Community-led Housing And Leasehold Enfranchisement

• Published date: 28 July 2020
• Subject Matter: Real Estate and Construction, Real Estate, Landlord & Tenant - Leases
• Law Firm: Wrigleys Solicitors
• Author: Ms Emma Ridge and Laura Moss

Law Commission recommends exemptions for CLH developments from freehold acquisition claims.

The Law Commission recently published this report on leasehold enfranchisement, in which they recommend that there should be an exemption available from freehold acquisition (or 'leasehold enfranchisement') claims for CLH developments. We have been working with the Law Commission to persuade them of this for several months and are delighted with the news.

What does this mean?

Leasehold enfranchisement is a right enjoyed by long leaseholders, which gives them the ability to force the owner of their freehold to sell it to them. For community-led housing ("CLH") groups, this could be very disruptive and even lead to the breakdown of a community. It potentially means a long leaseholder could force a cohousing group or community land trust to sell them the freehold of their property. You can see an earlier article we wrote about this here.

Why do community-led housing groups use leasehold structures?

The leasehold structure is used by CLH groups for lots of good reasons: the lease sets out the rights and obligations of both the leaseholder and the freeholder and it is generally easier to enforce than in a freehold structure.

For cohousing groups, it means that residents are bound into the community structure and ethos, with obligations to look after common areas and (in some cases) to have to seek approval from the community before selling their property on. For community land trusts, it offers a way to build in obligations which help ensure the properties remain affordable in the long term.

Many CLH residents already having a voice in how their homes are managed, as members of the organisation which owns their freehold (i.e. the cohousing group or CLT). As members of this organisation, they would also usually have an ownership stake in the freehold already.

For these reasons, we have been working with the Law Commission for the last couple of years to persuade them that CLH groups should be exempt from the right to enfranchise.

Latest (good!) news from the Law Commission

The Law Commission issued their report to Parliament this week, in which they recommend that there should be an exemption available from freehold acquisition...