Buy your freehold
How leaseholders can buy the freehold or get the right to manage
We're happy to pay £100,000s to buy leasehold properties, yet normally someone else owns the land they stand on, extending the lease can cost £1,000s (potentially more), and the service charge may be very expensive as well. If you're a leaseholder unhappy with this arrangement, you can buy your home's freehold or take over the management of your block. This step-by-step guide explains how it's done.
With thanks to Linz Darlington of Homehold for fact-checking this guide.
Freehold law is changing. The Government is making it cheaper and easier to buy a property's freehold. It's unclear when this reform will take effect, yet you should bear it in mind if you're think of buying your home's freehold.
Full details on the changes in our Should I extend my lease guide. In the meantime, here's how the process currently works.
Is it worth buying my freehold?
Legally it's possible for the owners of leasehold flats and maisonettes to take control by buying their home's freehold, which effectively gives their freeholder the boot.
Called 'collective enfranchisement', the process involves leaseholders getting together to buy the freehold for a fair market price. Introduced in 1993, the right was boosted by the Commonhold and Leasehold Reform Act 2002.
If successful in acquiring the freehold, a building's leaseholders will each get a 'share of freehold'. They then become responsible for insuring and maintaining the building.
There are over four million leasehold flats in England and Wales, with leasehold being the most common form of flat and maisonette ownership. The vast majority of houses are freehold, though some are leasehold. It's possible to buy the freehold of a leasehold house too but the rules are different – this guide is specifically about buying the freehold of a flat.
Here's what to consider if you're a flat owner thinking of buying your freehold...
Cost of buying the freehold is similar to extending the lease
Assuming all flat owners in your block want to participate, the cost of buying a share of the freehold should be similar to extending your lease by 90 years (more on the cost below).
If you don't want the extra responsibilities that come with ditching the freeholder, it may be more sensible to extend your lease instead. This doesn't require the input of neighbours and the process is more straightforward – our Should I extend my lease? guide has more info.
Be aware it gets much more expensive to buy the freehold or extend your lease – potentially by £1,000s or £10,000s – if the length of your lease drops below 80 years. So:
If your lease has 83 years left, it's time to seriously think about taking action...
Whether that's by buying the freehold or by extending your lease.
If you buy the freehold, you can usually extend your lease to 999 years for free afterwards – though agree to this in writing with fellow flat owners beforehand. The only outlay to extend the lease would be legal fees and possibly a small charge from your mortgage lender.
Extending your lease automatically reduces any ground rent you pay to zero. Plus buying the freehold means you no longer pay a service charge directly to your freeholder (though you and your neighbours will still need to finance the maintenance of the building).
Note.There are some scenarios where purchasing your freehold can be significantly more expensive than simply extending your lease – such as where only a few flat owners want to take part, or where your block is considered to have development potential.
You'd gain freedom from your freeholder
You hear stories of freeholders charging £100,000s for work costing £50,000, freeholders picking costly providers and choosing products and insurance policies that pay them the most commission. While this can be challenged at tribunal, it's not easy or cheap.
You've far more control if you own a share of the freehold. While you still need to pay for these services, hopefully you and your neighbours will pick reasonable, quality providers.
Bear in mind a flat with a share of the freehold differs from a freehold house, where the freehold is yours outright. With share of freehold you own the freehold jointly with others in the block (usually via a small limited company set up expressly for this purpose).
You'll also still have a lease – as you still need to set out who owns which flat. Though your lease should be free to extend after buying the freehold (if all leaseholders agree to this).
It could potentially add value to your flat
Surveyors typically add an additional 1% to a flat's value if it has share of freehold. But as leasehold is often the subject of negative media attention, you may find it adds even greater value than this.
The biggest potential gain is where you've a short lease, which you extend at the same time as buying a share of the freehold.
If you've already got a decent length lease – for example, 999 or 99 years – buying a share of the freehold might not add a huge amount of value. You'd still pay the same legal costs as someone with a short lease, but would only add a little extra to your home's value.
The table below gives a very rough estimate of the potential added value:
LEASE LENGTH | FREEHOLD COST | PROFESSIONAL FEES (2) | TOTAL | POTENTIAL ADDED VALUE |
|---|---|---|---|---|
90 years | £4,500 | £3,500 | £8,000 | £14,500 |
85 years | £5,500 | £3,500 | £9,000 | £18,500 |
79 years | £13,000 | £3,500 | £16,500 | £21,500 |
70 years | £19,500 | £3,500 | £23,000 | £27,000 |
(1) Estimates provided by Homehold. Estimated for a flat worth £200,000 once lease is extended to 999 years Assumes ground rent of £100 and based on a block of four flats all taking part. These are estimates and can vary wildly – they are not a substitute for valuation advice.
(2) Includes both your and the freeholder's valuation, negotiation and legal fees. Excludes any Stamp Duty cost.
Some inspiration...
This is a complex area of law so you'll need a specialist solicitor to guide you through.
Nevertheless, here are a few MoneySavers' experiences for inspiration. If you've bought a share of freehold before, please post your experiences in our Forum discussion.
"We bought a share of the freehold because we were being charged £1,000/year for buildings insurance. The freehold cost £1,500 per flat, including legal fees. We then saved £700 on insurance in the first year (down to £300 from £1,000).
"We also gained control over maintenance expenses, as the freeholder would dismiss suggestions she was forcing us to overpay and just hand us a huge bill."
"I have bought a share of freehold in two properties and would do again as long as the price is right. Having a share of freehold does seem to make properties more saleable. In both cases we had poor managing agents, and it was a huge bonus to take control of the management and improve the upkeep."
Buy my freehold or apply for 'right to manage'?
Flat owners who want more control have two options:
🏠 Either you can buy a share of the freehold.
🏠 Or you can apply for the 'right to manage' your building.
Below we explain how the two options compare:
PROS | CONS |
|---|---|
✅ Free lease extensions Once you've bought the freehold, you can usually extend the lease to 999 years for free (bar legal fees). | ❌ It's costly But a share of the freehold will hopefully add value. |
✅ You control service charges Choose good value, quality providers. | ❌ It takes time Usually about a year, but can drag out for longer if the freeholder won't play ball. Be determined and patient. |
✅ No ground rent You normally don't pay ground rent. | ❌ Reliant on your neighbours If your block has two flats and you get on, it can be easier. Bigger blocks may find it hard to work together. The more flats in the building, the more chance of spats – and no independent freeholder to sort things out. |
✅ Fewer restrictions Leases can come with a raft of conditions, even if you've paid £100,000s for your own place – such as needing the freeholder's permission to let the flat or keep a cat. | ❌ Ongoing responsibility You and your neighbours will need to do the accounts, arrange insurance and organise maintenance. If these jobs don't get done, it could wipe value off your flat. |
❌ There will still be disagreements Even though you and neighbours will probably own a new freehold company, some will still complain about services charges. Reaching a consensus can be hard. | |
❌ The lease stays the same Any punitive conditions in the leases will stay the same (and remain enforceable) unless you get a solicitor to extend the leases or update poorly-written / unjust leases at the same time as buying the freehold. |
Pros | Cons |
|---|---|
✅ It's much cheaper Compared to buying a share of freehold. | ❌ Ongoing responsibility (but little power) You'll have all the responsibility for managing the building, but fewer of the perks. It's also unlikely to boost your property value. |
✅ Control service charges Pick good value service providers. | ❌ Lease extensions aren't free Even with right to manage, lease extensions still cost. |
✅ It's quicker The process is simpler and usually takes five to six months. | ❌ Can't change the lease So badly-drafted leases won't automatically change. |
✅ Fewer negotiations Such as no price negotiations with the freeholder. | ❌ Lease restrictions remain For example, if you need permission to keep a pet, this will remain the case. The right to manage company will need to check lease conditions are being complied it. |
❌ Your freeholder is still around Your freeholder can sit on the right to manage company's board and go to tribunal to end your right to manage if they believe you're doing a poor job. |
If you don't want more control over your building but do want to extend your lease, read about how this is done in our Extend your lease guide.
How much does buying the freehold cost?
The starting point for the cost of buying your share of the freehold (excluding legal fees) is roughly the same as it would be to extend your lease by 90 years.
In some cases it can be higher, such as when it's believed there's development potential in your block, or where not all flat-owners participate in the enfranchisement process.
The bulk of the cost is the share of the freehold itself. Its price depends on the length of each flat's lease, the value of each flat, and if there's any ground rent. It also rests on negotiations and surveyor valuations. The shorter your lease though, the higher the cost.
Surveyors can offer rough estimates of a freehold's price and how much value it could add to your flat, so it's worth asking. Solicitors may be able to give an indication too.
However, be mindful costs depend on a complicated formula and can vary dramatically.
How is a freehold's value calculated?
The cost of your share of the freehold will depend on the following formula:
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Reversion. Technically, if your lease was to expire, ownership of your flat would 'revert' back to the freeholder, so you'll need to compensate the freeholder for this loss.
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Ground rent. Freeholders must be compensated for the loss of any ground rent you pay – though as you're paying it all up front you get a discount. This all depends on how profitable the ground rent investment is considered and your valuer's negotiation skills.
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Marriage value. If your lease is 80 years or less, you'll also need to pay 50% of the flat's 'marriage value' (there's no marriage value to pay if the lease is over 80 years). This is the amount of extra value a share of the freehold would add to your property.
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Development value. If the freeholder believes money could be made from developing your block of flats (like adding a new floor or converting the basement into another flat), you may pay extra to compensate for the loss of this development value.
For more information on valuing a freehold, see the Leasehold Advisory Service.
Other costs to factor in
On top of the cost of your share of the freehold, you'll pay a few other fees too:
🪙 Legal fees
Legal costs vary hugely. Solicitors typically start at £3,000ish plus VAT for dealing with a freehold purchase for two flats. This figure is likely to be higher for larger blocks. Also count on at least £500ish extra per flat to extend the lease to 999 years (which you should do as soon as you purchase the freehold, to avoid potential tax issues later).
Usually the more flats in your block the cheaper your individual legal costs, as it won't necessarily take twice as long to deal with a block of 10 flats than it would a block of five.
Costs will be more if you go to a First-Tier Tribunal, though this is not usually necessary.
🪙 Valuation fees
A surveyor will need to value the flat and freehold. Budget for £500 to £600ish per flat.
🪙 Freeholder's fees
You'll need to cover your freeholder's valuation and legal fees. If the costs they're claiming are really unreasonable, you may be able to take the case to the First-Tier Tribunal.
🪙 Stamp Duty
You may need to pay Stamp Duty. The rules are complex, but you're unlikely to pay it if the cost of purchasing your freehold is £40,000 or less (even where it's more, Stamp Duty won't always apply). It's important to discuss the Stamp Duty implications with your solicitor.
How to pay for a lease extension
You need to consider carefully how you would pay for the purchase of your freehold.
Many mortgage lenders will let you borrow extra cash to pay for a share of freehold. You'd need enough room on the mortgage to cover it and your normal repayments though. If you've a really short lease, lenders may be cautious, as the cost of purchase will be higher.
And remember, the cost of borrowing isn't just about the rate, it's about how long it's for. The longer, the costlier – and most mortgage terms are much longer than loans and credit cards.
Buying a freehold: step-by-step guide
The process of buying your freehold typically takes about a year – more if you have a difficult freeholder who is determined to drag it out. You will need expert advice from a solicitor specialising in collective enfranchisement.
The following general criteria needs to be fulfilled:
- A minimum of two flats in the block.
- At least 50% of flats in the block needs to take part in the enfranchisement.
- Where there are only two flats in the block, both need to be taking part.
- All flats taking part must have a long lease (at least 21 years in length).
See our quick questions below for the full qualifying criteria to buy a freehold.
If you qualify, the following steps explain how to go about buying your freehold.
Step 1. Galvanise the other flat owners
The first job is to see if the other residents are up for it. To buy the freehold, at least 50% of the buildings' flats need to take part, so if there are four flats then at least two must agree (if there are only two flats in the building, then both must take part).
Chat with the other residents. If others can't afford it, don't pressurise them. Try not to stress if you can't get 100% of flats to join in. Show them the how much does it cost section to give an estimate, but make clear this could differ significantly from the true cost.
Consider appointing a professional project manager if this would help with the process.
Important. Service charges must still be paid until the freehold has been bought. If you're in service charge arrears, you must clear these before you can take over the freehold.
Step 2. Find a solicitor
Expert advice is absolutely crucial when buying a share of the freehold.
So ensure you place the project in the hands of a solicitor that specialises in collective enfranchisement – freeholders can exploit mistakes made by the ill-advised. To find a specialist solicitor, see the Association of Leasehold Enfranchisement Practitioners.
Solicitors don't have to be local to you (further afield can work out cheaper). Check whether their fee is fixed or an estimate. Remember, the more flats that take part, the cheaper each flat's legal costs should be (provided the freeholder doesn't drag the process out).
Among its tasks, the solicitor will prepare and serve the initial notice and amend the leases.
Ask the solicitor about possibly drawing up a legally binding participation agreement to avoid logistical headaches – especially if you're in a large block. If there is no agreement, flat owners may back out at the last minute, potentially scuppering the entire process.
Step 3. Value the freehold
The freehold will need to be valued. Appoint a specialist enfranchisement valuer to give a best and worst valuation, drawing on local experience. Budget for £500-£600ish per flat.
Use the Association of Leasehold Enfranchisement Practitioners to find a specialist valuer.
Step 4. Set up a limited company
Enfranchising blocks must decide a 'nominee purchaser' who will buy the freehold. This can be a person or a group, but usually it's a company specifically set up by the flat owners.
You can set up a limited company online for £200-£400ish plus VAT, or a solicitor can do it for you. The company must be set up before you serve the initial notice on your freeholder.
You'll have to file accounts and elect directors of the company, who will take decisions after you purchase the freehold. The director of the company will also have the same duties and liabilities as directors of other limited companies, so consider taking out directors' insurance.
Companies House has info on starting and running a company, or your solicitor can advise.
Step 5. Negotiate the price
Your solicitor may informally approach the freeholder first (the legals can work out cheaper this way). If this doesn't work, they will issue an initial notice formally, stating your offer.
From the moment notice is served, leaseholders are liable for a freeholder's reasonable legal and valuation costs, so your solicitor should ensure the notice is completed correctly.
The freeholder usually has two months to reply – after that, you can force them to sell at the price you proposed. Assuming the freeholder responds, they'll propose a counter-offer and negotiations will begin. If you can't agree a price, you can ask a tribunal to decide.
Some freeholders try to stall by claiming they are happy to sell at a fair price, but then fail to finalise the details. Your solicitor should be pushing them to complete by the deadlines set out in law, and, if they fail to do so, explain that you're willing to apply to a tribunal.
Step 6. Go to a tribunal
If you and the freeholder can't agree a price, you can ask the First-Tier Tribunal to decide.
Importantly, you're normally eligible to go to tribunal from two months after the freeholder's counter notice was due, with the latest you can apply normally being six months from when the freeholder's counter notice was due. Miss this window and you'll be stuck with your freeholder's costs and will have to start the whole process again.
You usually need to wait about four months for a hearing, though this varies. The First-Tier Tribunal sends a written decision. You can appeal in some cases; consult your solicitor.
The Government publishes lists of past tribunal enfranchisement decisions, which may help.
Step 7. Extend your leases and manage your building
Once the matter's settled, it's important to get your solicitor to extend everyone's leases to at least 150 years. The Federation of Private Residents' Associations has a useful pack, for a small fee, about what to include in a lease after you've purchased a freehold.
If you have a mortgage you may also need to transfer the mortgage from the old lease onto the new one. Some mortgage companies charge an admin fee for this, from circa £75.
After this, you'll take control of the building's management (where the real work begins).
Freeholders MUST offer flat owners the freehold
If a freeholder wants to sell the freehold, by law they must first offer it to the flat owners in the building (Right of First Refusal).
You may receive a 'Section 5 Notice' from the freeholder informing you they want to sell and the terms of the transfer. If you don't accept in time, the freehold can be sold on the open market. So if you get a notice or find the freehold was sold without giving you notice, contact a solicitor immediately.
Quick questions:
Yes, you can sell your flat while enfranchising. Though if you've signed a participation agreement, the buyer will have to pay for their share of the purchase cost, as agreed.
One reason for purchasing the freehold is because the freeholder can't be found.
In this case, specialist legal advice is essential, as there are different routes to secure the freehold for yourself (some being much cheaper than others).
Once the initial notice has been served to your freeholder, none of the flats' leases can be extended until the enfranchisement process ends.
While far more uncommon, there are some leasehold houses, though they come under different law to flats. Enfranchising is similar, but more complex and lengthy.
It's very important to speak to a solicitor with experience in this area. For more info about buying the freehold of a leasehold house, see the Leasehold Advisory Service.
The full qualification criteria to buy a share of your flat's freehold is:
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Your flat needs a long lease. Longer than 21 years and not a commercial lease.
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Your building must meet certain conditions. It must contain at least two flats, at least two thirds of which must be owned on a leasehold basis (not owned or retained by the freeholder). At least 75% of floor space must be used for residential purposes (not business).
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Certain properties are excluded. It's a no-go if it's a charitable housing trust, National Trust, crown or cathedral precinct property. And you've no right to buy the freehold if the freeholder lives in the block (or their family has for at least 12 months) and they lived there before it was converted into flats.
Can I sell my flat while we are enfranchising?
What if I can't find the freeholder?
Can I extend my lease while we are buying the freehold?
What if I own a leasehold house?
What is the full qualification criteria to buy my freehold?
Right to manage: step-by-step guide
Under the Commonhold and Leasehold Reform Act 2002, most leaseholders have the 'right to manage' their building. You don't have to prove any negligence or poor service.
This doesn't necessarily mean managing the building yourself – many blocks appoint a third party agent.
You should probably only consider this if you've issues with your property management company, like excessive service charges, substandard work or aggressive fee collecting. Try resolving these through the freeholder or management company in the first instance.
The qualification criteria for both buying a share of the freehold and right to manage are the same. So if you can get 50% of the flat owners to participate and have enough money, you may as well go all the way and buy the freehold. For similar effort, the prize is greater.
With right to manage, there are still costly lease extensions and little added home value.
Is your building eligible for right to manage?
Not all buildings can get the right to manage. The bullets below give a steer, but bear in mind the law is complicated, so you'll need to ask a specialist solicitor.
Two-thirds of flats in the building must be leasehold.
Participating flats must have leases that were at least 21 years in length when granted.
At least 75% of floor space must be used for residential (not business) purposes.
How much does it cost to get the right to manage?
Taking on the right to manage is far cheaper than buying a share of freehold. You pay no fee for the right to manage itself or valuation, yet there are still costs to bear in mind:
🪙 Legal fees
Legal fees vary according to a block's size, but typically start from £500 for a building with two flats to £2,500 for 20 flats. If the case goes to a tribunal, you'll have to pay more, generally an extra £1,500 to £2,500. These prices are per building, not per flat.
🪙 The freeholder's reasonable costs
A freeholder's reasonable costs are harder to predict, but could start at £2,000ish for a block of ten flats. For smaller blocks, the cost could be lower. If you think these costs are too high, you may be able to challenge them at a tribunal.
Be wary of management companies that help you assume the right to manage by charging a low fee but tying you into a long contract to use their management services.
How to take over your building's management
The process should be speedier than buying your freehold.
If you have a managing agent in mind to take on the management tasks, they may handle the right-to-manage process for you on the understanding you appoint them to manage the building afterwards – though do check you're not being tied into a long-term contract.
If not, here's how to start the right-to-manage process yourself:
Step 1. Set up a right to manage company
At least 50% of flat owners need to participate, so try and get these people together.
You'll then need to form a right-to-manage company. A solicitor could help with setting one up, or try the Association of Leasehold Enfranchisement Practitioners.
Step 2. Ask the other flat owners to take part
The new company then formally invites all the building's leaseholders to take part, with a 'notice to participate', which your solicitor will help you to draft.
Step 3. Inform the freeholder
Once at least 50% agree, your solicitor will send a 'claim notice', informing your freeholder you want to take up your right to manage. The freeholder will then either accept or challenge your notice. There is then a period of at least four months from service of the claim notice until the right to manage is acquired.
Some freeholders challenge the claim – yet don't give up (many flat owners do). If your freeholder challenges, you can apply to a tribunal to take over the management.Step 4: Take control
Some blocks appoint a managing agent to maintain the property, arrange insurance, collect service charges, etc. Or you can arrange all this yourself.
Note that you must invite the freeholder to join your right-to-manage company. The logic behind this is that the freeholder still owns the structure of the building and the land it sits on, and so has an interest in how the building continues to be managed.
See the Leasehold Advisory Service for more info on obtaining the right to manage.
Further help & advice
The Leasehold Advisory Service has a wealth of free advice on leasehold law, including service charges, extending your lease, buying the freehold, right to manage and applying to a tribunal.
You can also book a free 15-minute consultation with the Leasehold Advisory Service to discuss these topics further.
Help managing your building
You might have found it hard to buy a share of your freehold or get the right to manage, but now the real work starts... At this stage, flat owners take control of managing the building, from repairing the roof, fixing faulty lifts to changing light bulbs.
Some blocks pay a management agent to do this work on their behalf. For more information about appointing a managing agent, contact The Property Institute or see the Royal Institution of Chartered Surveyors website which lists residential managing agents.
The Federation of Private Residents' Associations has a pack about setting up a residents association, which costs £18. You may want to build up a sinking fund to pay for repairs.
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