The Leasehold Reform, Housing and Urban Development Act 1993 gives the right for tenants of flats acting together to purchase the freehold of their building. On successful completion, the participating tenants will become the freeholders of the building. This will put them in a position to grant themselves extended leases, commonly 999-year lease terms.

As your lease gets shorter, the property becomes less valuable. By purchasing the freehold interest and extending a lease length, you are protecting or improving the value of a flat. You may also live in a block of flats or own a flat where the management or maintenance is not up to the standard you would expect. By purchasing the freehold, you and your neighbours take greater control over the running of a building. Owning a share of the freehold interest can make a property easier to sell and easier to get a mortgage from a bank to purchase.

You will need to instruct Olden Property to undertake a valuation on behalf of you and your neighbours. This valuation will set out the amount each participating leaseholder should expect to pay for the freehold purchase.

You will then need to instruct a solicitor to send a statutory letter to the freeholder confirming you are purchasing the freehold. We work with many excellent solicitors specialising in collective enfranchisement and we would be happy to introduce you should you choose to work with Olden Property.

A detailed guide, including qualification criteria, can be found by clicking on this Collective Enfranchisement information sheet

The price you and the other leaseholders pay to purchase the freehold interest from the freeholder is known as the premium. The premium is made up of a number of elements: compensation for ground rent, compensation for the fact the freeholder will not take possession of the flat in the future, and ‘marriage value’ if any of the leases have less than 90 years remaining.

The property's overall value will increase due to the lease extension. If your lease has less than eighty years left when you apply for the lease extension, 50% of this increase in value is payable to the freeholder. Compensation for loss in value of other property owned by the freeholder, including common parts and development value and professional fees.

The law around collective enfranchisement is changing, and marriage value makes up a major part of these proposed changes. Currently, it is a lot cheaper to purchase the freehold when the participating leases have eighty or more years remaining, as the marriage value is not applicable. This may change in the coming years, but our advice now is if your lease is getting close to 80 years, extend it or purchase the freehold immediately. If you wait until the lease has less than 80 years remaining, you could end up doubling the cost of the freehold purchase.

Olden Property undertake many collective enfranchisement valuations and negotiations every year. We predominantly act for leaseholders. If it is necessary to act as an expert witness at the Lands Tribunal, we have the expertise.

Our aim is to make the process as clear as possible, so you understand where you are in the process at every step of the way. You will have one point of contact from your initial inquiry to completion of the collective enfranchisement if you choose to work with Olden Property. It is a complicated process but can be well worth it. There are strict rules governing the collective enfranchisement process and valuation methodology. You should never pay more than you are legally obliged to, and we will ensure you do not.