Collective enfranchisement: How to buy your building’s freehold

Buying a share of the freehold is often presented as the obvious upgrade from leasehold. Sometimes it is. It can give flat owners lasting control over their building, remove an outside freeholder from future decisions and make long lease extensions much easier to arrange.

But collective enfranchisement is not simply a group property purchase. It is a statutory process with eligibility rules, valuation assumptions and unforgiving deadlines. The participating leaseholders must also agree how they will own and manage the freehold after completion. In my experience, that last part is too easily treated as tomorrow’s problem.

This guide explains the law currently in force in England and Wales. That qualification matters because the Leasehold and Freehold Reform Act 2024 contains major enfranchisement reforms, but many of them have not yet commenced.

Quick answer: What is collective enfranchisement?

Collective enfranchisement is the statutory right of qualifying flat owners to join together and compel the sale of their building’s freehold. The landlord does not have to agree, provided the building, leases and participating group satisfy the conditions in the Leasehold Reform, Housing and Urban Development Act 1993 and the correct procedure is followed.

Broadly, at least two-thirds of the flats must be held by qualifying long leaseholders, and the participating leaseholders must represent at least half of all the flats in the building. They nominate a purchaser—usually a company owned by the participants—which pays a premium for the freehold and any other interests included in the claim.

Contents

• What does buying the freehold mean?
• Why buy the freehold collectively?
• Does the building qualify?
• Who is a qualifying tenant?
• How many leaseholders must participate?
• How much does collective enfranchisement cost?
• How is the premium calculated?
• The collective enfranchisement process
• What happens to non-participating leaseholders?
• What happens after completion?
• Collective enfranchisement or Right to Manage?
• What if the freeholder is missing?
• What is changing under leasehold reform?
• Common mistakes and practical risks
• Frequently asked questions

What does buying the freehold mean?

There is not a separate freehold title for each flat. The freehold normally covers the building and the land included in its title. When leaseholders collectively enfranchise, their nominee purchaser acquires that freehold interest and may also have to acquire intermediate leasehold interests between the freeholder and the flat leases.

The expression “share of freehold” is useful shorthand, but it can cause confusion. Each participant still owns their flat under a lease. They also own a share in, or become a member of, the company that owns the freehold. The lease does not vanish: it continues to define the flat, grant rights and allocate repair, insurance and service-charge obligations.

This is why a share of freehold does not cure a short or defective lease by itself. The new freeholder can often grant participating owners very long replacement leases after completion, but the legal work still needs to be done. My guide asking whether a 125-year lease is long enough explains the distinction.

Why do leaseholders buy the freehold collectively?

The attraction is long-term control. The participant-owned freehold company can usually choose the managing agent, plan repairs, arrange insurance, control service-charge expenditure and make decisions with the building’s interests in mind. Participants may also grant themselves long leases at peppercorn rents, subject to mortgage-lender requirements and the company’s internal arrangements.

That can remove uncertainty about future ground rent and the cost of extending a diminishing lease. It may also make flats easier to sell, although “share of freehold” is not a guarantee of good management. Buyers and lenders will still examine the leases, company records, insurance, service-charge accounts and condition of the building.

Collective ownership also brings responsibility. Somebody must collect contributions, maintain the property, enforce covenants, keep company records and make decisions when neighbours disagree. The legal right is a route to ownership, not a promise that communal decision-making will always be harmonious.

Does the building qualify for collective enfranchisement?

The premises must generally be a self-contained building or a structurally distinct, self-contained part of a building capable of independent development. They must contain at least two flats, and at least two-thirds of the total flats must be held by qualifying tenants.

Under the law currently in force, the non-residential internal floor area must not exceed 25% of the building’s total internal floor area, excluding common parts. Shops, offices and other commercial areas can therefore prevent a claim. This is different from Right to Manage, where a 50% limit has applied since March 2025.

Measuring a mixed-use building is not always straightforward. Storage, basements, shared corridors and spaces serving both residential and commercial occupiers can create difficult questions. A professional measurement may be sensible before an expensive claim is started.

There are statutory exclusions. One can apply to certain converted buildings containing no more than four flats where the same person has owned the freehold since before the conversion and occupies a qualifying flat as their only or principal home. Other specialised exclusions include some National Trust property, cathedral precincts and certain Crown or railway interests. Unusual buildings require individual checking.

Who is a qualifying tenant?

A qualifying tenant is usually a flat owner whose lease was originally granted for more than 21 years. It is the original term that matters rather than the number of years now left. A lease granted for 99 or 125 years can therefore qualify even when it has become short.

Residence is not required, so a landlord who lets out their flat can qualify. Joint owners count together as the qualifying tenant of that flat. However, business tenancies and certain other leases are excluded. A person who owns long leases of three or more flats in the building is also excluded from being a qualifying tenant for this purpose.

There has not generally been a two-year ownership requirement for a qualifying tenant joining a collective enfranchisement claim. Since 31 January 2025, the separate two-year wait that formerly affected an individual flat owner’s statutory lease-extension claim has also been removed. In a collective claim, the critical questions remain whether the lease and leaseholder qualify and whether the building and participation thresholds are met.

How many leaseholders must participate?

The participating qualifying tenants must represent at least half of the total number of flats in the building. The test is not half of the qualifying flats. In a ten-flat building, leaseholders of at least five flats must participate. In a building containing only two flats, both must join the claim.

The number needed to begin is not necessarily the number that makes the project comfortable. If the group only just reaches the threshold, each person’s contribution may be substantial and one withdrawal can place the claim at risk. Wider participation spreads the premium and costs and may make the freehold company more representative.

Before serving notice, the participants should enter into a participation agreement. This usually records how the premium and expenses will be divided, who makes decisions, what happens if somebody withdraws or sells, how additional participants may join and how the freehold will be owned after completion.

I would not rely on goodwill alone, even in a friendly building. People’s finances, moving plans and enthusiasm change. A clear written agreement protects the project and the relationships behind it.

How much does collective enfranchisement cost?

Participants must budget for the purchase premium, their own solicitor and specialist valuer, the landlord’s recoverable reasonable legal and valuation costs, Land Registry charges and any tax due on the acquisition. There may also be company, conveyancing, lender and management-planning expenses.

Under current law, the participating leaseholders generally pay the landlord’s reasonable costs of investigating their right to enfranchise, valuing the interest and conveying it. They do not ordinarily pay the landlord’s costs of negotiating the premium or fighting tribunal proceedings. A government consultation is addressing the future replacement of this costs regime, but that reform is not yet the basis on which a current claim should be budgeted.

The initial notice proposes a price, but that is an opening statutory figure rather than the final budget. It should be realistic and based on valuation advice. If the landlord demands a deposit, the nominee purchaser must generally pay 10% of the price proposed in the notice or £250, whichever is greater.

Each participant needs to understand what they may have to contribute and when. A contingency fund is sensible because valuation negotiations, title complications or tribunal proceedings can increase costs.

How is the collective enfranchisement premium calculated?

The statutory valuation is technical and should be undertaken by a surveyor experienced in leasehold enfranchisement. It is not simply the open-market value of the bricks, roof and land.

Under the present valuation rules, the premium may include:

• the capitalised value of the ground rents the landlord will lose;
• the present value of the landlord’s right to receive the flats back when their leases expire;
• marriage value for participating flats with leases of 80 years or less;
• the value of intermediate interests that must be acquired; and
• compensation for other loss, which can include development value in an appropriate case.

Marriage value reflects the additional value created by combining the leasehold and freehold interests. Under current law, it is generally shared equally between landlord and participating leaseholders where a participating lease has 80 years or less remaining. The Leasehold and Freehold Reform Act 2024 provides for its abolition, but that valuation reform has not yet been brought fully into force.

Non-participating flats remain subject to their leases. Their ground rents and reversionary value pass with the freehold to the nominee purchaser, and “hope value” may arise in the statutory calculation because those owners might seek lease extensions later.

The valuation date is fixed when the section 13 initial notice is served. Lease length, property values and other assumptions are considered at that date, which is another reason not to improvise the figure in the notice.

The collective enfranchisement process step by step

1. Check eligibility and assemble the group

The leases, freehold and intermediate titles, building layout, commercial proportion and ownership of every flat should be checked. The group then decides who will participate, how contributions will be calculated and who will act as the nominee purchaser.

2. Put the ownership arrangements in place

The nominee purchaser can be an individual, but it is usually a company formed for the purpose. The participants should agree its share or membership structure, voting rules, directors and treatment of future flat sales. A participation agreement should be completed before anyone becomes committed to substantial expense.

3. Obtain specialist valuation advice

The valuer estimates a realistic premium, advises on the figure to place in the notice and may inspect development potential or mixed-use areas. An unrealistically low offer can jeopardise the notice; an unnecessarily high one weakens the negotiating position and increases the deposit that can be demanded.

4. Serve the section 13 initial notice

The nominee purchaser serves the prescribed notice on the competent landlord. It identifies the premises and participants, states the interests to be acquired, names the nominee purchaser, proposes a price and specifies the deadline for the landlord’s counter-notice.

The initial notice creates legal obligations and fixes the valuation date. It should not be served merely to discover what price the landlord might accept.

5. Provide evidence and pay any deposit

The landlord may require evidence of the participating tenants’ titles and payment of the statutory deposit. Deadlines apply, and failure to comply can have serious consequences for the claim.

6. Receive the section 21 counter-notice

The counter-notice deadline must be at least two months after the initial notice. The landlord must state whether the right is admitted and, if so, which terms are accepted or disputed. If entitlement is denied, reasons must be given.

7. Negotiate the premium and terms

The parties’ valuers usually negotiate the price while the solicitors deal with the extent of the property, rights, leasebacks, title matters and the transfer. Agreement may be possible without tribunal proceedings.

8. Apply to the tribunal if necessary

If the disputed terms are not settled, either side may apply to the appropriate tribunal. The application must normally be made no earlier than two months and no later than six months after the counter-notice date. Missing the six-month deadline usually means the claim is deemed withdrawn.

In England, the First-tier Tribunal (Property Chamber) determines the disputed price and terms. In Wales, the relevant forum is the Leasehold Valuation Tribunal.

9. Complete the purchase

Once the terms are agreed or finally determined, further statutory deadlines govern the contract and completion stages. If the landlord fails to give a counter-notice or will not complete, court applications may be required. The professional team should diary every deadline from the outset.

The Leasehold Advisory Service guide to buying the freehold of flats provides further official guidance on preparation, valuation and procedure.

What happens to leaseholders who do not participate?

A non-participant keeps their existing lease and remains a leaseholder. They do not contribute to the purchase and do not automatically receive a share in the freehold company. After completion, the participant-owned nominee purchaser becomes their landlord and acquires the benefit of their ground rent and lease covenants.

Non-participants continue paying service charges and any ground rent required by their leases. They retain their individual statutory right to seek a lease extension if eligible. The freehold company may agree to let them join or grant a new lease later, but the price and terms require careful handling. The directors must consider their duties to the company rather than simply giving away value belonging to the original participants.

The relationship should be thought through before the claim. A building can become divided if participants assume they have “rescued” everyone while non-participants feel that a new group of neighbours has simply replaced the old landlord.

What happens after buying the freehold?

The nominee purchaser becomes the freeholder and landlord under the leases. If it is a company, its directors must comply with company law as well as the landlord’s obligations. The building still needs insurance, maintenance, service-charge budgets, accounts, consultation on major works and enforcement of lease covenants.

The participants will commonly grant themselves long leases—often 999 years—with peppercorn ground rents. Mortgage lenders’ consent or involvement may be needed, and the leases should be reviewed for defects rather than extended blindly. My lease extension guide explains why lease length and drafting continue to matter.

Good governance is essential. The company’s articles and any shareholders’ agreement should cover voting, directors, expenditure, flat sales and deadlock. Management decisions should remain separate from personal disagreements between neighbours. My wider leasehold property guide explains the continuing rights and responsibilities.

Collective enfranchisement or Right to Manage?

Collective enfranchisement buys the freehold. Right to Manage transfers specified management functions without transferring ownership and without paying a purchase premium. RTM therefore tends to be cheaper and may be suitable where the main concern is poor or expensive management.

Freehold ownership offers broader and more permanent control, including control of the reversion and the ability to grant new leases. It also requires funding the premium and satisfying the enfranchisement rules. Notably, a mixed-use building may now qualify for RTM with up to 50% non-residential floor area while still failing the current 25% test for collective enfranchisement.

My updated guide explains how the Right to Manage works. The two rights are not mutually exclusive: a building that has acquired RTM may later pursue the freehold if it qualifies.

Can leaseholders buy the freehold if the landlord is missing?

Potentially, yes. Where the relevant landlord cannot be found after reasonable enquiries, qualifying leaseholders may apply to the County Court for a vesting order. The tribunal will usually determine the premium, which is then paid as directed before the interest is transferred.

The applicants must produce evidence of genuine tracing efforts. A returned letter and a quick online search are unlikely to be enough on their own. My guide to an absent freeholder explains the tracing and vesting-order route in more detail.

What is changing under leasehold reform?

The Leasehold and Freehold Reform Act 2024 contains major changes intended to make enfranchisement cheaper and more accessible. These include a new valuation system, abolition of marriage value, a 990-year standard statutory lease-extension term, changes to landlord costs and an increase in the permitted non-residential proportion for collective enfranchisement.

Most of those changes require commencement regulations and further detail before they operate. As at July 2026, the current 25% commercial limit, existing valuation method—including marriage value at 80 years or less—and current landlord-costs regime still matter to collective enfranchisement claims.

The distinction is easy to miss because some 2024 Act reforms are already live. The two-year ownership requirement for relevant lease-extension and freehold claims ended on 31 January 2025, while separate Right to Manage reforms commenced on 3 March 2025. That does not mean the entire 2024 Act is in force.

The House of Commons Library leasehold reform briefing tracks implementation. Anyone close to serving a notice should check the commencement position at that time rather than relying on an undated summary.

Common mistakes and practical risks

Confusing the 25% and 50% commercial limits

The current collective enfranchisement limit remains 25%. The 50% limit already applies to Right to Manage, not yet to an ordinary collective freehold claim. A mixed-use building can therefore qualify for one right but not the other.

Counting half of the qualifying leaseholders

The participating group must represent at least half of all flats in the building. Count the flats and ownership structure carefully, including any leaseholder who owns three or more flats and may therefore be excluded as a qualifying tenant.

Serving notice before the group is financially ready

A section 13 notice is not a free valuation exercise. The claim carries costs, deposit requirements and deadlines. Withdrawal can leave the participants responsible for costs and unable to make a fresh claim for a period.

Failing to agree what happens afterwards

Disputes about shares, voting, lease extensions and future sales can undo much of the benefit. The participation agreement and freehold company structure deserve as much attention as the claim notice.

Assuming all leases can simply be replaced

New leases affect valuable property rights and mortgage security. Their plans, rights, repair obligations and service-charge machinery must work across the whole building. A defective lease multiplied across every flat is not an improvement.

Frequently asked questions

Buying together means planning together

Collective enfranchisement can replace an unsatisfactory or remote landlord with genuine long-term control. It can also protect lease lengths and give flat owners a stronger voice over the place they call home. Those are substantial benefits.

The strongest claims begin with more than enough signatures. They begin with a realistic valuation, secure funding, a written participation agreement and a shared understanding of how the building will be governed after completion. Buying the freehold is the finish line for the statutory claim, but it is the starting point for collective ownership.

Last legally reviewed: 29 July 2026

This guide is based on general principles of English and Welsh law, is intended for informational purposes only, and does not constitute legal advice or establish a professional relationship.

About the author, Clare Lowes