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Enfranchisement
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Lease Extension
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| The Tenants have to set up an RTE
Company before starting the process |
No Company is necessary for a Lease
Extension. |
| There is one total of professional
costs shared between participating tenants |
The total costs may be similar but each qualifying tenant
is responsible for all of the costs.
If several tenants progress a Lease
extension at the same time using the same professionals, there
may be some savings.
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Initially only one property title is transfered by the Solicitors
The Tenants RTE company acquires the
freehold interest
There are likely to be additional legal
costs later when Lease extensions are granted to participating
tenants.
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Each tenant needs a Solicitor to acquire the variation
of the exisiting Lease see
FAQ |
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A minimum of 50% of qualifying tenants have to participate
in enfranchisement.
Those who participate become shareholders
of an RTE Company that purchases the Landlords interest.
The RTE Company acquires the freehold
interest of those leaseholders who do not participate.
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Each qualifying tenant only purchases an extension
of their existing Lease see
FAQ |
| By acquiring the freehold, the participating tenants
also usually acquire the Landlords management rights including
the right to nominate the insurer. |
A Lease extension gives no addition rights other
than an increased term and reduced ground rent. |
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It can be difficult to gather sufficient interest to achieve
the 50% participation needed initially.
To get
started sufficient monies have to be generated to pay for
initial professional costs.
Once the process gets going more people
will probably join in.
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The Leaseholder is not reliant on any other tenant to progress
the Extension.
Each Leaseholder has to raise their
own funds to set the process in motion.
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| At the outset, all Tenants have to be offered
the opportunity to participate. |
No consultation is necessary when deciding whether
to go for a Lease extension but it is economic to try and join
with other tenants to proceed at the same time. |
| It is typically
impossible to properly estimate all the costs but everyone has
to make a decision at an early stage. |
Tenants face the same cost uncertainty
whichever route they decide on
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| There is no limit to the length of lease that
participating tenants can grant themselves once they collectively
own the freehold as shareholders of the RTE Company. |
Statute specifies the length of lease and ground rent that
must be granted upon making an individual application to the
Tribunal
If you do not participate in an ongoing
enfranchisement then you have no benefit and will eventually
need to negotiate with the RTE Company to purchase a lease
extension.
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Enfranchisement does not automatically
provide an extended Lease
A mortgage lender may still require
an extended Lease document even if one participates in the
enfranchisement.
A mortgage lender requires a fixed term
to be remaining after the projected end of a new mortgage.
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The value of a Leasehold interest
begins to reduce after the term passes 80 years remaining.
A mortgage lender requires a fixed term
to be remaining after the projected end of a new mortgage.
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Decisions about the enfranchisement process are made collectively
Consequences (such as costs and time)
are shared
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All decisions are yours. |
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