Mandatory leasebacks and jurisdiction
The Act establishes a new right for leaseholders to require their landlord to take a 'leaseback' of any unit that is not let to a participating tenant (which includes commercial units). Leasebacks are 999-year leases (at a peppercorn rent) given to the former freeholder following a collective enfranchisement claim. If there is an existing lease of the unit (e.g. a sitting commercial tenant) the former freeholder, having received a leaseback, becomes an intermediate leaseholder and therefore continues to be the landlord of that unit, and receives any rent payable by the tenant. The leaseholders participating in the collective enfranchisement claim benefit because the value of the unit is removed from the price they must pay for the freehold. Under the current law, in some circumstances, a freeholder can require the leaseholders who are pursuing a collective enfranchisement claim against them to grant them a ‘leaseback’ of any unit that is not let to a qualifying tenant (leaseholder). The Act gives leaseholders an equivalent right for any non-participating units.
	The Act sets a new costs regime for enfranchisement and right to manage claims. Leaseholders who are extending their lease, buying their freehold or exercising their right to manage will no longer generally pay the landlord’s costs of dealing with the claim (such as valuation, conveyancing and legal fees). Each party will generally bear their own costs.
	The Act amends the jurisdiction for enfranchisement and right to manage disputes, so that as far as possible all disputes will be determined by the Tribunal. Again, in most cases each party will pay their own litigation costs.