Live/Work Units – Do Leaseholders Have a Right to Enfranchise or Manage?
I’m indebted to Mark Vinall of Ashley Wilson Solicitors LLP who recently sent me his expert’s thoughts on live/work units, and whether leaseholders have a right to enfranchise or manage. As a chartered surveyor advising leaseholders and freeholders across London, I am increasingly asked about the rights of those living in so-called “live/work” units to collectively enfranchise or exercise their right to manage. These hybrid properties – popular in mixed-use developments – raise complex questions at the intersection of property law, planning, and valuation, writes Clive Scrivener, Founder Partner at the Wimbledon-based Chartered Surveyors Scrivener Tibbatts Ltd, London Leasehold Valuation specialists.
The Legal Landscape
Under the Commonhold and Leasehold Reform Act 2002, leaseholders may collectively take over management of their building or buy the freehold if they are “qualifying tenants of flats”. However, there’s a crucial caveat: these rights do not apply where the lease falls within Part II of the Landlord and Tenant Act 1954 (LTA 1954), which governs business tenancies.
Section 23 of the LTA 1954 makes it clear that this part applies if the premises are “occupied by the tenant for the purposes of a business carried on by him or for those and other purposes.” The statutory definition of “business” is strikingly broad—it captures trades, professions, and even activities of unincorporated associations. Occupation by a company controlled by the tenant, or vice versa, also counts as occupation by the tenant for business purposes.
Practical Implications for Live/Work Leases
Live/work leases vary. Some specify which parts of a unit are for residential use and which for work. Others are silent, relying instead on planning permissions that may require dual use – or even permit permanent conversion to business use.
This creates a legal and practical tension. If a leaseholder occupies their unit partly for business, they may be excluded from collective rights. By contrast, if they sublet the unit – even to someone using it for business – they may retain their status as a qualifying tenant. It’s a quirk that means the actual use of the property can dramatically affect statutory rights.
Law Reform and What’s Next
In 2020, the Law Commission recommended that leaseholders of live/work units should retain their right to manage unless their unit was used exclusively for business. While the Leasehold and Freehold Reform Act 2024 left this proposal on the table, further reforms may yet adopt it. Until then, the grey area remains.
Advice for Leaseholders
For those in live/work units considering enfranchisement or right to manage, I recommend:
Reviewing lease terms carefully: Look for any express demarcation of residential and business areas.
Examining actual occupation: Consider whether your own use, or that of any occupier, could exclude you from qualifying.
Exploring planning variations: Subject to advice, seek to vary planning conditions or reclassify the unit to Class C3 residential use.
Considering subletting strategically: Temporary subletting may help in some circumstances, though professional advice is essential.
Live/work units occupy a unique niche in London’s property landscape. For leaseholders seeking to exercise their rights, a detailed analysis of lease, planning, and occupation status is vital before taking any action.
If you would like to discuss something related to a property valuation please contact Clive Scrivener direct via email at Clive@scrivenertibbatts.co.uk or call 020 8971 2983.
