The Leasehold Reform, Housing and Urban Development Act 1993 allows tenants of flats to group themselves together to acquire the freehold of a building in appropriate circumstances. This is known as ‘collective enfranchisement’.
For collective enfranchisement to apply, the application must be in respect of ‘a self-contained part of the building’. No fewer than half of the tenants of that part of the building must join in the application.
In a recent case, a landlord (who opposed an enfranchisement application) argued that this meant that if the building could be further subdivided into smaller self-contained units, the application had to take account of that.
The landlord had been served with an application to acquire the freehold by 10 of the tenants of a group of 20 flats (numbers 41-60). The landlord argued that the structure of the building was such that the flats could be subdivided into groups of 10 flats (in this case, numbers 41-50 and 51-60), which were capable of separate development and management. Only three of the tenants of flats 41-50 had joined in the application, so if the ability to subdivide the premises was accepted as the appropriate measure of what was ‘self-contained’, the enfranchisement notice in respect of flats 41-50 was not validly given, because at least half of the tenants in that group had not applied.
The High Court rejected the landlord’s submission, ruling that the language in the Act clearly intended that the fact that premises were capable of being further divided into smaller qualifying parts should not be a bar to the enfranchisement of a larger part.
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Partner Note
Craftrule Ltd. v 41-60 Albert Place Mansions (Freehold) Ltd. [2010] EWHC 1230. See http://www.bailii.org/ew/cases/EWHC/Ch/2010/1230.html.