Mike Somekh on the unintended effects of leasehold reform on resident‑controlled freeholds
- Current leaseholder reform neglects leaseholder-led freehold companies formed pursuant to statutory collective enfranchisement rights.
- This risks creating a new underclass of adversely affected parties, and their position should be given more consideration.
The current programme of leasehold reform—most notably the Leasehold and Freehold Reform Act 2024—has been framed as a way of correcting historic imbalances between landlords and leaseholders. However, insufficient consideration has been given to a distinct constituency: leaseholder-led freehold companies formed pursuant to statutory collective enfranchisement rights.
These ‘forgotten freeholders’ are not institutional investors or portfolio landlords. They are ordinary leaseholders who exercised rights conferred principally by the Leasehold Reform, Housing and Urban Development Act 1993 (LRHUDA 1993) to acquire their freehold collectively. In doing so, many incurred substantial personal expense, assumed borrowing, or deployed private savings.
The statutory framework
Collective enfranchisement under Pt I, Ch I, LRHUDA 1993 and right of first refusal under Pt I of the Landlord and Tenant Act 1987 require participation by a qualifying majority of leaseholders. In practice,
