Lease Extension and Collective Enfranchisement

Lease Extension

Tenants of leasehold property can extend their lease terms at any time, subject to qualification, by virtue of the Leasehold Reform Housing & Urban Development Act 1993. The Act sets out the qualifying criteria and the formula for valuing the price payable to the landlord for extending the lease term.

A lease extension can also be achieved outside of the Act by negotiation with the landlord.

Points to note in relation to lease extensions:

• The price increases as the number of remaining years of the term decreases
• Prices for leases with less than 80 years of the term remaining will be significantly more expensive
• Mortgage lenders will insist that a lease has a certain number of years of the term still remaining. The actual number differs from lender to lender but 80 years is not uncommon
• Extending the lease term under the Act can be a lengthy process and is not always achievable in the timeframe of selling a flat
• Negotiating an extension with the landlord to coincide with the sale can be expensive as the landlord is in a strong bargaining position

Collective enfranchisement

This is the collective right of tenants of residential blocks of flats, subject to qualification, to purchase the landlord’s freehold title at a time of their choosing. The tenants collectively become their own landlord.

The benefits of becoming the landlord are:

• The landlord can grant the tenants new or extended leases
• The landlord can decide to forego ground rent
• The landlord is responsible for maintaining the building and so the tenants can ensure that the building and grounds are properly maintained
• The landlord controls the service charge

However, there are certain stipulations that must be met in order to qualify:

• When the lease was first agreed it must have been granted for at least 21 years
• The participating leaseholders must own at least half of the flats
• If the building is partly non-residential, leaseholders cannot enfranchise if the non-residential element is more than 25% of the building

How our lease extension and solicitors collective enfranchisement can help you:

• Obtain a lease extension if you are selling your home to maximise the sale value
• If you are purchasing we will investigate the cost of extending the lease
• Asses your situation to see if you qualify for enfranchisement