These are a law unto themselves and, accordingly, I have devoted a chapter to them.The main difference between buying a flat in the private sector and ex-local authority stock is that in the former you are buying into a block which is predominately or entirely leasehold.With local authority buildings by contrast, you are buying into a building with a mixture of leaseholders, private tenants and social tenants, and this intimately affects the way the building is run.

 

Collective Enfranchisement

It is widely believed that you cannot collectively enfranchise with an ex-local authority block. In fact, this is not entirely true, although it can be very difficult. But CE would be possible with, say, a block containing 18 flats, of which 14 are on a long leasehold. The bigger the block, the greater the problem.

But Richard Towes, Head of Home Ownership at the London Borough of Hammersmith and Fulham, says:

We’re more than happy to lose control of the building. In our borough, several blocks have already enfranchised, and the building has passed entirely into private ownership, meaning we have nothing more to do with it.

Where a block has enfranchised, but there remain council tenants, the council becomes a leaseholder, and pays service charges to the new freeholder. In other words, the role is reversed, and the council would have to buy the new lease from the enfranchisers instead of the other way round.

Leases Shorter Than 80 Years

This is a common problem within this sector. When a former council tenant buys a lease from the council, this is for 125 years.

In normal cases, this can be extended for 90 years as it starts to run down – in the same way as in the private sector – for a suitable fee. This means that most leaseholders in these blocks have nothing to worry about.

But when it comes to high-rise blocks built in the 1960s, and the council may be the head leaseholder, rather than the outright owner, problems can occur. For one thing, the original leases granted to the council may have been shorter than 125 years, so by the time the council tenant comes to exercise right to buy, they could have become very short indeed.

Example

There are three high-rise blocks opposite Shepherd’s Bush station, in West London. These were originally built by a private company which wanted to develop commercial property in the area. The council on this occasion insisted that at the same time they built residential accommodation for social tenants. The property developer remained the freeholder.

In time, a proportion of these social tenants exercised their right to buy. But because the council was the head leaseholder, rather than the freeholder, they had less control over length or extension of the leases. This has resulted in some leases becoming very short indeed, under 70 years. In addition, it is difficult, if not impossible, to get a mortgage for higher than the seventh floor in blocks of this type.

Again, Richard Towes explains:

Where we are not the freeholders, as in these blocks, we cannot grant a longer lease. But as the law allows a leaseholder to extend the lease, we have to refer potential buyers to the freeholder. Potential buyers have to be very aware of the sell-on possibilities in blocks of this type.

All over the country, there are high-rise ex-council blocks where the council is not the owner. This is something to find out before buying, as very often these blocks are in wonderful locations and have stupendous views.

Also, contrary to popular belief, many are extremely well kept, with concierge services 24 hours a day, 365 days a year.