Enfranchisement in mixed use schemes

Mixed use developments are schemes which comprise one or more buildings used for commercial, retail and/or industrial use where there is also an element of residential accommodation. Even where the residential element is ancillary to the main commercial use, these schemes need to be treated with a degree of caution largely due to the different legislative regimes relating to commercial and residential property and in particular the rights of long leasehold residential tenants.

Collective enfranchisement

The Leasehold Reform, Housing and Urban Development Act 1993 (LRHUDA 1993) gives occupiers of long residential flat leases (more than 21 years) the collective right to buy the freehold and any intermediary leasehold interest where the residential floor areas comprise 75% or more of the whole development (not including common parts). Given the increased presence of flats within development schemes, particularly in mixed use developments, this represents a valuable right for such tenants. Where there are service charge contributions or commercial rental income streams, collapsing of superior leasehold interests could result in the obligation to contribute to service charge falling away or the potential loss of the commercial rental income

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