Act (1993 Act)
The Leasehold Reform, Housing and Urban Development Act 1993 gives qualifying leaseholders the statutory right to extend their lease or join together to purchase the freehold of their building. This is the key legislation that underpins leasehold enfranchisement.
Assignment
The legal transfer of a lease from one person (the seller) to another (the buyer). Buyers often consider lease length and enfranchisement rights when purchasing a property, as short leases can reduce value and mortgageability.
Collective Enfranchisement
The legal right of leaseholders in a block of flats to act together to buy the freehold of their building. At least 50% of the flats must participate. Once successful, leaseholders can grant themselves 999-year leases and take control of building management.
Counter-Notice
A formal legal response served by the freeholder (or landlord) after receiving a leaseholder’s notice to extend a lease or buy the freehold. It confirms whether the freeholder accepts the claim and, if not, which parts are disputed.
Determination
The decision made by the First-tier Tribunal (Property Chamber) if leaseholders and freeholders cannot agree on the premium or terms of a lease extension or freehold purchase. The Tribunal sets a binding outcome unless appealed.
Extension Premium
The price paid by a leaseholder to extend their lease under the 1993 Act. The premium is based on a statutory formula that considers the property’s value, ground rent, lease length, and (if below 80 years) marriage value.
First-tier Tribunal (Property Chamber)
An independent body that resolves disputes between leaseholders and freeholders. Common cases include disagreements over lease extension premiums, enfranchisement valuations, or service charge disputes.
Freeholder (Landlord)
The person or company that owns the land and building outright. Leaseholders pay ground rent and service charges to the freeholder. When a lease extension or freehold purchase takes place, the freeholder receives the premium.
Ground Rent
An annual payment made by the leaseholder to the freeholder. Ground rents can be fixed, escalating, or linked to inflation. Under a statutory lease extension, ground rent is reduced to a “peppercorn” (effectively nil).
Initial Notice (Section 42 / Section 13 Notice)
The formal notice that starts the enfranchisement process:
- Section 42 Notice – served by an individual leaseholder for a lease extension.
- Section 13 Notice – served collectively by leaseholders when buying the freehold.
Marriage Value
An additional cost that applies when a lease has fewer than 80 years remaining. It reflects the extra value created when the freehold and leasehold interests are combined. By law, marriage value is split 50/50 between leaseholder and freeholder.
Nominated Purchaser
In collective enfranchisement, the company or person chosen by the participating leaseholders to acquire the freehold on their behalf. Usually this is a company set up and owned by the leaseholders.
Participation Agreement
A legal contract signed by leaseholders taking part in collective enfranchisement. It sets out responsibilities, cost sharing, and what happens if someone withdraws from the process.
Peppercorn Rent
A nominal rent (effectively zero). Statutory lease extensions convert ground rent to a peppercorn, meaning the leaseholder pays no future rent to the freeholder.
Qualifying Tenant
A leaseholder who meets the criteria under the law to extend their lease or participate in enfranchisement. Typically, this means holding a lease originally granted for more than 21 years.
Reversion
The freeholder’s legal right to take back possession of the property once the lease expires. The value of this reversion forms part of the enfranchisement premium.
Service Charges
Payments made by leaseholders towards the maintenance, repair, and insurance of the building. Service charges can be disputed at the Tribunal if considered unreasonable.
Share of Freehold
When leaseholders collectively buy their freehold, each typically receives an equal share (directly or through a company). This allows leaseholders to control management and grant themselves new leases.
Statutory Lease Extension
A right under the 1993 Act that allows leaseholders to add 90 years to their lease term and reduce ground rent to a peppercorn. Unlike informal deals with freeholders, statutory lease extensions follow a set legal process and offer stronger protections.
Tribunal
Short for the First-tier Tribunal (Property Chamber). Leaseholders and freeholders apply here if they cannot agree on a lease extension or enfranchisement premium, or if there are disputes about service charges and lease terms.
