Collective Enfranchisement: How Flat Owners Can Buy Their Building

Collective enfranchisement lets leaseholders buy their building's freehold together. How it works, who qualifies, and cost per flat.

What Is Collective Enfranchisement?

Collective enfranchisement is the right of qualifying leaseholders in a block of flats to buy the building's freehold together, whether or not the freeholder wants to sell. It comes from Chapter I of the Leasehold Reform, Housing and Urban Development Act 1993. Once the purchase completes, the leaseholders (usually through a company they own) become the landlord: they collect the ground rents, appoint the managing agent and decide how the building is insured and maintained.

It is a different right from a lease extension. An extension buys more time on your own flat from the existing freeholder; collective enfranchisement buys out the freeholder altogether. It is also different from the Right to Manage, which hands you the management of the building but leaves the freehold with the landlord (see our Right to Manage guide).

Does Your Building Qualify?

Two sets of tests apply: one for the building and one for the people making the claim.

The building

• Self-contained: the premises must be a self-contained building, or a self-contained part of a building (a vertical slice that could be redeveloped independently).
• Two or more flats: at least two flats must be held by qualifying tenants.
• Two-thirds qualifying: the flats held by qualifying tenants must make up at least two-thirds of all the flats in the building.
• Non-residential limit: no more than 25% of the internal floor area may be non-residential (shops, offices and so on, ignoring common parts). The 2024 Act raises this limit to 50% for the Right to Manage, and that change has been in force since 3 March 2025, but for collective enfranchisement the limit remains 25%.
• Resident landlord exception: a building with no more than four units can be excluded if the freeholder, or an associated person, lives in one of the flats and has done so as their only or principal home for at least the previous 12 months. Check the current rules before relying on or arguing about this exception.

The people

• Qualifying tenant: broadly, someone who owns a flat on a long lease (originally granted for more than 21 years). Having a mortgage or sharing ownership with a partner does not stop you qualifying.
• Participation: the initial notice must be given by qualifying tenants of at least half of the flats in the building. Each participating tenant must be a qualifying tenant of a flat; non-qualifying leaseholders and the freeholder cannot be counted.
• The two-year rule has gone: until 31 January 2025 a tenant needed to have owned their lease for two years to take part. That requirement was removed by the 2024 Act (SI 2025/57), so newer owners can now join.

Step by Step: How a Claim Runs

1. Canvass your neighbours. Find out who qualifies and who is willing to take part, and agree in writing how the cost will be shared. Equal shares are common, but a flat with a shorter lease, a bigger flat or a share of the roof space can reasonably carry a different share.
2. Appoint a nominee purchaser. The claim is made through a nominee purchaser, usually a newly formed company (often called a RTE company) whose members are the participating leaseholders. The nominee buys the freehold on behalf of the participants.
3. Instruct a specialist solicitor and a RICS valuer. You need a valuation of the freehold under the statutory formula before you can propose a price in the notice. See the section on price below.
4. Serve the initial notice (section 13). The notice goes on the freeholder, and on any other landlords or those with an interest in the building. It identifies the premises, the participating tenants and nominee purchaser, the price you propose and any leaseback proposals. It must give a date, at least two months away, by which the freeholder must respond with a counter-notice.
5. Counter-notice (section 21). The freeholder either admits your right to buy, usually with counter-proposals on price and terms, or rejects the claim, giving grounds. If they do not serve a counter-notice at all, you can apply to the court for an order that the freehold be transferred on the terms of your notice (section 22), but you need to act within six months of the counter-notice deadline.
6. Negotiate, or apply to the Tribunal. If the freeholder admits the claim but terms are not agreed, either side can apply to the First-tier Tribunal to determine whatever is still in dispute, between two and six months after the counter-notice date. Most cases that reach this stage settle before a hearing.
7. Complete. The freehold is transferred to the nominee purchaser. Once terms are agreed or determined, the statutory timetable obliges both sides to complete promptly. A straightforward claim often takes six to twelve months from the notice, and disputed ones longer.

Be aware that the notice is a formal document with a strict content list. A defective notice can be invalid, which is one reason these claims are almost always run by a specialist solicitor.

What Does the Freehold Cost?

The statutory price (Schedule 6 to the 1993 Act) has the same building blocks as a lease extension premium, calculated for the building as a whole:

• Capitalised ground rents: the present value of all the ground rents the freeholder will lose over the remaining terms.
• Reversion: the freeholder's right to the flats back when the leases end, discounted to today. For a building of long leases this is small; for short leases it is large.
• Marriage value: where participating leases have 80 years or fewer left, the freeholder is entitled to 50% of the uplift in value created by merging the interests. As with an individual extension, this is the main reason short leases push the price up sharply.
• Compensation: in some cases the freeholder can claim compensation for losses that follow from the sale, for example where they own other nearby property.

On top of the price you pay your own solicitor and valuer, and you are normally also liable for the freeholder's reasonable professional costs of the claim under section 33. The 2024 Act would remove that liability for freeholder costs on enfranchisement claims, but that change is not in force, so budget for both sides. If the claim fails or you withdraw, you can still be liable for those costs, which is why participants usually agree a cost-sharing and withdrawal arrangement up front.

What Changes After You Own the Freehold?

• No more ground rent to a third party. Ground rent that was paid to the freeholder is now due to your own company, and the participants can agree to waive it.
• Longer leases. Participating leaseholders can grant themselves new, much longer leases, commonly 999 years at a peppercorn rent. This is done by agreement among the owners rather than by statutory formula, so the terms and cost should be settled in your agreement and company articles, and the legal work still has to be done.
• Control of management. You choose the managing agent (or self-manage), set the service charge budget and arrange the building insurance. You also take on the landlord's responsibilities: repairs, health and safety, fire safety and, for higher-risk buildings, the regime under the Building Safety Act.
• Directors' duties. Running a company that owns the building carries legal duties, and disagreements between neighbours become governance disagreements. See our guides to share of freehold and leasehold versus freehold.

What About Neighbours Who Don't Join?

Qualifying tenants who do not take part keep their existing leases, and the nominee purchaser becomes their landlord on the same terms. Non-participants are not automatically entitled to a cheap extension: if they want a longer lease later they will usually have to pay a premium to the new owner, either by agreement or under the statutory right, and the new owner is their neighbours. The freeholder may also be able to require leaseback arrangements for certain flats, so it pays to have the position clear early. Remember too that the freeholder's price is assessed on the whole building, so each participant's share of the cost goes up if fewer neighbours take part.

Alternatives to Consider

• Right of first refusal. If the freeholder decides to sell, a majority of the qualifying tenants can have a right to buy first under Part I of the Landlord and Tenant Act 1987. It does not usually apply to every building, so take advice, but it can be a cheaper route than a compulsory claim.
• Voluntary sale. Some freeholders will sell on agreed terms, which avoids the notice formalities (and the risk of an invalid notice).
• Individual lease extensions. If only a minority want to act, extending each lease separately is simpler. See Should I wait or extend now?
• Right to Manage. If the main problem is service charges and management, not ownership, the Right to Manage can fix it without buying the freehold.