Firstly, let’s look at what a lease is. Most flats and a few houses are owned under long leases, in other words, longer than 21 years. This means that ‘owner’ in fact is renting the property for a very long term from a freeholder. The freeholder technically owns the ground beneath the property from the centre of the earth to the top of the sky.
Leasehold enfranchisement is the collective term for the process of democratising what is effectively a thousand-year-old feudal system. Successive governments have implemented laws starting with the 1967 Leasehold Reform Act, through the 1987 Landlord and Tenant Act, 1993 Leasehold Reform, Housing and Urban Development Act and most recently the 2002 Commonhold and Leasehold Reform Act. These have made it progressively easier for owners to buy out the freeholders, extend their leases or replace the managing agents, among other things.
The lease is a document that governs this relationship. For most owners (for the purposes of this article, the ‘owner’ is the lessee or long leaseholder) this is a rather impenetrable and complex document that they never read. We encourage every owner to make sure they DO read this and understand the various agreements under which they are bound.
ALEP members are specialists in helping particularly owners of flats to make changes to the tenure of their flats. Some also act for freeholders in these transactions. This broadly falls into three categories:
- Lease extension
- Freehold acquisition
- Right To Manage
The option chosen depends on the individual circumstances, but we look here at the broad choices.
If the lease length is getting to around 80 years or below, then this needs addressing. An extension needs to be obtained and this can be done broadly two ways. You can either do this as an individual directly with the freeholder, or you and your neighbours can look to buying the freehold or extending leases as a group.