Collective Enfranchisement

Collective enfranchisement is the right of qualifying leaseholders in a block of flats to compulsorily purchase the freehold of their building. The right is established in Part 1 of the Leasehold Reform, Housing and Urban Development Act 1993. It requires a qualifying group of leaseholders to participate and a nominee purchaser — typically a company formed by those leaseholders — to take title to the freehold.

Unlike Right to Manage, which transfers management functions only and leaves ownership with the freeholder, collective enfranchisement transfers the freehold itself. After a successful claim, the leaseholders' company becomes the freeholder of the building. They may then grant themselves extended leases on terms they choose, manage the building without a third-party landlord, and control the service charge regime as the entity responsible for management.

Who Qualifies: Building Criteria

The building must be a self-contained building or a self-contained part of a building. It must contain at least two flats. At least two-thirds of the total number of flats in the building must be held by qualifying tenants. Not more than 25% of the total internal floor area of the building (excluding common parts) may be in non-residential use — this is the current threshold under the 1993 Act. The Leasehold and Freehold Reform Act 2024 contains provisions to raise this threshold for collective enfranchisement, but commencement has not been announced as at June 2026; the current 25% threshold therefore applies.

Certain buildings are excluded. A building where the freeholder owns the freehold together with any other land and the building does not constitute the whole of the freehold may require careful analysis. Where the freehold is owned by a resident landlord — that is, the freeholder occupies a flat in the building as their only or principal home and the building contains no more than four units — the right to enfranchise does not apply.

Who Qualifies: Leaseholder Criteria

A qualifying tenant is a leaseholder whose lease was originally granted for a term of more than 21 years. At least 50% of the total number of qualifying tenants in the building must participate in the claim. Where there are only two qualifying tenants in the building, both must participate. Non-participating qualifying tenants do not prevent the claim from proceeding, but their flats are counted in calculating the 50% threshold.

The two-year ownership requirement for enfranchisement — the requirement to have owned the flat for at least two years before making a claim — was removed with effect from 31 January 2025 by section 27 of the Leasehold and Freehold Reform Act 2024 (SI 2025/57). A qualifying tenant who has owned their flat for any period may now participate in an enfranchisement claim. A leaseholder who holds more than two flats in the building does not count as a qualifying tenant for the purposes of the 50% participation threshold.

How It Works

The collective enfranchisement process under the 1993 Act proceeds as follows. The participating qualifying tenants form a nominee purchaser — usually a company limited by guarantee incorporated for the purpose. A specialist leasehold valuer is instructed to value the freehold on the statutory basis; the valuation determines the offer price in the Initial Notice.

An Initial Notice is served on the landlord (and on any intermediate landlord, if the building is held under a head lease structure). The notice must identify the property, the participating qualifying tenants and their leases, the proposed terms of acquisition including the purchase price, and the nominee purchaser. Once served, the Initial Notice triggers a protected period during which the freeholder cannot sell the freehold to a third party without first offering it to the nominee purchaser.

The landlord has two months to serve a Counter-Notice, admitting the claim, admitting it in part, or disputing it. If the purchase price cannot be agreed between the parties, either may apply to the First-tier Tribunal for a determination of the price and terms. If no counter-notice is served within the required period, or if the claim is admitted, the matter proceeds to conveyancing. On completion, the nominee purchaser takes title to the freehold.

Costs and the Purchase Price

The price payable for the freehold is calculated on the statutory basis under Schedule 6 of the 1993 Act. It comprises the value of the landlord's reversionary interest; marriage value, where applicable, calculated as 50% of the increase in the aggregate value of the leaseholders' interests and the freehold created by the merger of those interests; and compensation for any other loss suffered by the landlord (such as the diminution in value of other property he holds). Marriage value arises where any qualifying tenant holds a lease with fewer than 80 years unexpired.

As at June 2026, marriage value remains payable under the current law. The Leasehold and Freehold Reform Act 2024 abolishes marriage value from enfranchisement premiums, but the valuation provisions of the Act are not in force — they require secondary legislation that has not been made. In a building where leaseholders hold short leases, the marriage value component can substantially increase the enfranchisement price under the current rules.

The participating tenants bear their own professional costs (solicitor and surveyor) and the landlord's reasonable costs in connection with the claim. Under provisions of the LFRA 2024, some changes to landlord cost recovery in enfranchisement proceedings are anticipated, but their commencement status should be verified on the Reform Tracker.

What Happens After the Freehold Is Acquired

Once the nominee purchaser company holds the freehold, the participating leaseholders — through their company — are in control of the building. They may grant themselves extended leases, typically for 999 years at a peppercorn ground rent, which eliminates both ground rent and short-term lease concerns. They may appoint their own managing agents or manage the building directly. The obligations of the Landlord and Tenant Act 1985 — service charges, Section 20 consultation, and the rights to information — continue to apply to the nominee purchaser company in its capacity as the new landlord.

Qualifying tenants who did not participate in the enfranchisement retain their existing leases and statutory rights. They may subsequently approach the nominee purchaser company to extend their leases on statutory or negotiated terms. As the freeholder is now a company controlled by fellow leaseholders, these negotiations are typically more straightforward than dealings with a commercial freeholder, though the 1993 Act process applies in the same way if needed.