Collective Enfranchisement
Expert support for leaseholders seeking to purchase the freehold of their building through collective enfranchisement, giving you full control over your property.
What Is Collective Enfranchisement?
Collective enfranchisement is the legal right that allows qualifying leaseholders in a block of flats to collectively purchase the freehold of their building from the freeholder. This right is established under the Leasehold Reform, Housing and Urban Development Act 1993 and has been enhanced by subsequent legislation including the Leasehold and Freehold Reform Act 2024.
When leaseholders successfully complete the collective enfranchisement process, they gain ownership of the freehold through a nominee purchaser company. This gives them complete control over the management of the building, including decisions about building maintenance, service charge budgets, block insurance, and the appointment of a managing agent. They can also grant themselves new long leases, typically for 999 years at a peppercorn ground rent, which can significantly increase property values.
At Block, we support leaseholders through every stage of the collective enfranchisement process and provide professional block management services once the freehold has been acquired. Many of the buildings we manage today were originally acquired through collective enfranchisement, and we understand the unique needs of leaseholder-owned buildings.
Qualifying Criteria
Not every building or group of leaseholders qualifies for collective enfranchisement. The key qualifying criteria under the 1993 Act are:
The Leasehold and Freehold Reform Act 2024 is expected to simplify these criteria further as its provisions come into force. If you are unsure whether your building qualifies, our team can assess your situation and advise on your options.
The Collective Enfranchisement Process
The collective enfranchisement process follows a structured legal framework. While it can seem daunting, having experienced professional support makes the process manageable. Here are the key steps:
1. Gauge leaseholder interest and confirm eligibility
The first step is to establish whether sufficient leaseholders are interested and whether the building meets the qualifying criteria. An initial meeting or survey of leaseholders can determine participation levels.
2. Form a nominee purchaser company
Participating leaseholders form a company (usually a company limited by guarantee) to act as the nominee purchaser. This company will hold the freehold on behalf of the participating leaseholders once the purchase is complete.
3. Obtain a professional valuation
A specialist leasehold valuation surveyor assesses the premium payable for the freehold based on the building value, unexpired lease terms, ground rents, and marriage value where applicable.
4. Serve an Initial Notice on the freeholder
The nominee purchaser company serves a formal Section 13 notice on the freeholder, setting out the proposed purchase price and terms. This is a legally binding step that triggers the statutory process.
5. Freeholder responds with a Counter-Notice
The freeholder has two months to respond with a counter-notice, either accepting the proposed terms, proposing alternative terms, or challenging the claim on eligibility grounds.
6. Negotiate or apply to the Tribunal
If the parties cannot agree on the premium, negotiations continue. If agreement is not reached within the statutory timeframe, either party can apply to the First-tier Tribunal for a determination of the premium payable.
7. Complete the purchase
Once terms are agreed or determined, solicitors complete the conveyance of the freehold to the nominee purchaser company. The freehold is then registered at the Land Registry.
Collective Enfranchisement Costs
Understanding the costs involved in collective enfranchisement is essential for leaseholders considering this route. The main costs include:
- The premium (purchase price) paid to the freeholder, calculated using the statutory formula
- Legal fees for the leaseholders' solicitor handling the claim
- The freeholder's reasonable legal and valuation costs, which leaseholders are required to pay
- Valuation fees for assessing the premium
- Company formation and administration costs for the nominee purchaser
- First-tier Tribunal fees if the premium cannot be agreed through negotiation
- Stamp Duty Land Tax on the purchase price where applicable
The total cost is shared among participating leaseholders, making collective enfranchisement more affordable when more leaseholders participate. Individual contributions vary depending on the number of participants and the value of each flat and its remaining lease term.
The long-term financial benefits often outweigh the initial costs. Once the freehold is acquired, leaseholders can grant themselves new 999-year leases at a peppercorn ground rent, eliminating future ground rent payments and significantly increasing property values. The building also benefits from being managed by its own residents rather than an external freeholder.
After Purchasing the Freehold
Once collective enfranchisement is complete and the freehold is transferred to the nominee purchaser company, the leaseholders effectively become their own landlord. This brings significant advantages but also new responsibilities:
Many freehold-owning groups choose to appoint a professional block management company to handle the day-to-day management of the building. This ensures that building maintenance, service charge administration, compliance, and block insurance are all handled professionally while the directors retain strategic oversight.
At Block, we specialise in managing leaseholder-owned buildings. We understand the unique dynamics of resident-managed blocks and work closely with directors to deliver transparent, accountable property management. For more on how we can help after your freehold purchase, visit our freeholder and leaseholder rights page or contact our team directly.
Frequently Asked Questions About Collective Enfranchisement
What is collective enfranchisement?
Collective enfranchisement is the legal process by which qualifying leaseholders in a block of flats can collectively purchase the freehold of their building. The right is granted under the Leasehold Reform, Housing and Urban Development Act 1993. Once the freehold is acquired, the leaseholders gain full control over the management of the building, including the ability to grant themselves new long leases, set service charges, and appoint their own managing agent.
How many leaseholders are needed for collective enfranchisement?
To exercise the right to collective enfranchisement, at least two-thirds of the flats in the building must be held by qualifying tenants, and at least half of the qualifying tenants must participate in the claim. For example, in a building with 12 flats where 10 are held by qualifying tenants, at least 5 of those qualifying tenants must participate. The Leasehold and Freehold Reform Act 2024 may further simplify these requirements as its provisions come into force.
How much does collective enfranchisement cost?
The cost of collective enfranchisement includes the purchase price of the freehold (the premium), legal fees for both the leaseholders and the freeholder, valuation fees, and any tribunal costs if the premium cannot be agreed. The premium is based on a statutory formula that considers the value of the freeholder's interest, the unexpired lease terms, and marriage value where applicable. Costs can range from tens of thousands to hundreds of thousands of pounds depending on the building.
What are the qualifying criteria for collective enfranchisement?
For collective enfranchisement, the building must contain at least two flats, at least two-thirds of the flats must be held by qualifying tenants, and at least half of those qualifying tenants must participate. A qualifying tenant is generally someone who holds a long lease (originally granted for more than 21 years). Certain buildings are excluded, such as those with more than 25 percent non-residential floor space or buildings within a cathedral precinct.
What happens after leaseholders buy the freehold?
After completing collective enfranchisement, the participating leaseholders (through their nominee purchaser company) become the freeholder of the building. They gain control over building management, insurance, service charges, and maintenance decisions. They can grant themselves new 999-year leases at a peppercorn ground rent, appoint their own managing agent, and make decisions about major works without needing external landlord consent. Many freehold-owning groups choose to appoint a professional block management company to handle day-to-day management.
Can a freeholder block collective enfranchisement?
A freeholder cannot block a valid collective enfranchisement claim. If the qualifying criteria are met and the correct legal process is followed, the freeholder is legally required to sell the freehold to the nominee purchaser. The freeholder can challenge the claim on the grounds that the qualifying criteria are not met, or dispute the premium offered, but they cannot simply refuse to sell. Disputes over the premium are resolved by the First-tier Tribunal.
Considering Collective Enfranchisement?
Our team provides expert guidance through every stage of the collective enfranchisement process, from initial assessment to ongoing block management after the freehold purchase.