Thank you to Richa for the question about how to transform one's leasehold flat effectively into a condo. Welcome to London, Richa. It's a great city.
The short answer is: one must join forces with other leaseholders of flats in the building and collectively buy the building from the landlord (called the "freeholder"). This process is called buying the freehold of the building.
The good news is that the 1993 and 2002 legislation that I mentioned earlier gives leaseholders of flats the legal right to force the landlord to sell the freehold. This is a very powerful right. The landlord is not able to say no. And the landlord must sell the freehold at a fair-market price that is determined by a statutory valuation formula and within deadlines set out by law.
The bad news is that it is a multiple-stage process with a significant degree of complexity. If one gets it wrong, the whole process can collapse, leaving the owners of flats feeling very frustrated.
Unfortunately, over the years, there have been many failed attempts to buy one's building freehold.
Even if the process goes smoothly, it often takes a year from the time one serves the official notice on the landlord until the completion of the purchase of the building freehold. So patience, focus and organisational efficiency are critical.
But let's start at the beginning. First you need to ensure that your building qualifies to force on the landlord this type of compulsory freehold sale. When leaseholders buy their freehold, following this statutory route, it is called a "Collective Enfranchisement".
In order for your building to qualify, a minimum of 50% of all flats must participate. If your building has only, say, five flats, then at least three flats must participate. You also have to ensure that every flat owner wishing to participate is entitled to do so by law. In order for a flat owner to qualify to participate, he or she must own a flat that has a "long lease", that is, a lease that had more than 21 years when first granted. Also, he or she can only own a maximum of two flats in the building under the same name. A person (or company or other entity) owning three or more flats in the building is not allowed to take part in a Collective Enfranchisement.
There are a few other qualification criteria. For more information on this, I invite you to have a look at Chapter One of my book, The Survivor's Guide To Buying A Freehold, which you can find at www.rosettaconsulting.com/books.php.
The purchase of one's building freehold, which has been achieved by thousands of leaseholders of flats across England in recent years, represents an exciting and powerful homeowner movement. At the end of the process and following best practice, participating leaseholders are granted new 999-year leases. They are also now collectively the new owner of the building, as they have got rid of the absentee landlord.
I will explore with readers in upcoming postings some of the common pitfalls that can and should be avoided when organising to buy one's freehold.
For now, please accept my best wishes for a safe, happy and restful holiday season!
