Buying Your Freehold From a Local Authority

Are you a leaseholder in Lambeth, Islington or any other London Borough?

We can assist you to buy your freehold from your council.

A group of Leaseholders in a block coming together to purchase the freehold of their building is referred to as “collective enfranchisement”. If certain qualifying conditions are met, leaseholders may exercise the right to ‘enfranchise’ – in other words, compel their Freeholder to sell the freehold of the building to them, in accordance with the Leasehold Reform Housing & Urban Development Act 1993 (as amended by the Commonhold & Leasehold Reform Act 2002) (‘the 1993 Act’).

It is important to remember that the right to enfranchise is not a right to purchase the freehold at ‘any’ price. The Freeholder has the right to be fairly compensated for the loss of their property. The intention is that the Freeholder should be paid a value for the freehold to the building, as calculated under the provisions of the 1993 Act.

Buying a Freehold: Qualifying criteria

Broadly speaking, to exercise the right of collective enfranchisement the following qualifying criteria must be met for all enfranchisement claims. There are additional criteria for Local Authority leaseholders including those who have bought via Right to Buy.

The Leaseholders

At least half of the Leaseholders in any building must participate in the enfranchisement – that is, give formal notice of their wish to acquire the freehold to the Freeholder in a prescribed form (the Leaseholders ‘Initial Notice’) and;

The Leaseholders giving the notice must be ‘qualifying tenants’. This means they must own their flats under ‘long leases’, i.e. leases originally granted for more than 21 years.
Note: There is no longer a requirement of residence, so an investor who lives elsewhere or a flat-owning company may be a ‘qualifying tenant’.

The Building

Must be the whole (or part) of a building constituting a distinct vertical division of the property.
No more than 25% of the building must be used for non-residential purposes.
There must be at least two flats in the building, and at least two-thirds of the flats in the building must be held under ‘long leases’.
Note: For any units in the building which are not let out on ‘long leases’ (e.g. short-term residential tenancies or commercial leases), the Freeholder may elect to take a “lease back” (for a term of 999 years and at a peppercorn (nil) ground rent.)

Buying a Freehold: Right to Buy

If you were initially granted your lease under Right to Buy, you will be a qualifying tenant. You do not need to be the original Right to Buy purchaser.

However, you are not a qualifying tenant if you own more than two of the flats in the building or if you have sublet your flat on a long lease (over 21 years).

If your building doesn’t qualify, you can still apply to extend the lease of your flat.

Buying a Freehold: Local Authority-owned flats

If there are any flats in the building still owned by the Local Authority, the new freeholder must lease the flats back to the council. This will protect the rights of any council tenants who live in the building.

Buying a Freehold from a Local Authority: What happens next?

To start the formal process of buying the freehold of your building, you must serve a legal notice, called an ‘initial notice’. It is vital to obtain professional legal and valuation advice to make sure the notice is valid.

Your Local Authority freeholder will respond and thereafter, a period of negotiation follows. If after certain time limits there is no agreement, either side can apply to the First Tier Tribunal who will make a decision that will be binding on both parties.

Buying a Freehold from a Local Authority: Collective Enfranchisement

We always take care to identify and address any specific technical points unique to your individual case. We know our way around the enfranchisement process better than most, from initial consultation, through to successful completion.

Alongside our legal expertise, we offer plenty of practical guidance to ensure that your claim does not lose momentum. We can also help you identify an investor, if needed, to fund any gap in the cost of buying the freehold, or a surveyor suitable to undertake the valuation work.

Buying a Freehold from a Local Authority with Bishop & Sewell

If you are a leaseholder in Lambeth, Islington or any other London Borough and have been offered the opportunity to buy your freehold, it is important to seek expert legal advice. Bishop & Sewell can assist you to buy your freehold from your council.

Our lawyers are industry experts on Leasehold Reform legislation.

The team deals with a variety of issues affecting leasehold properties and works closely with the dispute resolution and commercial property teams, to provide sound advice on a range of matters. We have extensive experience in dealing with the purchase of Local Authority freeholds.