A Short Introduction To Collective Enfranchisement
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Written by: Tim Bishop
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Word Count: 339 |
Date: Tue, 1 Feb 2011 |
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Collective enfranchisement is something which is very important to leaseholders. A leaseholder is someone whom lives in a flat and pays a mortgage. However, they do not own the property, the freeholder does. They have the right to remain in this property for the duration of the lease, however when this runs out it is likely they will then have to pay rent as a tenant.
So what precisely are the differences between being a leaseholder and a freeholder? One big difference, as suggested above, relates to the ownership of the property. Leases are normally available for individual flats in a building containing two or more residential properties and are time-limited, whereas if you are a freeholder, you own the entire building indefinitely. When taking out a mortgage on a house you are normally a freeholder, however when it comes to a flat this can be different.
Collective enfranchisement is the process of a freeholder purchase by a group of tenants whom live in flats and want to own the building itself. This can help you sell your property in the future as it simplifies things - an important factor when you consider that it can often be hard to get a mortgage for a leasehold if there is less than 50 years left on the lease. Leases can run up to 999 years, if you get one on a flat then it is normally for 99 to 125 years maximum.
Therefore, freehold purchase can be a good way for groups of tenants to gain more control over where they live and have the security of knowing there's no risk of them being turfed out of their flats at the end of the lease. It also gives them more rights over what happens to the leases once they have purchased the freehold. The concept of collective enfranchisement was introduced in the 1993 Leasehold Reform, Housing and Urban Development Act and is based on the premise of the tenants involved paying a premium to the current freeholder in order to buy him or her out.
About the Author
Bonallack and Bishop are specialist collective enfranchisement solicitors with significant expertise in advising on freehold purchase. Tim Bishop is senior partner at the firm, responsible for all major strategic decisions. He has grown the firm by 1000% in 13 years and has plans for further expansion.
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