Why consider buying the freehold?

Collective enfranchisement gives qualifying leaseholders the right to join together to buy the freehold of their building. If the building and leaseholders meet the legal requirements, the landlord can be compelled to sell the freehold to the participating leaseholders. Buying the freehold can give flat owners greater long-term control over their building, its management and its future.

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Property value and lease terms

Owning a share of the freehold can help protect and enhance the value of individual flats. Once the freehold has been acquired, the participating leaseholders may be able to grant themselves longer leases, often for 999 years, at a peppercorn ground rent. This can be particularly valuable where existing leases are short, approaching 80 years, or contain ground rent terms that may affect saleability or mortgageability. Any lease extensions or amendments after the freehold has been acquired should be properly documented by a solicitor.

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Maintenance and service charges

When leaseholders own the freehold collectively, they can have greater influence over how the building is maintained and how service charge money is spent.

This may include decisions about:

• repairs and maintenance;

• obtaining quotes;

• choosing contractors;

• appointing or replacing managing agents;

• planning future works;

• setting appropriate budgets and reserve funds.

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Collective ownership does not remove the need to comply with the leases, consultation requirements, health and safety obligations, or landlord and tenant legislation. However, it can give leaseholders more direct control over how those responsibilities are managed.

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Buildings insurance

After buying the freehold, the new freehold owner may be able to review the building’s insurance arrangements and seek competitive quotations. This can sometimes lead to savings or greater transparency, particularly where leaseholders are concerned about insurance commissions, administration fees or lack of visibility over the existing policy. Insurance must still meet the requirements of the leases and any lender requirements.

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Control over the building

Buying the freehold gives leaseholders much greater control over the long-term management and direction of the building. The participating leaseholders can decide whether to manage the building themselves or appoint a professional managing agent of their choice. They can also make decisions about the upkeep, maintenance and future planning of the block. Owning the freehold may also reduce the risk of the existing freeholder seeking to exploit development opportunities over parts of the building or site, although planning law, property rights and the terms of the leases will still need to be considered.

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General information

The Leasehold Reform, Housing and Urban Development Act 1993, as amended, gives qualifying leaseholders of flats the right to buy the freehold of their building collectively. This is known as collective enfranchisement.

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Where the statutory requirements are met, the participating leaseholders can compel the landlord to sell the freehold to them. Once the freehold is acquired, the leaseholders usually own it through a nominee purchaser, often a company set up for that purpose.

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We provide a practical service to assist leaseholders through this process, including eligibility checks, valuation support, company formation where required, and preparation and service of the initial notice.

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Before starting a claim, leaseholders should make sure they understand the likely premium and costs involved. If the claim is withdrawn or deemed withdrawn, the participating leaseholders may still be responsible for their own costs and the landlord’s reasonable statutory costs.

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A specialist valuation is strongly recommended before a claim is started, even though it is not a legal requirement. The valuation will help the leaseholders understand the likely premium and the figure to include in the initial notice.

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The nominee purchaser

The freehold is acquired by a “nominee purchaser”. This is the person or company named in the initial notice who will acquire the freehold and become the new landlord.

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In many cases, the nominee purchaser will be a company owned by the participating leaseholders. This can provide a clear structure for ownership, decision-making and future management of the building.

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The right structure should be considered carefully, particularly where there are multiple participating leaseholders, future lease extensions are intended, or the building will continue to be professionally managed.

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Eligibility: does the building qualify?

Before starting a collective enfranchisement claim, leaseholders should check that the building qualifies and that enough qualifying leaseholders are willing to participate.

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In general, the building must:

• contain at least two flats;

• have at least two-thirds of the flats owned by qualifying leaseholders;

• be a self-contained building, or a self-contained part of a building;

• have no more than 25% of its internal floor area used for non-residential purposes, excluding common parts.

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The government has proposed increasing the non-residential limit for collective enfranchisement from 25% to 50%, but leaseholders should check the current position before relying on this because not all Leasehold and Freehold Reform Act 2024 provisions are fully in force.

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How many leaseholders need to participate?

The participating leaseholders must represent at least half of the total number of flats in the building.

For example, if there are 15 flats in the building, at least 8 qualifying leaseholders must participate.

If there are only two flats in the building, both qualifying leaseholders must participate.

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Who is a qualifying leaseholder?

A qualifying leaseholder will usually be someone who:

• has a residential lease;

• holds a long lease, usually meaning a lease originally granted for more than 21 years;

• owns no more than two flats in the building.

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A shared ownership leaseholder must usually have staircased to 100% ownership to qualify.

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The previous requirement to have owned the flat for at least two years has been removed. Since 31 January 2025, a qualifying leaseholder no longer needs to wait two years after purchase before participating in a collective enfranchisement claim. You do not need to live in the flat to qualify.

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Buildings and landlords that may be excluded

Some buildings are excluded from collective enfranchisement, even where the leaseholders would otherwise qualify.

Collective enfranchisement may not be available where:

• the building is within a Church of England cathedral precinct;

• the building is owned by the National Trust;

• the freehold includes certain operational railway land or related infrastructure;

• the resident landlord exemption applies.

Crown property is treated differently because the Crown is n

 

ot bound by the legislation in the usual way. However, the Crown has indicated that it will generally comply with the principles of the legislation. Specialist advice should be taken where Crown land is involved.

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Resident landlord exemption

The resident landlord exemption may apply where the building:

• has been converted into four or fewer flats;

• is not a purpose-built block;

• has been owned by the same freeholder since before the conversion into flats;

• includes a flat occupied as the main residence of the landlord, or an adult member of the landlord’s family, for the required period.

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This exemption is technical and should be checked carefully before deciding whether a claim can proceed.

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Right of first refusal: Section 5 notices

The right of first refusal is separate from collective enfranchisement.

Under the Landlord and Tenant Act 1987, a landlord who intends to sell their freehold or other relevant interest in a building containing flats may first have to offer it to the qualifying leaseholders. This is usually done by serving a Section 5 notice.

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If you receive a Section 5 notice, you should act quickly. There are strict time limits and a formal procedure must be followed. Leaseholders cannot simply write to the landlord saying they wish to buy. If the statutory steps are not followed correctly, the landlord may be able to sell to a third party.

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If the landlord serves a Section 5B notice, this usually means the landlord intends to sell at auction. Again, strict deadlines apply and leaseholders need to act promptly to protect their position.

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We can assist leaseholders with the right of first refusal process, including forming a company where required and preparing or serving the necessary notices.

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Costs and financial planning

Before starting a claim, participating leaseholders should make sure they have funds in place for the likely costs.

These may include:

• the premium payable for the freehold;

• valuation fees;

• legal fees;

• company formation and administration costs;

• Land Registry fees;

• the landlord’s reasonable statutory costs;

• tribunal costs if the premium or terms cannot be agreed.

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The landlord’s reasonable costs usually relate to investigating the claim, obtaining valuation advice and completing the conveyancing. Costs can become more complex if the matter proceeds to the First-tier Tribunal.

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We cannot guarantee that a claim will be successful, that the landlord will agree the proposed premium, or that the tribunal will determine the premium at a particular figure. A specialist valuation is therefore an important part of preparing a claim.

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What happens if the premium cannot be agreed?

After the initial notice is served, the landlord must respond by serving a counter-notice.

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If the landlord admits the right but the premium or terms are not agreed, there is a negotiation period. If agreement still cannot be reached, the matter can be referred to the First-tier Tribunal for determination.

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Many claims settle by negotiation, but leaseholders should be prepared for the possibility of tribunal proceedings if the parties remain too far apart.

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Our charges and services

We offer a fixed-fee service, calculated on a per-flat basis and subject to VAT at the prevailing rate.

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We do not charge an hourly rate for the fixed-fee work agreed with you. All fees will be confirmed clearly in writing before you proceed.

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Our collective enfranchisement service can include:

• an initial eligibility check based on the information you provide;

• Land Registry searches;

• reviewing the basic building and leasehold structure;

• arranging a specialist independent valuation;

• forming a nominee purchaser company where required;

• preparing and serving the statutory notices;

• assisting with absent landlord searches;

• supporting vesting order applications where necessary;

• assisting with right of first refusal notices where relevant;

• liaising with solicitors, valuers and other professional advisers.

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Further fees may apply if the claim becomes disputed, if negotiations are required, or if an application to the First-tier Tribunal is needed.

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Please read our Terms and Conditions carefully before instructing us, as they set out the scope of our services, our fees and the responsibilities of the participating leaseholders.

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Before you begin

Before starting a collective enfranchisement claim, leaseholders should consider:

• whether the building qualifies;

• whether enough qualifying leaseholders are willing to participate;

• whether any exemptions may apply;

• the likely premium;

• the likely professional and landlord costs;

• how the nominee purchaser will be structured;

• how decisions will be made between participating leaseholders;

• whether the building will be self-managed or managed by a professional agent after completion;

• whether lease extensions will be granted after the freehold is acquired.

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Collective enfranchisement can be a powerful way for leaseholders to take control of their building and protect the long-term value of their flats, but the procedure is technical and should be handled carefully.