Enfranchisement & Lease extensions.

If you own a leasehold flat or house, you own the property for the number of years specified in your lease, rather than indefinitely.

The freeholder owns the building or land, and the property will normally return to the freeholder when the lease expires.

Leaseholders haveseveralf important statutory rights. Depending on the property and the terms of the lease, these may allow you to extend your lease, purchase the freehold, take over management of a block of flats or challenge unreasonable charges and poor management.

Exercising these rights can make a property easier to sell or mortgage, reduce future ground rent liabilities and give leaseholders greater control over the management of their building. However, each procedure has technical eligibility requirements, strict notices and deadlines.

This guide principally covers residential leasehold property in England and Wales. Some aspects of housing and tribunal procedure differ between England and Wales, and entirely different systems apply in Scotland and Northern Ireland.

Understanding Leasehold Ownership

A lease is a contract between the leaseholder and the landlord or freeholder. It states how long the lease will last and sets out the rights and obligations affecting the property.

The lease may deal with:

• ground rent;
• service charges;
• repairs and maintenance;
• building insurance;
• use of the property;
• alterations and improvements;
• subletting;
• pets;
• access by the landlord or managing agent; and
• management of communal areas.

Leasehold property is a diminishing asset because the remaining term reduces over time. As the lease term shortens, the property may become more difficult or expensive to sell, mortgage, or remortgage.

Extending the Lease of a Flat

The Statutory Right to a Lease Extension

A qualifying owner of a leasehold flat may have the statutory right to obtain a new lease under the Leasehold Reform, Housing and Urban Development Act 1993.

Under the current statutory procedure, the leaseholder generally receives:

• the remaining term of the existing lease;
• an additional 90 years; and
• ground rent reduced to a peppercorn, meaning no financial ground rent is payable.

The leaseholder must pay the freeholder a premium for the extension. The price is calculated using statutory valuation principles. It will depend on factors including the value of the flat, the remaining lease term, the ground rent and the value of the freeholder's interest.

Who Qualifies?

The leaseholder must normally own a qualifying long lease of a flat. A long lease will usually be one originally granted for a term of more than 21 years, even if fewer than 21 years remain when the claim is made.

Since 31 January 2025, a leaseholder no longer has to own the flat for two years before starting a statutory lease-extension claim. A qualifying owner can usually begin the procedure as soon as they are registered as the proprietor.

There are exceptions, including certain business tenancies and some properties owned by charitable housing trusts.

The 80-Year Threshold and Marriage Value

The cost of extending a flat lease can increase significantly when the remaining term falls to 80 years or fewer. Under the present valuation system, marriage value may then become payable as part of the premium.

Marriage value represents part of the increase in the property's combined leasehold and freehold value resulting from the lease extension. It is generally shared equally between the leaseholder and freeholder under the current statutory calculation.

A leaseholder approaching the 80-year point should obtain advice promptly. The relevant date is normally the date on which the formal tenant's notice is served, not the date on which negotiations begin or the new lease completes.

Starting the Formal Lease-Extension Process

The formal process normally begins when the leaseholder serves a notice under section 42 of the 1993 Act. The notice must contain prescribed information, including the premium proposed by the leaseholder.

Before serving the notice, the leaseholder should usually instruct:

• a solicitor experienced in leasehold enfranchisement; and
• a surveyor experienced in statutory lease-extension valuation.

The freeholder will have a set period in which to serve a counter-notice stating whether the claim is admitted and which terms are accepted or disputed.

The parties then negotiate the premium and other terms. If agreement cannot be reached within the statutory period, either party may apply to the appropriate tribunal for a determination. Missing a statutory deadline may result in the claim being treated as withdrawn.

Formal and Informal Lease Extensions

A leaseholder may negotiate informally with the freeholder rather than use the statutory procedure.

An informal agreement can sometimes be completed more quickly, but the freeholder is not obliged to offer the same terms available under the legislation.

An informal offer may include:

• a shorter extension;
• a continuing or increasing ground rent;
• new restrictions or obligations;
• higher administration charges; or
• other changes to the lease.

The headline premium should not be considered in isolation. A lower initial price may be poor value if the new lease contains an escalating ground rent or other unfavourable terms.

Lease Extensions Where the Freeholder Is Missing

A leaseholder may still be able to extend a lease where the freeholder cannot be found. The leaseholder must normally demonstrate that reasonable efforts have been made to locate the freeholder and may apply to the court for a vesting order.

The tribunal may be asked to determine the premium and terms. Specialist advice will usually be needed because evidence of the search for the missing landlord must be prepared carefully.

Lease Extensions During a Sale

A short lease can delay a sale or reduce the price buyers are prepared to pay. Because the two-year ownership requirement has been abolished, a buyer who qualifies no longer needs the seller to start and assign a statutory lease-extension claim merely to avoid waiting two years.

However, a seller may still choose to begin or complete an extension to make the property more marketable. Advice should be taken before agreeing to the sale terms or serving any notice.

Collective Enfranchisement for Flat Owners

What Is Collective Enfranchisement?

Collective enfranchisement is the statutory process through which qualifying leaseholders in a block of flats join together to purchase the freehold of their building.

After acquiring the freehold, the participating leaseholders will usually own it through a company established for that purpose. The company can then control matters such as building management, insurance, repairs and the grant of lease extensions, subject to the leases and relevant legislation.

Potential Benefits of Buying the Freehold

Collective enfranchisement may allow leaseholders to:

• control the management of the building;
• appoint or replace managing agents;
• influence repair and maintenance decisions;
• control building-insurance arrangements;
• grant themselves longer leases;
• remove or reduce ground rent through new leases;
• improve transparency over expenditure; and
• increase the marketability of their flats.

Owning a share of the freehold does not automatically extend the lease of each flat. New leases should normally be granted and registered formally.

Qualifying Requirements

Under the current rules, the building must generally:

• be a self-contained building or qualifying self-contained part of a building;
• contain at least two flats;
• have at least two-thirds of its flats owned by qualifying leaseholders; and
• have no more than 25% of its internal floor area, excluding common parts, used for non-residential purposes.

At least half of the flats in the building must normally participate in the claim. If the building contains only two flats, both qualifying leaseholders must participate.

There are exceptions, including certain small conversions where the resident freeholder has lived in the building for the required period, and some properties connected with the National Trust, cathedral precincts or operational railway land.

The Collective Enfranchisement Procedure

The participating leaseholders should normally enter into a participation agreement before serving the claim. This can govern:

• how costs will be shared;
• how decisions will be made;
• what happens if a participant withdraws;
• the ownership structure for the freehold;
• funding arrangements; and
• the grant of new leases after completion.

A formal initial notice is then served on the competent landlord. The notice must identify the participating tenants, the property and the proposed purchase price.

The landlord may serve a counter-notice admitting or disputing the claim and responding to the proposed terms. If the price or terms cannot be agreed upon, an application may be made to the tribunal within the statutory deadline.

The Cost of Collective Enfranchisement

The leaseholders must pay the purchase price for the freehold together with their own valuation and legal costs. Under the current rules, they will also normally be responsible for the landlord's reasonable legal and valuation costs incurred in investigating the claim and completing the sale, but not for the landlord's costs of contesting the price before the tribunal.

The premium may include compensation for the loss of ground rent, the freeholder's reversionary interest, marriage value where applicable and the value of other property or development rights included in the acquisition.

The Right to Manage

What Is the Right to Manage?

The right to manage allows qualifying leaseholders of flats to take over specified management functions from the landlord without purchasing the freehold.

Leaseholders do not generally have to prove that the landlord or managing agent has managed the building badly. The right is primarily based on meeting the statutory qualifying conditions and following the correct procedure.

The right is exercised through a special right-to-manage company, usually referred to as an RTM company.

What Management Functions Are Transferred?

The RTM company may take responsibility for matters including:

• repairs and maintenance;
• services provided to the building;
• management of communal areas;
• collecting service charges;
• arranging buildings insurance;
• appointing contractors and managing agents;
• consulting leaseholders about major works; and
• dealing with applications for approvals under the leases.

The freeholder normally remains the owner of the building and retains functions not transferred by legislation.

Right-to-Manage Qualification

The building must satisfy statutory conditions. It will generally need to be a self-contained building or a qualifying part of a building that contains at least two flats.

At least two-thirds of the flats must normally be held by qualifying long leaseholders, and leaseholders of at least half the flats must become members of the RTM company before the claim notice is served.

Since March 2025, a building can generally qualify where up to 50% of its floor area is used for non-residential purposes. This increased the previous non-residential limit of 25%.

Starting a Right-to-Manage Claim

The leaseholders must establish an RTM company in the prescribed form. Before serving the formal claim notice, the company must normally invite all qualifying leaseholders who are not already members to participate.

The claim notice is then served on the landlord and other relevant parties. The landlord can serve a counter-notice admitting the claim or disputing it on specified legal grounds.

Most leaseholders making an RTM claim are no longer required to pay the landlord's legal costs following reforms that took effect in March 2025. However, exceptions can apply.

Preparing to Manage the Building

Acquiring the legal right to manage is only the beginning. The RTM company must be ready to take practical responsibility for the building.

Before the management date, leaseholders should consider:

• appointing a professional managing agent;
• preparing a service-charge budget;
• reviewing existing maintenance contracts;
• arranging appropriate insurance;
• obtaining information about arrears and reserve funds;
• planning major works;
• setting up banking and accounting arrangements;
• complying with company-law obligations; and
• dealing with fire and building-safety responsibilities.

Poor administration by the RTM company can lead to service-charge disputes, funding difficulties and potential personal concerns for those involved in its operation.

Right to Manage or Buy the Freehold?

The right to manage transfers management functions but does not transfer ownership of the freehold. Collective enfranchisement provides greater ownership and control but is generally more expensive and requires the leaseholders to fund the purchase price.

The right to manage may be appropriate where leaseholders are mainly concerned about poor or expensive management. Collective enfranchisement may be preferable where they also want to control the freehold, extend leases and deal with ground rent.

Buying the Freehold of a Leasehold House

Enfranchisement of Leasehold Houses

A qualifying owner of a leasehold house may have the right to purchase the freehold under the Leasehold Reform Act 1967. This process is known as enfranchisement.

Whether a property legally qualifies as a house can sometimes be disputed, particularly where it forms part of a mixed-use building, is divided vertically or horizontally from another property or has undergone substantial alteration.

Qualifying for the Right to Buy

The lease must generally be a qualifying long tenancy at a low rent or fall within one of the extended categories introduced by later legislation. The property must also qualify as a house that is reasonably so called.

The previous requirement to own the lease for two years before making a statutory claim was abolished on 31 January 2025. A qualifying leaseholder can now generally begin the process after becoming the registered owner.

Eligibility and valuation under the 1967 Act can be complex because different valuation methods may apply depending on the lease, the property and the circumstances in which the tenancy was granted.

What May Be Included in the Freehold Purchase?

The acquisition will usually include the freehold of the house and may also include associated premises such as:

• a garden;
• a yard;
• a garage;
• an outbuilding; or
• other land occupied with the house.

Disputes can arise about which land should be included, rights of way, services, covenants and estate-management arrangements.

Extending the Lease of a House

A qualifying leaseholder of a house may alternatively have a statutory right to extend the lease by 50 years under the law currently in force.

Unlike the statutory extension for a flat, the existing ground rent does not necessarily reduce to zero. The landlord may be entitled to a modern ground rent under the extended lease.

For this reason, purchasing the freehold may sometimes provide a better long-term outcome than extending the lease. However, the costs and circumstances of the individual property must be considered.

The Right of First Refusal

Where a landlord intends to sell the freehold of a qualifying block of flats, the Landlord and Tenant Act 1987 may require the landlord to offer it to the qualifying leaseholders before selling it to somebody else.

This is known as the right of first refusal. It differs from collective enfranchisement because it arises when the landlord decides to dispose of the freehold, rather than when leaseholders initiate a compulsory purchase.

Strict notices and deadlines apply. A landlord who disposes of the freehold without following the required procedure may commit a criminal offence, and the leaseholders may have rights to acquire the interest from the purchaser.

Appointment of a Manager

Where a building is being managed poorly, qualifying leaseholders may apply to the tribunal for the appointment of an independent manager under the Landlord and Tenant Act 1987.

Grounds may include:

• breach of the landlord's management obligations;
• unreasonable service charges;
• failure to comply with relevant management codes;
• unreasonable administration charges;
• failure to provide proper accounts; or
• other circumstances making it just and convenient to appoint a manager.

This remedy differs from the right to manage because the tribunal appoints the manager and defines their powers. It may be useful where the building does not qualify for the right to manage or where leaseholders cannot secure sufficient participation.

Challenging Service Charges

Leaseholders are generally required to pay only service charges permitted by the lease and reasonably incurred. Where works or services are provided, the standard and cost must normally be reasonable.

A leaseholder may apply to the tribunal to determine:

• whether a service charge is payable;
• who must pay it;
• the amount payable;
• when payment is due;
• how the charge should be calculated; and
• whether works or services were reasonable.

Special consultation requirements may apply before a landlord carries out major works or enters into certain long-term agreements. A landlord's failure to consult can limit the amount recoverable from each leaseholder unless the tribunal grants dispensation.

Administration Charges

Administration charges may arise from matters such as:

• consent to alterations;
• permission to sublet;
• providing information on a sale;
• late payment;
• breach of the lease; or
• legal and management costs.

An administration charge must normally be reasonable. A leaseholder can apply to the tribunal for a determination of whether the charge is payable and whether its amount is reasonable.

Varying a Defective Lease

A lease may be defective or impractical because it does not make adequate provision for matters such as repairs, insurance, service charges or maintenance of the building.

The parties can sometimes agree on a deed of variation. Where agreement cannot be reached, a leaseholder, landlord, or other qualifying party may apply to the tribunal for an order varying one or more leases.

Mortgage-lender consent and Land Registry applications may also be required.

Leasehold Reform

The Leasehold and Freehold Reform Act 2024 contains substantial changes intended to make lease extensions and freehold purchases easier and less expensive. These include proposals for standard 990-year lease extensions, changes to valuation and wider access to collective enfranchisement.

However, not every provision in the 2024 Act is yet in force. Leaseholders should not assume that the 990-year extension or new valuation rules currently apply merely because the legislation has received Royal Assent.

Changes already operating include:

• the abolition of the two-year ownership requirement for statutory lease extensions and enfranchisement claims from 31 January 2025;
• an increase in the permitted non-residential element for right-to-manage claims from 25% to 50% from March 2025;
• changes to the costs payable by leaseholders making right-to-manage claims; and
• the removal, from 27 December 2025, of the risk that long residential leases could be treated as assured tenancies solely because of their ground rent.

Further reform of commonhold, leasehold enforcement and ground rents has also been proposed. Until each provision is formally brought into force, claims must proceed under the legislation and valuation rules operating at the relevant time.

Professional Costs

A leaseholder exercising statutory rights may need to pay:

• their ownsolicitor'ss fees;
• their own valuation fees;
• the premium or purchase price;
• Land Registry fees;
• Stamp Duty Land Tax where applicable;
• company formation or administration costs; and
• some of the landlord's reasonable legal and valuation costs.

The costs rules differ between lease extensions, enfranchisement and right-to-manage claims. A leaseholder should obtain a clear estimate before starting the procedure.

Why Specialist Advice Is Important

Leasehold claims involve strict statutory notices, valuation evidence and procedural deadlines. Errors can invalidate a notice, delay the transaction, increase costs or result in a claim being treated as withdrawn.

A leasehold solicitor can advise on:

• extending the lease of a flat or house;
• buying the freehold of a leasehold house;
• collective enfranchisement of a block of flats;
• forming and operating an RTM company;
• the right of first refusal;
• missing freeholders;
• service-charge and administration-charge disputes;
• applications to appoint a manager;
• lease variations;
• defective leases;
• sales involving short leases; and
• tribunal proceedings.

Finding a Leasehold Solicitor

Extending a lease, buying a freehold or taking over management can protect the value of a leasehold property. Still, the best option will depend on the remaining lease term, the cost, the level of support from other leaseholders and the owner's plans.

Use the search facility at the top of this page to find a solicitor experienced in leasehold enfranchisement and leasehold property law.

This guide provides general information about leasehold rights in England and Wales. It does not constitute legal advice and should not be relied upon as a substitute for advice about a particular property, lease or claim.