Mark Steggles, Partner at Thomson Snell & Passmore, explains enfranchisement.
What is enfranchisement?
Enfranchisement entitles tenants to force their landlord to sell the freehold of their building to them.
The building must contain at least two flats and at least two qualifying tenants (i.e. who have leases who have more than 21 years subject to exceptions) must own flats. Normally at least half of the qualifying tenants in a building are required to join the process provided there are more than two flats. Qualifying tenants usually form a company to buy the freehold and set up a participation agreement to record decisions on financial management and voting matters.
How much does it cost?
A landlord must be paid a premium for the freehold calculated by a specific formula. Qualifying tenants must pay the landlord’s legal and valuation fees as well as their own. A tribunal can fix the premium to be paid and resolve other disputes if the parties cannot agree.
How long does it take?
The process can typically take between six to eight months it referred to a tribunal, and shorter if not.
How do I get more information?
Thomson Snell & Passmore have a dedicated enfranchisement team.
Article first published in ABliving Magazine October 2014.