© 2025 News On The Block. All rights reserved.
News on the Block is a trading name of Premier Property Media Ltd.
© 2025 News On The Block. All rights reserved.
News on the Block is a trading name of Premier Property Media Ltd.
Not to generalise, but enfranchisement can broadly be divided into three groups. There are those who extend their lease. There are those who purchase the freehold of their house. And there are those who, collectively with their neighbours, purchase the freehold to the block within which they own a flat. There is surprisingly, an ever emerging fourth category. These are the flat owners who do nothing but sit on their ever diminishing asset. The expression ‘resting on one’s laurels’ could be said to be put to mis-use in the context of ownership of a prime central London flat on a short lease. For the purposes of this article let’s concentrate on this latter group.
2013 marks twenty years since the enactment of the Leasehold Reform, Housing and Urban Development Act 1993, the piece of legislation which permits leaseholders to extend their lease or collectively purchase their freehold. The right to purchase the freehold of one’s house has been around for even longer, approaching fifty years.
Indeed the legislation has only improved, from the leaseholder’s point of view, since its introduction. The biggest changes include the fact that now there is now no requirement for the leaseholder to reside in the flat. The number of leaseholders in a building required to participate in a collective claim to purchase the freehold is now only one-half, it was originally two-thirds. And a building still qualifies so long the commercial parts do not exceed 25 per cent, previously it used to be a maximum of 10 per cent.
So why is there a pool of leaseholders who allow their lease length to diminish into unchartered waters? Perhaps enfranchising is on every leaseholder’s ‘must-do’ list? Some would argue that the urge to keep track of our assets be approached on a reactive basis: by waiting for someone else in the building to organise a collective acquisition of the freehold or by tackling the issue of the short lease length when selling the flat.
A New Year means not just resolutions but predictions too. Prime central London market supremos have given broadly unanimous verdicts in terms of optimistic growth levels for 2013, the eurozone is looking more stable than it has done for some time and some lenders have their appetite for lending back, but of course only in relation to the right assets and the right clients. Demand in 2013 will more than likely continue to boom – so long as foreign buyers keep coming in the same numbers.
So what do such market forecasts mean in terms of short leases? A short lease (or a lease with less than 80 years remaining), is, in a stable or rising market, a diminishing asset. 90 years may be added to its term under the legislation once you have owned the flat for two years, or, better still, join in a collective claim to purchase the freehold and thereafter extend your lease to 999 years. Foreign buyers are, in particular, very alive to the issue of lease length.
Perhaps, in this digital age and ‘Act world’ we should have a smartphone app, as we do for all our other recording needs, showing the increasing daily cost of extending our lease or purchasing our freeholds. This may encourage more leaseholders to embark on an enfranchisement expedition. But perhaps that’s an over-generalisation.