Collective Enfranchisement — How Leaseholders Can Buy the Freehold as a Block

What Is Collective Enfranchisement?

Collective enfranchisement is the legal right of leaseholders in a block of flats to club together and purchase the freehold of their building. Once they own the freehold (typically through a company they establish for the purpose), they effectively become their own landlord — and can grant themselves 999-year leases at a peppercorn ground rent, set service charges at cost, and manage the building according to their own standards.

This right is set out in Part I of the Leasehold Reform, Housing and Urban Development Act 1993, which has been updated by the Leasehold and Freehold Reform Act 2024.

Qualifying Criteria for the Building

To exercise the collective right to enfranchise, the building must:

• Contain **at least two flats held by qualifying tenants**
• Have at least **two-thirds of the flats held by qualifying tenants**
• Not be a conversion of four units or fewer where the freeholder occupies part of the building as their only or main residence

Buildings that are entirely commercial, or where more than 25% of the floor area is non-residential, may not qualify (the 25% commercial limit has been revised under the 2024 Act — check current guidance).

Who Is a Qualifying Tenant?

A qualifying tenant is someone who holds a flat on a long lease (originally granted for more than 21 years). You cannot be a qualifying tenant if you hold more than two flats in the building.

The two-year ownership requirement has been removed by the Leasehold and Freehold Reform Act 2024 for individual lease extensions; the position for collective enfranchisement qualifying periods is being updated — check with your solicitor.

Participation Threshold

At least **50% of all qualifying tenants** in the building must participate in the claim. So if there are 20 qualifying tenants, at least 10 must join the collective purchase. Getting sufficient participation is often the biggest practical challenge.

The Section 13 Notice Process

The collective process mirrors the individual extension process in structure:

1. **Instruct a RICS surveyor** to value the freehold and any intermediate leasehold interests

2. **Establish a nominee purchaser** (usually a company formed by the participating leaseholders)

3. **Serve the Section 13 initial notice** on the freeholder — this must name all participating tenants, specify the proposed purchase price, and include the proposed terms of acquisition

4. **Freeholder serves a counter-notice** within two months

5. **Negotiate on price** through surveyors; apply to the First-tier Tribunal if agreement cannot be reached within six months

Right to Manage vs Enfranchisement

If collective enfranchisement is too complex or expensive, leaseholders can instead exercise the Right to Manage (RTM) under the Commonhold and Leasehold Reform Act 2002. RTM allows you to take over management of the building without purchasing the freehold — and crucially, it requires no payment to the freeholder and no proof of mismanagement.

RTM is simpler and cheaper, but you do not own the freehold — you manage it on the freeholder's behalf. You cannot grant yourselves extended leases through RTM.

Why Enfranchisement Beats Individual Extensions

Once you own the freehold, every leaseholder can grant themselves a 999-year lease at a peppercorn ground rent at no additional cost beyond the legal paperwork. This permanently removes the lease extension premium issue for all current and future owners of flats in the building.

Get a Premium Estimate

Our [Lease Extension Calculator](/lease-extension-calculator) covers individual lease extension premiums. For a collective enfranchisement, the freehold value calculation is more complex and requires a specialist valuation — but understanding individual extension premiums gives you a useful reference point for whether collective purchase is financially worthwhile.