Collective Enfranchisement: Buying Your Freehold

Collective enfranchisement is the statutory right of the leaseholders in a block to buy the freehold together, whether or not the freeholder wants to sell. It is the route that produces a freehold residents management company — the leaseholders end up owning the building through a company they control.

Three tests decide whether your block qualifies: enough of the flats must be held by qualifying tenants, enough of them must participate, and the building must not be too commercial. The third test is where blocks most often fail, and it is also where the current law is most widely misreported.

This applies to England and Wales.

The three qualifying tests

Test 1 — two-thirds of the flats. Section 3 of the Leasehold Reform, Housing and Urban Development Act 1993 requires that

"the total number of flats held by such tenants is not less than two-thirds of the total number of flats contained in the premises."

"Such tenants" means qualifying tenants — broadly, holders of long leases. A block where a third or more of the flats are let on short tenancies or held by the freeholder can fall at this hurdle.

Test 2 — half must participate. Section 13 governs the initial notice, and the participation threshold is that the number of participating flats

"is not less than one-half of the total number of flats so contained"

Half is a real constraint in practice. Enfranchisement costs money per flat, and persuading half a block to commit funds simultaneously is usually harder than satisfying any of the legal tests.

Test 3 — the commercial floor area limit. Section 4(1) excludes premises where the non-residential part

"exceeds 25 per cent. of the internal floor area of the premises (taken as a whole)."

Note the figure: 25 per cent. Not 50.

The 25% / 50% trap — read this before you rely on anything else

A great deal of current online material states that the commercial limit for buying your freehold rose to 50%. That is wrong, and the error is easy to make because a very similar change did happen — to a different right.

• Right to Manage: section 49 of the Leasehold and Freehold Reform Act 2024 raised the non-residential limit to 50%, and it came into force on 3 March 2025. Mixed-use blocks that could not claim RTM before often can now.
• Collective enfranchisement: section 29 of the same Act would make the equivalent change, directing that in section 4(1)(b) of the 1993 Act, for "25 per cent." substitute "50%". The commencement note on that section reads: "S. 29 not in force at Royal Assent, see s. 124(3)." It has not been commenced.

So as things stand, a block with 30% commercial floor space can claim the Right to Manage but cannot collectively enfranchise. Two rights, two thresholds, one commenced and one not.

If that describes your building, RTM is the available route today. Our guides cover how the Right to Manage works and what an RTM claim costs.

What the process looks like

1. Establish qualification. Count the flats, count the qualifying tenants, measure the commercial floor area. Get the floor-area figure from a surveyor if it is anywhere near the threshold — this is not a tape-measure job.
2. Get leaseholders committed. You need at least half the flats participating, and you need them committed in writing, because the costs are shared and someone dropping out mid-claim is disruptive.
3. Form the nominee purchaser. Usually a company limited by guarantee that will hold the freehold. This is the entity that becomes the landlord afterwards.
4. Get a valuation. A leasehold valuer prices the freehold. As with lease extension, the premium is valuation-dependent — see our guide to lease extension costs for how the same valuation concepts work.
5. Serve the initial notice under section 13, with the proposed purchase price.
6. Negotiate, or apply to the tribunal. Terms and price are agreed, or determined by the First-tier Tribunal if they cannot be.
7. Complete. The freehold transfers to the nominee purchaser.

Expect this to take months rather than weeks, and expect the negotiation on price to be the slow part.

What changes the day after you complete

This is the part leaseholders consistently underestimate. Buying the freehold does not end the management problem — it transfers the whole of it to you.

Your new company is now the landlord. That means:

• It sets and demands the service charge, and must do so validly — see the service charge accounting guide.
• It must run Section 20 consultation before qualifying works, with the same £250-per-leaseholder trigger and the same consequences for getting it wrong.
• It carries the insurance obligation — our guide to buildings insurance for blocks of flats covers what that involves.
• It has Companies House obligations, and directors have the full set of director duties.
• Any leaseholder who did not participate is now your leaseholder, paying service charges to a company owned by their neighbours. That relationship needs handling deliberately.

The freehold residents management company guide covers the resulting structure, and the common problems facing RMCs guide covers what tends to go wrong afterwards.

Enfranchisement gives you control. Control is the thing that comes with the work attached.

Quick qualification check

• Two-thirds or more of the flats held by qualifying tenants — yes or no?
• At least half the flats willing to participate and pay — yes or no?
• Non-residential floor area 25% or less — yes or no?
• Someone willing to be a director of the new company afterwards — yes or no?

Four yeses and you have a claim worth taking to a solicitor. A no on the third question but a yes on a 50% measurement means RTM today, and enfranchisement if and when section 29 is commenced.

LevyBoard is building guided block management software for volunteer directors — service charge accounting, arrears tracking, and Section 20 compliance, designed for people who did not sign up to become property managers.

This guide applies to England and Wales. Scottish and Northern Irish property law differs significantly. This is general information, not legal advice. Enfranchisement claims are technical and the qualifying tests turn on facts about your specific building — instruct a solicitor specialising in leasehold enfranchisement, or start with the free service at the Leasehold Advisory Service (LEASE).

Sources

• LRHUDA 1993, section 3 — premises to which the chapter applies (two-thirds test)
• LRHUDA 1993, section 4 — premises excluded (25 per cent non-residential limit)
• LRHUDA 1993, section 13 — initial notice (one-half participation threshold)
• Leasehold and Freehold Reform Act 2024, section 29 — change of non-residential limit (not in force)
• Leasehold and Freehold Reform Act 2024, section 49 — RTM non-residential limit (in force 3 March 2025)
• Leasehold Advisory Service (LEASE)