Leasehold enfranchisement: costs, premium and the 2024 reforms

Enfranchisement is the collective purchase of a building's freehold under the Leasehold Reform, Housing and Urban Development Act 1993. The cost divides into two very different things: the premium paid to the freeholder for the freehold, and the transaction costs (valuers, solicitors, and the landlord's statutory costs).

Both were meaningfully changed by the Leasehold and Freehold Reform Act 2024 — parts of which are in force, parts of which are still awaiting commencement. Treat all figures as indicative and check the current statutory position at the date of your claim.

The premium — three limbs

The FTT (or Tribunal Upper Chamber on appeal) determines the premium using capitalised income and reversion values under Sch. 6 LRHUDA 1993:

1. Term value — the present value of the ground rent stream to expiry, capitalised at (currently) 6–7% for typical London blocks.
2. Reversion value — the present value today of the freeholder's right to receive the property back at lease expiry, discounted at (currently) around 4–5%.
3. Marriage value — half of the uplift in value created by the leaseholders obtaining a longer lease/freehold. Only applies where any unexpired term is 80 years or less. Removed prospectively by the 2024 Act.

Worked illustration (indicative)

For a 10-flat mansion block in Zone 2 with 82 years unexpired, current ground rents totalling £2,500 pa, aggregate long-lease value £8.5m, current short-lease value £8.0m:

• Term ≈ £30–35k
• Reversion ≈ £160–180k
• Marriage value ≈ £250k (dropping to zero if you cross the 80-year threshold post-reform commencement)

Total premium: ~£450k, or ~£45k per flat — but sensitive to yields and to comparable evidence.

Transaction costs

• Your valuer: £3–8k
• Your solicitors: £6–15k (higher for complex titles)
• Nominee purchaser company set-up: £300–500
• Landlord's reasonable costs under s.33 LRHUDA 1993: valuation and conveyance only. The 2024 Act removes recoverable landlord costs prospectively, subject to commencement.

The steps

1. Verify qualification: two-thirds long leases (over 21 years originally), 50% participating leaseholders, non-residential ≤25% (raised to 50% under the 2024 Act once commenced).
2. Incorporate a nominee purchaser (usually a company limited by guarantee).
3. Serve a Section 13 Initial Notice — inaccuracy is fatal.
4. Landlord serves Counter-notice within 2 months.
5. Negotiate; if not agreed within 2 months of counter-notice, apply to the FTT within a further 4 months.
6. Complete on the terms determined.

Individual lease extension (s.42)

Alternative for a single flat: 90 years added on top of the residue at a peppercorn ground rent. Same three-limb premium mechanics. Post-reform commencement the statutory extension will move to 990 years and marriage value drops out for all lease lengths.

Where cases go wrong

• Serving the Initial Notice with a manifestly low premium — grounds for the landlord to challenge validity.
• Missing a qualifying tenant off the participation list.
• Under-costing the reserve fund contribution for landlord costs.
• Ignoring underleases and intermediate landlords.

Reading list

• [Right to Manage: step-by-step guide](/guides/right-to-manage-rtm-step-by-step-guide-for-london-leaseholders)
• [Statutory lease extension: 90 years explained](/guides/statutory-lease-extension-90-years-guide-for-flat-leaseholders)
• [Leasehold Reform Act 2024: what changed and when](/guides/leasehold-and-freehold-reform-act-2024-what-changed-and-when)