Buying your freehold reversion from your Landlord (“LEASEHOLD ENFRANCHISEMENT”) 1. Introduction In 1993 the government gave tenants in England and Wales who held long leases the right to buy their freehold reversion from their landlords. This is otherwise known as the right of ‘leasehold enfranchisement’. By giving tenants the right to join together to buy the freehold, the idea was that qualifying tenants would pay the market premium to their landlord for the freehold reversion. A formula for valuing the freehold was put together by government surveyors. The Leasehold Valuation Tribunal was also given power to value freeholds if the premium could not be agreed between landlords and tenants. 2. The Law Recent changes have been made affecting tenants seeking to enforce their rights of leasehold enfranchisement. Significantly, tenants now no-longer need to satisfy a strict residency test to be a “qualifying tenant” under the Leasehold Reform (Housing and Urban Development) Act 1993, as amended by the Commonhold and Leasehold reform Act 2002. A summary of the new requirements include the following:- i The building and premises in respect of which the right to leasehold enfranchisement is to be exercised must contain two or more flats and at least two thirds of those flats must be held on long leases (a long lease is principally a lease originally granted for a term certain exceeding 21 years, but includes also certain other types of lease); ii The right must be exercised by a ‘right to enfranchise company’ (ie the members being the participating leaseholders). Members must hold at least half the long leases on the flats in the block - except where there are only two flats in which case both long leaseholders must be members of the company. Note that it will no longer be necessary for at least two-thirds of the leaseholders to participate; iii All qualifying leaseholders will have the right to participate in the leasehold enfranchisement process by becoming members of the company; iv There will no longer be a low rent test or a ‘particularly long term test’. 2. Can all tenants afford their share of the freehold? Before incurring legal fees in connection with the preparation of the notice (plus the legal and valuation fees of your landlord), instruct a chartered surveyor to value the price payable to your landlord for the freehold reversion. The valuation will not only give a premium for the freehold, but should also give you guidance on what figure to propose to your landlords and include with any notice served under the 1993 Act. Ask your chartered surveyor also whether or not he or she will be able to carry out negotiations on your behalf following service of the notice with the landlord’s valuer on what the correct premium should be for the freehold. If you do not want to go to the expense of arranging your own independent valuation, it may be that your landlord/managing agents may consider a voluntary sale of the freehold to you without the need to apply with the formal statutory notice. If you are successful enough to reach an agreement with your landlords and/or all tenants are satisfied they can afford the lease extension, contact us for further guidance. 3. Instruct a solicitor We will need to check the terms of your leases to ensure all participating tenants qualify, and check that each participating tenant is eligible to proceed. At this time ‘without prejudice’ negotiations can be undertaken by us to agree the premium payable, or negotiate other terms to avoid having to proceed with the notice, so as to save time on the matter and consequently your legal fees. If the landlords are unwilling to voluntarily sell the freehold then if appropriate we will prepare the notice which sets out your statutory right of leasehold enfranchisement. 4. Appoint a spokesperson In order to keep your costs to a minimum and keep your instructions clear it is important to ensure just one spokesperson for the group of tenants is the main point of contact to give and receive instructions in connection with the application. For further information please do not hesitate to contact Vivienne Haynes or Chris Phillips at the office on 020 7841 0123

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