Collective enfranchisement

 

Campden Hill Court, one of the largest mansion blocks in Kensington where, after completing a collective enfranchisement, we were instructed by the new freeholders to negotiate the sale of shares in the freehold company to those who had earlier chosen not to participate.

Albert Hall Mansions where we acted in a collective enfranchisement claim on behalf of the tenant. This is still the most valuable collective enfranchisement that has taken place.

Collective enfranchisement is where a group of leaseholders club together to acquire the freehold of their block. It was introduced in the Leasehold Reform, Housing and Urban Development Act 1993 and has proved fairly successful.

For any collective enfranchisement to succeed, you need a fair amount of coordination between the lessees and somebody to manage the process. We work in close contact with residents’ associations and their chosen solicitor in sorting out who is going to participate, who is going to pay for the reversionary value of those leases owned by the non-participating lessees.

The Act requires that at least 50% of the lessees need to participate and there lies the first difficulty. It is very common, particularly in a large block, to have a number of non-participating and this will frustrate a claim unless either the participating lessees are agreeable to making that further investment or some third party investor is found.

As with individual lease extensions, it is necessary to propose a price, but unlike individual lease extensions it is not necessary to provide a statutory deposit.

We were involved in some of the earliest collective enfranchisements but we have also been involved in claims which endured for many years before the section 13 notice was eventually served. The secret to all collective enfranchisement claims is to have one of the lessees, ideally a residents’ association chairman, acting as a co-ordinator.

Where there is uncertainty amongst the qualifying lessees and the leases are relatively short, it may be sensible for those who wish to get on with it to make an individual claim for a lease extension. That way, if the collective claim should flounder, they will be in a secure position and if it should progress after all, their contribution will be minimal.