Leasehold Enfranchisement and Extension

Lease extensions

 Leasehold extension is the process allowing leaseholders to extend the term of their lease, so they can continue living in the property without it reverting back to the freeholder. To extend the lease, you will typically have to pay a premium to the freeholder. This is determined by a range of factors. For example, you must have lived in the property for at least two years before applying for a lease extension. 

In England and Wales, leaseholders have a right to extend their leases for an additional 90 years thanks to the Leasehold Reform Housing and Urban Development Act 1993. 

There are many reasons why you might consider extending your lease. For example, it can make it easier to get a mortgage and make the property more attractive to potential buyers if you’re looking to sell.

It’s important to consult a lawyer before extending your lease. Get in touch with our leasehold extension solicitors to see how we can assist you.

Collective enfranchisement

Collective enfranchisement involves a group of leaseholders purchasing the freehold for their building as a collective. It enables them to manage the property themselves and not have to worry about short leases.

If you’re interested in collective enfranchisement, there are a few criteria to meet, including the following:

• The building must contain at least two flats.
• At least 2/3 of flats must be occupied by qualifying tenants (with long leases of at least 21 years when originally granted, and not owning more than three flats in the building).
• No more than 25% of the floor space must be taken up by non-residential units.
• The building will also not qualify if it has four or fewer units and a resident freeholder.

As long as 50% of flats want to take part, are qualifying tenants, and all other criteria are met, leaseholders have a right to collective enfranchisement. However, the process is complex, and it’s important to consult a solicitor for advice. Please get in touch with our expert leasehold enfranchisement solicitors for more information and guidance.

Buying your freehold - individual enfranchisement

Under the Leasehold Reform Act 1967, you may qualify to purchase the freehold of your leasehold property, so you own both the building and the land it stands on outright.

There can be many benefits to buying your freehold, including no longer having to pay ground rent or seek permission from the freeholder for alterations to the property. It can also make the property more attractive to potential buyers when you go to sell, as some may be put off by short leases or ground rents.

Compared to collective enfranchisement, individual enfranchisement involves a single leaseholder buying the freehold for their flat or house. It can be a smoother process than collective enfranchisement due to fewer parties being involved. But, it’s always crucial to seek expert legal advice before you start the process. Get in touch with Setfords’ leasehold enfranchisement solicitors today to find out more.

Right to manage

The right to manage is the right for building leaseholders to take over the management of the building from the freeholder through a registered RTM company. This means that the leaseholders will collectively be responsible for the building’s management and maintenance, not the landlord or an outsourced management company chosen by the landlord.

It can be a good option for leaseholders who feel that they are being overcharged for service charges, are not seeing any repairs or maintenance on the building, or simply want to take over the building’s management.

Some criteria must be met for the right to manage, including the building containing at least two flats, at least 2/3 of the tenants having long leaseholds (of at least 21 years), and at least half of the building’s flats wanting to take part and holding long leases.

Right of first refusal

The Landlord and Tenant Act 1987 provides leaseholders with the right of first refusal to purchase the freehold if the landlord is selling it.

If the landlord is selling the freehold, they must first advise the leaseholder about their intention and give them a set period of time to consider whether they would like to purchase the freehold. If they do, the landlord must sell the freehold to the leaseholder unless they have a genuine reason for refusal. It must not be offered to them at a higher price than it would be sold to anyone else – this could be in breach of the Act, and the leaseholder may have the right to buy it from the new owner.

There are certain eligibility criteria to take advantage of the right of first refusal. For example, there must be at least two flats in the building, and no more than 50% of the units in the building are to be used for non-residential purposes. It also doesn’t apply to certain landlords, such as local authorities.

Contact our leasehold solicitors for more information. 

Building Safety Act 2022 (BSA)

The Building Safety Act 2022 (BSA) is a major piece of legislation that came into effect on 1st April 2023. Its core goal is to enhance the safety of high-rise buildings, such as blocks of flats.

The BSA applies to ‘relevant buildings’ only – those that are at least 11 metres or 5 storeys tall, contain two or more residential units, and aren’t leaseholder-owned.

Because the Act is still relatively new, finding a conveyancer with the right expertise to handle your sale or purchase can be tricky. However, at Setfords, many of our conveyancers are well-versed in this area, providing you with peace of mind and helping your transaction run as smoothly as possible. Our lawyers are committed to staying up to date with the BSA and understanding how it may affect conveyancing.

If you think your transaction could be impacted by the Building Safety Act 2022, please don’t hesitate to contact us. We’re here to help you navigate the details.