improve the value of their home.

Please see below the areas of work we cover:

• Collective Enfranchisement
• Right to Manage
• Tenant’s Rights of First Refusal
• Lease Extension

What is leasehold?

Leasehold is a form of ownership. It is on a time limited basis (i.e. a 99 year lease) where ownership of the property is shared with a landlord. For example, if you own a flat, usually you will own the interior of the flat and be referred to as a leaseholder/tenant. The owner of the rest of the building (ie the exterior, the roof, foundations etc) is often referred to as the freeholder/landlord.

With leasehold properties, the tenant will be restricted as to what they can do to the property.  For example, should they wish to make any alterations, they will need the landlord’s consent.

Historically, ownership of individual flats is governed by the creation of long leases. The lease is a contract that sets out the details of ownership of certain areas, the responsibilities of both parties and the length of lease term. It is a device that ensures that positive obligations, i.e. the obligation to maintain, can be enforced against the tenant and other tenants living in the building.

The lease term depreciates over time and can become expensive for the tenant to extend, especially once the lease term drops below 80 years. In contrast, as the lease term depreciates, the lease becomes more valuable to the landlord, as the shorter the lease term, the higher the premium they can demand from the tenant. 

Lease Extension

This right is available for an individual flat owner (a leaseholder).  It is available to those who are unable to join in a collective enfranchisement and/or where a building does not qualify for collective enfranchisement, i.e. more than 25% of the building is non-residential.

Qualification to extend lease

• The lease must be granted for an initial term of 21 years or more;
• The leaseholder must have been registered as the owner of the flat for 2 years or more;
• There is no residence requirement;
• The lease extension claim can be assigned to a buyer who can take over the claim from completion of the sale. The benefit is that the buyer does not have to wait 2 years to start a claim.

 Procedure

• A claim notice will need to be prepared setting out certain details about the property and the lease. A price will be inserted being the price the leaseholder wishes to pay for the lease extension. We will prepare the notice and gather the information required to prepare and serve the claim notice. 
• The notice contains a “response date” by which the landlord (or whoever is capable of granting the lease known as the competent landlord) must respond. That date must be at least 2 months after the date of service of the claim notice.
• The landlord serves a Counter Notice stating if they accept the leaseholder’s entitlement to extend the lease and if so, on what terms are agreed and are not agreed.
• There follows a 2 month period when the parties can try to negotiate terms by agreement through their valuers.
• Once terms are agreed there is a period of two months to complete. If unable to complete within this time, there is a further two months where an application to the county court can be made to preserve the claim.
• If the landlord does not respond to the Notice of Claim or responds after the “Response Date” the tenant can enforce the notice through the courts.
• If the claim is not agreed the Landlord can apply to the County Court within 6 months to have the claim discarded.

What do I acquire?

A lease extending the lease term by 90 years on top of the current lease term and reducing the ground rent (not service charges) to a nil rent. There may be other clauses in the lease that can be varied, e.g. to modernise outdated lease provisions but these are restrictive.

Why extend the lease?

The lease is valuable and has a value which a home owner can use to obtain a mortgage.  However, as the lease term depreciates the value of the freehold increases.  If the lease term drops below a certain amount (i.e. 80 years) the lease becomes more difficult to extend.  Should the lease term drop below 50 years, a lender will be unable to mortgage the property.  Therefore, the property will become more difficult to sell.

It is therefore important (from a tenant’s perspective) that a lease is extended to prevent the property depreciating in value and to pay significant costs.

Negotiation

Both parties will need to negotiate a premium (price) for the lease extension.  Negotiations should be conducted through valuers.  We are connected with a number of valuers who are specialised in this field and we can put in touch with them should this be required.  It is best to employ a valuer from the outset to ensure that the best possible premium can be achieved. 

Power in the Collective

Where possible, it is always optimal to work with leaseholders acting together.  The reason being that “strength in numbers” will work in achieving the best result.  It can redress the balance in the negotiations as the landlord tends to have the upper hand in terms of negotiation as they often have more financial resources and are usually more used to litigation. This can be stressful to an individual leaseholder if they have to face this on their own.

There is no such legal concept as a group application and each lease extension claim is treated separately. However, there is a substantial overlap in the legal documentation between each application which allows for cost savings.  It is for this reason that a discount in fees can be offered for leaseholders who work together. 

In addition, there is usually a saving in associated fees (surveyor’s) and landlord’s costs as again, there will be an overlap in the work they will need to carry out.

If you would like further information on how a group claim can assist your block please contact our property law specialists on 01245 453873.

Negotiated Lease Extension?

There is nothing preventing a leaseholder from contacting the freeholder directly to ascertain if they would be willing to offer terms to extend their lease. In addition, some freeholders, when responding to a statutory lease extension claim, will make an alternative offer. The alternative offer is usually a lower price (compared to what you would pay with a statutory lease extension) with an increase/variation in the current ground rent and/or modernising current lease terms.

We would advise that where the freeholder offers you terms to extend your lease/an alternative offer to a statutory lease extension claim, you take valuation advice to ensure the terms are reasonable.

Whether you are a landlord or an individual tenant, we can advise you of your rights. Complete our enquiry form, to discuss how we may be able to help you.