How you can buy your block’s freehold

The Landlord and Tenant Act 1987 provided flat owners with a route to compelling the sale of the freehold, by creating the Right of First Refusal (RFR). The Leasehold Reform, Housing and Urban Development Act 1993 provided another avenue for flat owners to assume ownership of the freehold, a right called Collective Enfranchisement.

But there are important differences between the rights provided by the two acts. The RFR only arises in response to the intention of the immediate landlord to dispose of its interest in the premises.

RFR involves the service of an offer notice on the qualifying tenants by the landlord in advance of contracts being exchanged for the sale of the freehold, including details of the principal terms of the sale. It is open for acceptance for two months by the ‘requisite majority’ of qualifying tenants: more than 50 per cent of the total number of flats in the building let to qualifying tenants. For example, where the building contains 30 flats granted to qualifying tenants at least 16 will comprise the requisite majority.

A qualifying tenant is defined as being any residential leaseholder other than an assured or assured shorthold or protected tenancy or business or certain agricultural tenancies. A tenant of at least three flats is not the qualifying tenant of any of them.

By contrast there is no need to wait until the landlord sells to make a Collective Enfranchisement claim under the 1993 Act. The process can be initiated by participating tenants serving an Initial Notice on the landlord. Once served there is not less than two months for the landlord to serve a counter-notice.

For the purpose of Collective Enfranchisement a qualifying tenant is one with a long residential lease (usually meaning one originally granted for more than 21 years). A tenant of at least three flats is not the qualifying tenant of any of them.

For a valid Initial Notice to be served on the landlord those participating in the purchase of the freehold under the 1993 act must represent at least one half of the total number of flats in the building. Therefore in respect of the building containing 30 flats at least 15 must take part.