Collective Enfranchisement: How Leaseholders Buy the Freehold of Their Building

What collective enfranchisement is

Collective enfranchisement is the statutory right for leaseholders of a block of flats to buy the freehold of their building together. It was introduced by the Leasehold Reform, Housing and Urban Development Act 1993 and gives qualifying leaseholders the right to force the freeholder to sell at a price determined by the statutory formula.

Once leaseholders own the freehold, they collectively control the building, can grant themselves long lease extensions at peppercorn rents, eliminate ground rent forever, and run the block through a company they control.

Qualifying criteria

The block must meet several tests:

1. It must contain at least 2 flats.

2. At least two-thirds of the flats must be held by qualifying leaseholders (broadly, leases originally for more than 21 years).

3. No more than 25% of the floorspace can be non-residential. The 2024 Act raises this to 50%.

4. At least half of the qualifying leaseholders must participate.

5. The leaseholders must form a nominee purchaser company to take ownership of the freehold.

The process

1. Get a valuation. Instruct a specialist enfranchisement surveyor to estimate the freehold price under the statutory formula.

2. Form a nominee purchaser (a company limited by guarantee, owned by the participating leaseholders).

3. Serve a Section 13 notice on the freeholder, setting out the proposed price and the participating leaseholders.

4. Freeholder counter-notice within 2 months, accepting or disputing.

5. Negotiation. Most cases settle through surveyor negotiation. Disputed cases go to the First-tier Tribunal (Property Chamber) for determination.

6. Completion. Once the price is agreed, the freehold transfers to the nominee company. The participating leaseholders typically grant themselves new 999 year leases at peppercorn rent on the same day.

The whole process from notice to completion usually takes 9 to 18 months.

Cost

The price has several components:

• The freeholder's reversion, the value of the freeholder's right to receive the property back at the end of the lease.
• The capitalised ground rent, the value of all the future ground rent payments under the existing leases.
• Marriage value, half the uplift in property value from extending the leases. Under the 2024 Act, marriage value is abolished.
• The freeholder's reasonable costs, which the leaseholders also pay.

For a typical 6 flat block in London with leases of 90 years remaining and ground rent of £200 per flat per year, the total cost might be £80,000 to £150,000 plus around £20,000 in costs, split between the participating leaseholders.

How the 2024 Act changes things

The Leasehold and Freehold Reform Act 2024 makes enfranchisement cheaper in several ways:

• Marriage value is abolished, removing the largest single cost item for blocks with shorter leases
• The valuation methodology is being revised to use a fairer deferment rate
• The non-residential floorspace cap rises from 25% to 50%, qualifying many mixed-use buildings for the first time
• The freeholder's recoverable costs are capped, reducing the total cost
• Leaseholders no longer have to participate in the process by buying out their own ground rent at the same time

The cumulative effect is a significant reduction in the cost for most blocks, especially those with short leases or mixed-use elements.

Whether to enfranchise or take Right to Manage instead

Both routes give leaseholders control over their building, but they are different. Right to Manage transfers management without changing ownership and is much cheaper to set up. Collective enfranchisement transfers ownership and lets leaseholders eliminate ground rent forever, but costs much more upfront. For most blocks, RTM is the right starting point. Enfranchisement is worth considering when leases are shortening (because you can grant yourselves 999 year extensions on completion) or when ground rent is high enough to justify the capital cost of buying it out.

Confirm your building's tenure

Before instructing a surveyor, confirm the tenure of your block. Property Passport UK shows freehold or leasehold tenure for every flat in England and Wales, sourced directly from HM Land Registry. Search your building at [/search](/search) to confirm how each flat is held before starting the process.

Look up any leasehold property on Property Passport UK

Property Passport UK shows tenure (freehold or leasehold) sourced directly from HM Land Registry for every one of the 19.35 million properties in England and Wales. For leasehold properties, you can also see lease length, ground rent, and service charge information where it has been published. Search by postcode or address at [propertypassport.uk/search](/search), or look up an EPC at [/epc](/epc).

Related guides

• What is a leasehold property
• How to extend a lease
• Leasehold Reform Act 2024 explained
• Service charge disputes