Leasehold Enfranchisement: How to Buy the Freehold of Your Flat

Leasehold enfranchisement — the right of flat owners to collectively purchase the freehold of their building — is one of the most significant rights available to leaseholders in England and Wales. Done properly, it removes the freeholder from your building entirely, eliminates ground rent (or keeps it nominal), and gives you direct control over how the building is managed and maintained. Done badly, it can trigger expensive legal disputes, procedural failures that reset the clock, and falling-out among participating leaseholders.

This guide covers the entire process under the Leasehold Reform, Housing and Urban Development Act 1993 (LRHUDA 1993) as significantly amended by the Leasehold and Freehold Reform Act 2024 (LFRA 2024), which made the right more accessible and changed how the purchase premium is calculated.

What Is Collective Enfranchisement?

Collective enfranchisement is the legal right for a group of qualifying leaseholders in a building to compulsorily purchase the freehold from the freeholder. Unlike the individual right to extend a lease, collective enfranchisement gives you ownership of the building itself — including the common parts, the structure, and the land.

Once leaseholders own the freehold (through a company they control), they can:

• Manage the building themselves or appoint a managing agent of their choice
• Eliminate or reduce ground rent for existing leaseholders
• Grant new leases on the property at whatever length and terms they agree
• Extend their own leases at minimal cost (typically just professional fees)
• Make decisions about major works, insurance, and service charges without needing the freeholder's consent

It is, in short, a fundamental shift from being tenants of someone else's asset to being joint owners of your own building.

Qualifying Conditions

The Building Must Qualify

For collective enfranchisement to be available, the building must meet the following conditions under LRHUDA 1993:

• It must be a self-contained building or part of a building (i.e. capable of independent management)
• It must contain at least two flats
• At least two-thirds of the total flats must be held on qualifying leases (long leases — originally granted for more than 21 years)
• No more than 25% of the total internal floor area can be in non-residential use (shops, offices, etc.)

There is no longer a minimum number of flats required — even a two-flat building can enfranchise.

Individual Leaseholders Must Qualify

Each participating leaseholder must:

• Hold a long lease — one originally granted for more than 21 years
• Have owned the lease for at least two years before serving the initial notice

There is no longer a residence requirement — buy-to-let leaseholders can participate.

The Participation Threshold

At least 50% of the total flats in the building must be represented by participating leaseholders. So in a 10-flat building, at least 5 leaseholders must join. In a 3-flat building, at least 2 must join.

This is a minimum. More participants means lower costs per person and a stronger negotiating position. It also means the process is less vulnerable to a participant dropping out.

Setting Up the RTE Company

Participating leaseholders must act through a Resident Enfranchisement Company (commonly called an RTE company — Right to Enfranchise). This is a limited company incorporated specifically to acquire the freehold. Each participating leaseholder becomes a member.

The RTE company is straightforward to incorporate through Companies House — typically done by a solicitor for a few hundred pounds. Its articles of association should be tailored to the enfranchisement purpose.

Once the freehold is acquired, the RTE company becomes the freeholder and can continue to manage the building (with leaseholders as members/shareholders), or it can appoint an ARLA Propertymark or RICS-accredited managing agent.

The Collective Enfranchisement Process: Step by Step

Step 1: Establish Eligibility and Get Valuations

Before serving any notice, confirm that the building and all proposed participants meet the qualifying conditions. Instruct a specialist enfranchisement solicitor and a RICS-accredited valuer with experience in enfranchisement work.

The valuer will provide an estimate of the premium — the price the RTE company will pay for the freehold. This is crucial: you need to know the likely cost before committing to the process.

Step 2: Serve the Initial Notice (Section 13 Notice)

The RTE company serves a formal Initial Notice on the freeholder under Section 13 of LRHUDA 1993. This notice must:

• Identify the building and the participating leaseholders
• Specify the proposed purchase price (the premium the RTE company is offering)
• Include details of any intermediate leases (head leases)
• Specify a date for the freeholder to respond — this must be at least two months after the notice is served
• Be signed by or on behalf of all participating leaseholders

Serving the Section 13 notice is a significant legal step. It crystallises the leaseholders' rights and prevents the freeholder from selling the freehold to a third party without first offering it to the RTE company (the right of first refusal under the Landlord and Tenant Act 1987).

The notice also "freezes" any lease extension applications: once a Section 13 notice is served, individual lease extension notices cannot be served until the enfranchisement concludes (or fails).

Step 3: Freeholder's Counter-Notice (Section 21 Notice)

The freeholder must respond with a Counter-notice under Section 21 within the period specified in the Initial Notice (at least two months). In the Counter-notice, the freeholder must either:

• Admit the claim — accept that the leaseholders have the right to enfranchise and negotiate on the premium; or
• Deny the claim — challenge the leaseholders' right to enfranchise (e.g. disputing whether the qualifying conditions are met); or
• In limited circumstances, apply to court to claim the building for redevelopment (though this is rarely used and requires a firm redevelopment intention)

If the freeholder fails to serve a Counter-notice in time, the leaseholders can apply to the County Court for an order deeming the terms of the Initial Notice agreed.

Step 4: Negotiation

Once the freeholder has admitted the claim, the parties negotiate the premium and the other terms of acquisition (e.g. any intermediate leases, restrictive covenants to be imposed on the new freehold title).

Negotiation is typically conducted between surveyors/valuers rather than solicitors. Both sides will commission valuations. There is a statutory timetable: if terms are not agreed within two months of the Counter-notice, either party can apply to the First-tier Tribunal (Property Chamber) to determine the premium.

Step 5: First-tier Tribunal (If Disputed)

The FTT is an independent tribunal that determines enfranchisement disputes, including the premium where parties cannot agree. FTT hearings are less formal than court proceedings, but both parties will typically be represented by a valuer (and sometimes a solicitor or barrister). The FTT's determination is binding.

FTT proceedings add time and cost to the process — typically 3–9 additional months and £3,000–£15,000+ in professional fees per side. The FTT can also award costs in cases of unreasonable conduct.

Step 6: Completion

Once the premium and terms are agreed (by negotiation or FTT determination), completion takes place — usually within two months of the terms being finalised. The RTE company pays the premium and any other agreed sums, and the freehold is transferred.

How the Premium Is Calculated Under LFRA 2024

The LFRA 2024 made significant changes to premium calculation that make enfranchisement cheaper in most cases. The premium is based on:

1. The present value of the ground rent — the freeholder is compensated for losing future ground rent income, calculated using a prescribed capitalisation rate
2. The reversion value — the value of the freeholder's interest in the building reverting at lease expiry, discounted to present value
3. Marriage value — previously, if any participating lease had fewer than 80 years remaining, half the "marriage value" (the increase in value created by combining freehold and leasehold interests) had to be paid to the freeholder. LFRA 2024 abolished marriage value entirely for collective enfranchisement

The abolition of marriage value is the biggest practical change. For buildings with short leases, premiums can be substantially lower than they were under the old rules. For the full picture of what the LFRA 2024 changes — including 990-year leases, prescribed valuation rates, and the ground rent reforms — see our complete guide to the Leasehold and Freehold Reform Act 2024.

Prescriptive rates (set by regulation) now govern the capitalisation and deferment rates used in the calculation, replacing the previous approach where rates were argued before the Tribunal.

Typical Premium Ranges

These are indicative ranges only. Every building is different. Instruct an enfranchisement valuer early.

Collective Enfranchisement vs Individual Lease Extension: Comparison

For most leaseholders in a building where 50%+ would participate, collective enfranchisement is the better long-term outcome. The upfront complexity is higher, but the result — full control of the building — is transformative.

For more on individual lease extension rights, see our guide to extending your lease.

Freeholder's Rights During the Process

The freeholder cannot frustrate a valid enfranchisement claim, but they do retain certain rights:

• To challenge eligibility — if the building or leaseholders don't meet the qualifying conditions, the freeholder can serve a Counter-notice denying the claim and apply to the County Court
• To dispute the premium — the freeholder can argue for a higher premium before the FTT
• To impose reasonable covenants — the freeholder can require certain restrictive covenants be imposed on the new freehold title (e.g. restrictions on use)
• To apply for redevelopment — in very limited circumstances, the freeholder can apply to the court on the grounds that they intend to redevelop the building; the criteria are strict and this right is rarely exercised

What Happens After You Own the Freehold?

Once the RTE company owns the freehold, several things change:

Management

The building is now managed by the RTE company (owned by the leaseholders). You can manage the building yourselves (practical in small buildings of 4–6 flats) or appoint a professional managing agent. If you have an existing Right to Manage (RTM) company, it is automatically dissolved when you acquire the freehold — the RTM right merges with the freehold ownership.

For larger buildings (18 metres+), the RTE company as the new freeholder has obligations under the Building Safety Act 2022, including appointing an Accountable Person and maintaining the building safety case.

Lease Extensions

Each participating leaseholder (and later any qualifying leaseholder) can now extend their lease at minimal cost — typically just the professional fees (£500–£1,500 per flat), since the new freeholder (the RTE company, which they own) will grant extensions at nominal or peppercorn premium.

This is one of the most significant financial benefits of enfranchisement. Lease extensions from third-party freeholders are expensive; extending from a freeholder you collectively own is essentially free.

Non-Participating Leaseholders

Leaseholders who did not participate in the enfranchisement (because they didn't want to or didn't qualify) are not adversely affected — they continue to hold their leases on the same terms. They cannot, however, benefit from cheap lease extensions until the RTE company's articles of association (and associated deed of trust) set out the terms on which non-participants can later join.

Costs Summary

Total professional fees (excluding premium) typically run to £5,000–£15,000 for the RTE company as a whole, shared among participants.

Common Pitfalls and Risks

• Procedural errors in the Section 13 Notice — an invalid notice can be rejected, forcing you to start again and potentially losing costs already incurred. Always use a specialist solicitor.
• Participants dropping out — if enough participants withdraw to take you below the 50% threshold, the claim fails. Ensure participants are committed before serving notice.
• Underestimating the premium — a low initial offer in the Section 13 Notice that is far from the FTT's eventual determination can look opportunistic and increase costs risk.
• Ignoring intermediate leases — some buildings have head leases between the freehold and the individual flat leases. These must be dealt with as part of the enfranchisement and add complexity.
• Building Safety Act obligations — if your building is 18 metres or taller, you're taking on significant obligations as the new freeholder. Make sure the RTE company understands its duties under the Building Safety Act 2022 before completing.

Leasehold enfranchisement is one of the most financially significant decisions a leaseholder can make. Getting the right specialist solicitor and valuer is not optional — the process is too technical and the stakes too high for a DIY approach.

Related Guides

• Right to Manage: How Leaseholders Can Take Control — the no-fault alternative to enfranchisement: how RTM works, qualifying conditions, and when it's the better route
• Service Charges in Leasehold Flats: What's Reasonable and How to Challenge — once you own the freehold, managing service charges transparently is your responsibility; this guide explains the legal framework
• Ground Rent Reform: The Leasehold and Freehold Reform Act 2024 Explained — how the 2024 Act's abolition of marriage value and prescribed rates changes enfranchisement premiums
• Freehold vs Leasehold Flats UK: Service Charges, Ground Rent, and What Buyers Need to Know — for buyers who want the full leasehold picture before deciding whether to pursue enfranchisement or simply extend their lease
• Dilapidations Explained: What Commercial Tenants Need to Know — for leaseholders who also hold commercial property, or investors managing mixed portfolios: how FRI lease obligations and the Section 18(1) cap work on the commercial side