Enfranchisement claims

Essentially, there are three categories of claim that leaseholders can bring either to acquire the freehold to their building or to obtain a lease extension. If you live in a house, you should be able to acquire the freehold by virtue of the Leasehold Reform Act 1967. Determining eligibility can be challenging, particularly when dealing with a mixed use building such as a corner shop with residential accommodation above. Matters are now made easier by changes brought in by the Leasehold and Freehold Reform Act 2024 which has increased the threshold for non-residential use to 50%. The freehold can also be acquired under the Landlord and Tenant Act 1987 – either by accepting the freeholder`s offer notice or through an acquisition notice if a previous sale breached that Act .

Rights to acquire the freehold of a block of flats were given to leaseholders through the Leasehold Reform, Housing and Urban Development Act 1993. The larger the block of flats, the more complicated such claims become because flat owners may have leases of varying lengths as well as different motives for purchasing the freehold. These types of claims are called collective enfranchisement claims and will usually require the establishment of a company to act as the nominee purchaser.

Under the 1993 Act, qualifying tenants also have the right to extend their lease by 90 years, paying no further ground rent. If you are thinking of buying a leasehold property which has a short term, then you should always consider whether to extend, particularly if you require a mortgage. The 2024 Act has made it simpler to bring a claim to extend by removing the requirement to wait two years before doing so.

Each type of claim has its own challenges, most of which are well known to the team at Penningtons Manches Cooper. Our lawyers have the requisite experience and knowledge to be able to progress the full spectrum of enfranchisement claims and are often able to conduct difficult negotiations without resorting to litigation. Where litigation is required, we can call upon our property litigation experts.

We also have experience in bringing Right to Manage (RTM) claims. Increasingly, we are finding that leaseholders owning their freehold via a company are turning to us for tax advice because lease extensions, unless dealt with properly, can trigger capital gains tax and stamp duty land tax liabilities.