Collective Enfranchisement: Buying Your Freehold Together
A comprehensive guide to the collective enfranchisement process for enfranchisement leasehold properties. Understand the collective enfranchisement requirements, costs, and how to work with collective enfranchisement solicitors to purchase your building's freehold.
What Is Collective Enfranchisement?
Collective enfranchisement is the legal right that allows a group of qualifying leaseholders to jointly purchase the freehold of their building. This right is established under the Leasehold Reform, Housing and Urban Development Act 1993 and gives leaseholders the power to take full control of the enfranchisement property they live in, rather than remaining dependent on an external freeholder for management decisions, service charges, and building maintenance.
Once enfranchisement leasehold rights are exercised successfully, the participating leaseholders own the freehold through a nominee purchaser company. This means they can grant themselves new 999-year leases at a peppercorn ground rent, choose their own managing agent, set their own service charge budgets, and make all decisions about the building's future without seeking freeholder consent. It is one of the most powerful rights available to leaseholders in England and Wales.
This guide is designed as a deeper resource for leaseholders exploring collective enfranchisement. For an overview of our professional support services, visit our collective enfranchisement service page. You can also learn more about your statutory entitlements in our leaseholder rights guide.
Do You Qualify? Collective Enfranchisement Requirements
Before pursuing collective enfranchisement, you need to confirm that both your building and the participating leaseholders meet the statutory collective enfranchisement requirements. The qualifying criteria under the 1993 Act are as follows:
The 2 year rule for enfranchisement means that recent purchasers must wait before they can be counted as qualifying tenants. However, the Leasehold and Freehold Reform Act 2024 includes provisions to abolish this requirement, allowing new owners to participate immediately once the relevant provisions come into force.
If you are unsure whether your building meets the collective enfranchisement requirements, speak to experienced collective enfranchisement solicitors who can assess your eligibility. Our team at Block can also provide an initial assessment and recommend specialist legal professionals. For further context on freehold ownership structures, see our freehold management guide.
The Collective Enfranchisement Process Step by Step
The collective enfranchisement process follows a structured legal framework under the 1993 Act. While it involves multiple stages and can take many months, having the right professional support makes each step manageable. Here is the process from start to finish:
1. Gauge interest and confirm eligibility
Survey the leaseholders in your building to establish whether enough qualifying tenants are willing to participate. You need at least half of the qualifying tenants to commit. At this stage, it is sensible to consult collective enfranchisement solicitors to confirm the building meets the qualifying criteria, including the 25 percent commercial limit and the two-thirds qualifying tenant threshold.
2. Form a nominee purchaser company
The participating leaseholders form a company (typically limited by guarantee) that will act as the nominee purchaser. This company will hold the freehold on behalf of all participants once the purchase completes. Each participant becomes a member of the company, and directors are appointed to manage the process.
3. Obtain a specialist freehold valuation
A qualified leasehold valuation surveyor assesses the premium payable for the freehold. The valuation considers the building value, unexpired lease terms, ground rents, and marriage value where leases have fallen below 80 years. This figure forms the basis of the proposed purchase price in the Initial Notice. You may also find a collective enfranchisement calculator useful for a rough estimate, though a professional valuation is essential.
4. Serve the Section 13 Initial Notice
The nominee purchaser company serves a formal Initial Notice (under Section 13 of the 1993 Act) on the freeholder. This notice sets out the proposed purchase price, the names of the participating leaseholders, and the terms of acquisition. It is a legally binding step that triggers strict statutory timeframes.
5. Negotiate, determine, and complete
The freeholder has two months to serve a counter-notice. If the parties cannot agree on the premium, negotiations take place between their respective surveyors. If agreement is still not reached, either party can apply to the First-tier Tribunal for a determination. Once the premium is settled, solicitors complete the conveyance and the freehold is registered at the Land Registry to the nominee purchaser company.
Disputes over the premium are resolved by the First-tier Tribunal, which can determine the price payable based on the statutory valuation methodology. For more information on your rights throughout this process, see our right to manage guide as an alternative route to building control.
How Much Does Collective Enfranchisement Cost?
The collective enfranchisement cost varies significantly depending on the building, the number of flats, existing lease lengths, and the ground rent payable. It is not possible to provide a single figure, but understanding the cost components helps leaseholders budget accurately. A collective enfranchisement calculator can offer a rough indication, though a professional valuation is always recommended for an accurate assessment.
- The premium (purchase price) paid to the freeholder, determined by a statutory formula that takes into account the capitalised value of ground rents, the value of the reversion, and marriage value where applicable
- Legal fees for the leaseholders' collective enfranchisement solicitors who manage the claim, serve notices, and complete the conveyance
- The freeholder's reasonable legal and valuation costs, which the participating leaseholders are required to pay under the 1993 Act
- Your own surveyor's valuation fees for assessing the freehold premium and negotiating with the freeholder's surveyor
- Nominee purchaser company formation and ongoing administration costs
- Stamp Duty Land Tax on the purchase price where applicable
- First-tier Tribunal fees if the premium cannot be agreed through negotiation
The total collective enfranchisement cost is shared among the participating leaseholders, with each individual's contribution typically proportionate to the value of their flat and remaining lease term. The more leaseholders who participate, the lower the cost per person. This is why building consensus early in the process is so important.
The long-term financial benefits of collective enfranchisement often far outweigh the upfront investment. Once the freehold is acquired, leaseholders eliminate ground rent payments, avoid future lease extension premiums, and gain the ability to grant themselves new long leases. For help understanding how costs are managed after purchase, visit our lease extension guide to see how the process compares with individual lease extensions.
Non-Participating Leaseholders and Commercial Elements
Not every leaseholder in a building needs to participate in the claim. However, the position of collective enfranchisement non participants and the treatment of commercial space are two areas that require careful attention during the process.
Non-Participating Leaseholders
Collective enfranchisement non participants are leaseholders who choose not to join the claim. Their existing leases continue on the same terms, and they are not required to contribute to the cost. However, they do not gain the benefits of freehold ownership, such as the ability to grant themselves a new long lease at a peppercorn ground rent.
After the freehold is purchased, non-participants become tenants of the nominee purchaser company. They retain all their existing statutory rights and can apply for a lease extension or join the company at a later date, subject to agreement with the existing participants.
Commercial Elements
A building qualifies for collective enfranchisement with commercial element provided that no more than 25 percent of the total internal floor area (excluding common parts) is used for non-residential purposes. This means many mixed-use buildings with ground-floor shops or offices can still qualify.
When a building includes commercial space, the valuation becomes more complex because the commercial element must be included in the freehold purchase. The premium reflects the value of both the residential leases and the commercial interests. Experienced collective enfranchisement solicitors and surveyors are essential for buildings with a commercial element to ensure the premium is accurately assessed.
Understanding these nuances is important for building a successful claim. For more on how resident-owned companies operate after the freehold purchase, see our residents' management company guide. If you are weighing up collective enfranchisement against other options for gaining building control, our right to manage guide explains the alternative route that does not require purchasing the freehold.
Frequently Asked Questions About Collective Enfranchisement
Is collective enfranchisement worth it?
Collective enfranchisement is generally worth it for leaseholders who want long-term control over their building and lower ongoing costs. Once the freehold is acquired, participating leaseholders can grant themselves new 999-year leases at a peppercorn ground rent, eliminating ground rent payments and significantly increasing property values. They also gain full control over service charges, building maintenance, and the appointment of a managing agent. While the upfront costs can be substantial, the combined savings on ground rent, lease extension premiums, and management fees often outweigh the initial investment within a few years.
How much does collective enfranchisement cost?
The cost of collective enfranchisement depends on several factors including the value of the building, the number of flats, the length of existing leases, the ground rent payable, and whether marriage value applies. The main costs include the premium paid to the freeholder, your solicitor's fees, the freeholder's reasonable legal and valuation costs (which the leaseholders must pay), your own surveyor's valuation fees, nominee purchaser company formation costs, and any First-tier Tribunal fees if the premium cannot be agreed. A specialist leasehold valuation surveyor can provide an accurate estimate based on your specific building.
How long does collective enfranchisement take?
The collective enfranchisement process typically takes between nine and eighteen months from start to completion. The initial stage of gauging leaseholder interest and confirming eligibility can take several weeks. Obtaining a professional valuation, forming the nominee purchaser company, and serving the Section 13 notice takes further time. The freeholder then has two months to serve a counter-notice. If the premium is agreed through negotiation, completion may follow within a few months. If either party applies to the First-tier Tribunal, the process can extend further. Having experienced collective enfranchisement solicitors helps keep the process on track.
How does collective enfranchisement work?
Collective enfranchisement works by allowing qualifying leaseholders to jointly purchase the freehold of their building under the Leasehold Reform, Housing and Urban Development Act 1993. At least half of the qualifying tenants must agree to participate, and the group forms a nominee purchaser company to hold the freehold. A specialist surveyor values the freehold, and the company serves a formal Section 13 Initial Notice on the freeholder with a proposed purchase price. The freeholder responds with a counter-notice, and the two parties negotiate or apply to the First-tier Tribunal to determine the premium. Once agreed, solicitors complete the conveyance and the freehold is registered to the nominee purchaser.
What is the 2 year rule for enfranchisement?
The 2 year rule for enfranchisement requires that a leaseholder must have owned their flat for at least two years before they can participate in a collective enfranchisement claim or exercise the right to a statutory lease extension. This ownership period runs from the date the lease was registered at the Land Registry. A leaseholder who has owned for less than two years does not count as a qualifying tenant for the purpose of collective enfranchisement. The Leasehold and Freehold Reform Act 2024 includes provisions to remove this two-year requirement, though these provisions may not yet be in force.
What is the 80 year rule for leasehold?
The 80 year rule refers to the threshold at which the cost of extending a lease increases significantly. When a lease falls below 80 years remaining, an additional element called marriage value becomes payable as part of the lease extension premium. Marriage value is the increase in property value that results from extending the lease, and the freeholder is entitled to 50 percent of this uplift. This is relevant to collective enfranchisement because leaseholders with shorter leases will see a higher share of the freehold premium allocated to their flat. Extending leases or pursuing collective enfranchisement before the 80-year threshold can save considerable money.
Ready to Buy Your Freehold Together?
Our experienced team can guide you through every stage of the collective enfranchisement process, from eligibility assessment to ongoing freehold management after purchase. Free initial consultation with no obligation.