There is a point in the life of most leasehold blocks where the leaseholders start asking why they are paying a freeholder for the privilege of owning their own flats. Rising ground rents, opaque service charges, a managing agent nobody chose, and leases quietly ticking down towards the eighty-year threshold all push in the same direction.
Collective enfranchisement — leaseholders buying the freehold together — solves those problems at once. It also involves several households agreeing on money, which is where most attempts founder.
What You Are Actually Buying
If enough leaseholders qualify and participate, the group has a statutory right to buy the freehold of the building. The freeholder cannot refuse; the negotiation is about price, not principle.
Once you own it, the group controls the building. Ground rent effectively disappears, because you would be paying it to yourselves. Service charges are set by the leaseholders rather than imposed. Managing agents can be appointed and dismissed. And — often the biggest financial prize — leases can be extended to 999 years at nominal cost, because the group is granting the extension to itself rather than paying a premium to a third party.
That last point is why enfranchisement often makes more financial sense than it first appears. A block of flats where several leases are approaching eighty years faces a collective bill for individual extensions that can exceed the cost of simply buying the building.
The Money Problem
The purchase price is one bill, but it is not the only one, and the total needs establishing early.
You will pay the premium for the freehold itself, which is determined by valuation and negotiated. You will pay your own legal and valuation costs. And — this is the part that surprises people — you are generally liable for the freeholder’s reasonable valuation and legal costs as well.
Beyond that, the participating leaseholders need to fund the acquisition vehicle, usually a company set up to hold the freehold, and to agree how the costs are apportioned. Apportionment is rarely equal: flats with shorter leases benefit more, and a fair split usually reflects that rather than dividing by the number of doors.
Getting the apportionment agreed in writing, early, is the single most useful thing a group can do. Most collapsed enfranchisements collapse over this, not over the freeholder.
Why Lenders Find It Awkward
Individual leaseholders funding their share encounter a specific problem: the thing being bought is not, on its own, mortgageable security.
A share in a freehold company is not a property. It cannot readily be valued in isolation, and a lender cannot easily realise it. So the ordinary answer — borrow against the asset you are acquiring — does not work here.
What works instead is borrowing against the flat you already own. Where you have equity in it and either no mortgage or a mortgage you would rather not disturb, additional borrowing secured against the flat can fund your share of the freehold purchase. Because the existing first mortgage can usually stay in place, this often means keeping a rate you would otherwise lose. Our second charge bridging page explains that structure.
Where the group’s timetable is tight — statutory deadlines apply once notice is served, and missing them can invalidate the claim — short-term facilities are commonly used to meet the completion date, refinanced afterwards onto longer-term borrowing. Our bridging loans pillar covers eligibility and typical terms.
Some groups borrow collectively through the acquisition company, secured on the freehold itself once acquired. This is more complex to arrange and generally suits larger blocks with several participating flats.
When One Flat Cannot Raise Their Share
This is the practical situation that derails groups, and it has a solution worth knowing about.
Not every leaseholder has to participate. The statutory right requires a sufficient proportion of qualifying leaseholders to join, not all of them. Where one household cannot or will not fund their share, the remaining participants can proceed without them — and the non-participating flat simply keeps its existing lease and does not become a shareholder.
Participants sometimes fund an additional share on the basis that they later sell it to the non-participating flat, or to a future owner of it, often at a profit. This needs documenting properly, but it turns a blocked project into a funded one.
The alternative, where the group is close but short, is that a participating leaseholder borrows more against their own flat and takes a larger stake. Whether that is worthwhile depends on the value the extra share unlocks.
Enfranchisement or Just Extend Your Lease?
For an individual leaseholder, the question is often whether to join a collective purchase or simply extend their own lease.
Extending is simpler, involves no coordination with neighbours, and costs less up front. It does nothing about ground rent on the other flats, service charges, or who manages the building.
Enfranchisement costs more and requires agreement, but it addresses the underlying problem permanently and allows 999-year leases at nominal premium afterwards.
Where the group cannot be assembled, or where you need the lease sorted quickly for a sale or remortgage, extending individually is the pragmatic route — our post on funding a lease extension covers how that is financed. Where the block is largely willing, enfranchisement is usually the better long-term answer.
Because so much of Britain’s leasehold stock is concentrated in the capital, this is disproportionately a London question — our London bridging finance page covers lender appetite for leasehold security across the city.
Frequently Asked Questions
Do all the leaseholders have to take part?
No. A sufficient proportion of qualifying leaseholders must participate, but those who cannot afford to or do not wish to can stay out and keep their existing leases.
How is the freehold price decided?
By valuation, taking account of the ground rents, the unexpired lease terms and the value the extensions would create. It is negotiated between the parties’ valuers, with a tribunal available if agreement cannot be reached.
Can I borrow against my flat to fund my share?
Usually yes, and it is the most common route. The lending is secured against your flat rather than against the share in the freehold company, which is what makes it financeable.
What happens to my mortgage when the freehold changes hands?
Your existing mortgage stays in place, secured on your flat as before. Your lender will generally want notice of the change, and if you are extending your lease as part of the process they will be involved in that.
Enfranchisement is one of those projects where the finance is entirely solvable but the coordination is not, so getting clarity on funding early tends to keep a group together. You can see the full range of what we arrange on our homepage, look at longer-term options on our mortgages pages, or contact our team to discuss your building.