Extending your lease agreement and enfranchisement

Your lease agreement is limited in its length, and at the end of its life ownership will revert back to the landlord. However, it is possible for you to extend the length of your lease agreement.

It is also possible for you to purchase the freehold of your building (a process known as “enfranchisement”), collectively with other leaseholders.

The government regularly update and publish booklets explaining these processes in detail, but this part of the leaseholder handbook is designed to give you a brief overview of those processes involved.

Qualification

Not everyone has the right to extend their lease or to enfranchise. To qualify you and your property have to pass certain criteria. These are listed below:

• You have to either have a long lease at a low rent
• Or have a lease that was first granted for over 35 years in length (unless it is covered by the rural exclusion or is a shared ownership lease granted by a housing association)
• You must also have a lease for the whole property
• You must pass the residence test
• You have to have held a long lease for the length of the qualifying period of residency.

In order to explain some of these terms:

• A long lease is one that was first granted for more than 11 years, but you do not have to be the first person to whom the lease was granted. The Council’s leases vary in length of time granted, but generally last for 99 years or 125 years, and so do qualify here.
• A low rent is one that passes the “low rent test”. That test is detailed in the government booklets, but most of the Council’s properties do qualify.
• The residence test asks that you must occupy all or part of the property as your only or main home, and must have done so for either the last 3 years or periods that add up to 3 years in the last 10 years. If you have inherited the lease or bought it from a deceased leaseholder’s estate, you may count the deceased leaseholder’s period of residence as your own. At the time of death you must have been a member of their family and been resident in the house as your only or main residence. A company, trust or “artificial person” cannot satisfy the residence test although the beneficiary of a trust can do so.

Your property qualifies if it is a building or part of a building that would normally be considered as a house. It does not matter that it may have been divided into flats, provided that you have the lease of the whole house. However, if part of your house overhangs another property it will not qualify.

It should be remembered here that one lease is given for the whole of the building with regard to the Council’s properties, and that each leaseholder actually holds a copy of that lease agreement.

That is why your lease agreement may start from years before you or the original purchaser actually bought it from the landlord, as it starts from the date the first tenants in the building bought their lease agreement.

In this way, each lease agreement in the building should be similar, being copies of the same agreement, and should pass this qualification test in most cases.

There should also be two or more flats in your building, and not more than 10% of the internal floor area (apart from common parts such as stairs) is in non-residential use. For enfranchisement there also needs to be at least two-thirds of the flats within the building let to qualifying tenants (in other words at least two-thirds sold on long leases).

You can buy the whole of the building with your neighbours, or just the part containing your flat, in cases for instance where there are wings or sections serving selected flats with separate entrances and facilities.

There are also exceptions to being able to enfranchise, which still allow lease extension. These are:

• If the freehold is held inalienably by the National Trust
• If your house is owned by the Crown
• It is owned by a charitable housing trust and provided by the charity as part of its charitable work
• It is a property that has been given conditional exemption from Inheritance Tax by the board of the Inland Revenue
• In some cases on a shared ownership lease
• Public bodies may be able to prevent enfranchisement if they need the house for development
• In very limited circumstances, if your landlord wants to live in the house If you have a lease bought under the Right To Buy (which covers the majority of the Council’s leaseholders), you will normally be able to enfranchise except where the freehold is owned by a charity and your immediate landlord is a housing association even if your lease agreement with them is a shared ownership lease.

What do you do now?

If you want to extend your lease agreement, to enfranchise (buy the building freehold), or to find out more about these subjects, you should contact your Leasehold Management Officer (or Housing Officer if your property is within the Lancaster West Estate Management Board area), in the Leasehold Services One Stop Shop, who will pass your details on to The Borough Valuer.

The process will involve you and the landlord deciding on your own valuation of the property, then coming to an agreement.

As the Council is the landlord, not the TMO. The Borough Valuer manages this operation.

However, it is important that the TMO know (through your Contact TMO/EMB Officer) what is happening, especially regarding any service charges to be paid or any arrears actions that may be undertaken.

Similarly, if you want to “vary” your lease (to change it) you should contact the TMO first of all, though the Council through either The Borough Valuer or their solicitors, will then do much of the general management of the operation.