Collective Enfranchisement - Does your building qualify?

Section 3 of the Leasehold Reform, Housing and Urban Development 1993 Act defines “qualifying premises”. In general, the statutory qualification criteria are:

Looking at each in turn:

A building is a “self-contained building” if it is structurally detached – it is unlikely that there will be difficulty in identifying such buildings. For “part of a building” there needs to be a:

The requirement for a “vertical division” is unqualified and there is no discretion as to whether a building qualifies, nor is it appropriate to consider whether the area which falls outside the vertical line is material. Leaseholders need to draw a hypothetical line vertically through the building. If the division leaves part of the building outside the line, the building does not qualify.

The second and third points are a question of fact and/or matters requiring expert evidence.

There may also be issues with overhanging buildings or where there is an estate comprising more than one building. Consideration may need to be given to several enfranchisement claims for each building.

Care should be given to what constitutes “non-residential property”. The right does not apply if there are non-residential parts (excluding common parts) where the internal floor area exceeds 25% of the whole premises.

Attention should be given to the fact excluded areas are not necessarily commercial per se and the statutory definition relates to premises not occupied or intended to be occupied for residential purposes.

Failure to thoroughly investigate the feasibility of pursing a collective enfranchisement claim prior to service of a notice of claim will expose leaseholders to:

• The risk of incurring unnecessary costs (not only theirs but those of the landlord(s); and
• being left in a position whereby a further corrected notice cannot be served for a further 12 months, thereby probably increasing the likely costs for the entire process.

The importance of preliminary investigations and feasibility assessments can never be a waste of resources.

Yashmin Mistry is a Partner and Solicitor at JPC Law