The Leasehold Reform, Housing and Urban Development Act 1993 confers rights of collective enfranchisement on qualifying tenants. The legislation applies to premises that consist of a self-contained building or part of a building.
Section 3 of the Act provides that an area will qualify as a self-contained part of a building if: (i) it is vertically divided from the rest of the building; (ii) it can be redeveloped independently; and (iii) it is independently serviced (or could be without significantly disrupting the services to the rest of the building).
The Leasehold Reform, Housing and Urban Development Act 1993 confers rights of collective enfranchisement on qualifying tenants. The legislation applies to premises that consist of a self-contained building or part of a building. Section 3 of the Act provides that an area will qualify as a self-contained part of a building if: (i) it is vertically divided from the rest of the building; (ii) it can be redeveloped independently; and (iii) it is independently serviced (or could be without significantly disrupting the services to the rest of the building). 41-60 Albert Palace Mansions (Freehold) Ltd v Craftrule Ltd [2011] EWCA Civ 185; [2011] PLSCS 61 raised an important question, in respect of which there was no previous authority; namely can a self-contained part of a building consist of an area that can be further subdivided into separate but smaller self-contained parts? To put it another way, does the right to enfranchise attach only to the smallest possible self-contained part of a building? The area that the tenants sought to enfranchise comprised 20 flats in a terraced property. Each half of the building had its own entrance that led to separate common parts and staircases and was separated from the other by a dividing wall that was vertically continuous from the footings to roof level. The two halves had their own drainage and services and could be redeveloped independently. However, the number of qualifying tenants in each block was unequal. The landlord tried to persuade the Court of Appeal that it would be wrong to allow tenants to enfranchise a part of a building in which they have no direct financial interest, against the wishes of the tenants in that part. In an extreme case, the tenants in one section of a self-contained building could force themselves as new landlords on the tenants of another, even though those tenants have no interest in acquiring the freehold. The landlord argued that this would have undesirable and unintended consequences; the court disagreed and upheld the tenants’ claim. Their lordships ruled that it is not necessary for a self-contained part of a building to comprise the smallest possible self-contained part of it. Parliament had concluded that enfranchisement offered real advantages and those advantages should not be lost because some tenants were unwilling to participate. The ruling puts paid to another potential obstacle to enfranchisement and confirms that tenants can together form different configurations to acquire the freeholds of their buildings. However, it seems reasonable to suppose that the tenants of a smaller but self-contained part of a building that has already been enfranchised will also have the right to enfranchise and to acquire the freehold from their new landlord, if they have the inclination and can raise the finance to do so. Allyson Colby is a property law consultant
