When your lease is running short, you have two main routes to solving the problem: extend your lease individually, or join forces with other flat owners to buy the freehold of the building. Both add value to your property and both have legal frameworks behind them. But they work very differently in practice, and which one makes sense depends on your building, your neighbours, and your plans.
What is the difference?
A lease extension adds 90 years to whatever time remains on your existing lease and reduces the ground rent to a peppercorn (effectively zero). You use the statutory process set out in the Leasehold Reform, Housing and Urban Development Act 1993. You remain a leaseholder, but with a much longer lease that is fully mortgageable and retains its value.
Buying the freehold - known legally as collective enfranchisement - means you and the other flat owners in the building join together to purchase the freehold from the landlord. You typically set up a company (a freehold management company) to hold the freehold, and then grant yourselves new, very long leases - usually 999 years at zero ground rent. This is also governed by the 1993 Act.
Both routes give you a long lease and zero ground rent. The difference is in who controls the building afterwards and what it takes to get there.
Lease extension in detail
How it works
You serve a Section 42 notice on your freeholder, formally requesting a 90-year extension at zero ground rent. The freeholder has two months to respond with a counter-notice. If you cannot agree on the premium, either side can apply to the First-tier Tribunal (Property Chamber) to determine the price. The whole process typically takes 6-12 months. For a full walkthrough, see our Section 42 notice guide.
Advantages
- You can do it on your own without needing agreement from other flat owners. This is the biggest practical advantage
- The statutory process is well established - solicitors and surveyors handle hundreds of these every year
- You get a guaranteed 90-year extension at zero ground rent. The freeholder cannot refuse it (assuming you qualify)
- Since January 2025, there is no minimum ownership period - you can serve notice straight away
- The process is quicker than collective enfranchisement - typically 6-12 months versus 12-18 months
Disadvantages
- You still have a freeholder who controls the building. If you have issues with management, service charges or building maintenance, those problems remain
- Service charge disputes, building insurance arrangements and major works decisions stay in the freeholder's hands (unless you also have a recognised tenants' association or Right to Manage)
- The premium can be expensive, particularly once the lease drops below 80 years. This is because of the marriage value element - the freeholder is entitled to 50% of the increase in value created by the extension
- You pay the freeholder's reasonable legal and surveyor costs on top of your own. Budget for £3,000-£5,000 in total professional fees on both sides
Typical costs
The premium depends on the flat's value, the remaining lease length, and the ground rent. As a rough guide for a flat worth £400,000 on a long lease:
- 75 years remaining: Premium of roughly £15,000-£25,000
- 65 years remaining: Premium of roughly £35,000-£50,000
- 55 years remaining: Premium of roughly £55,000-£75,000
These figures are indicative. Use our lease extension calculator for an estimate based on your specific numbers, or get a formal valuation from a specialist surveyor.
Buying the freehold in detail
How it works
At least 50% of the qualifying flats in the building must participate. You form a nominee purchaser (usually a limited company), serve an initial notice on the freeholder under Section 13 of the 1993 Act, and negotiate or have the Tribunal determine the price. Once completed, your company owns the freehold and can grant new leases to participating flat owners.
Advantages
- Full control over the building and its management. You appoint your own managing agent (or self-manage), control the service charge budget, choose your own building insurance and decide on major works
- You can grant yourselves 999-year leases at zero ground rent. This effectively eliminates the lease as an issue for the foreseeable future
- No more dealing with an unresponsive or exploitative freeholder
- Can work out cheaper per flat than individual lease extensions, especially in buildings with many flats. The total cost is split between participating owners
- Adds significant value. A share of freehold flat with a 999-year lease is worth very close to 100% of freehold value
- Eliminates ground rent for all participating flat owners
Disadvantages
- Requires agreement and cooperation from at least 50% of qualifying tenants. Getting neighbours on board can be the hardest part of the entire process
- More complex and expensive legal process. Expect total professional fees (for the group) of £10,000-£30,000 depending on the building's size and complexity
- You take on responsibility for building management. Some owners find this a burden rather than a benefit
- Not all buildings qualify. The building must contain at least two flats, at least two-thirds of the flats must be held by qualifying tenants, and no more than 25% of the building can be non-residential
- Non-participating flat owners do not get new leases automatically. They retain their existing leases and deal with the new freeholder (your company) instead
- The process typically takes 12-18 months from start to finish
- If one participating owner drops out mid-process, it can derail the whole claim
Typical costs
The freehold purchase price is broadly similar to the sum of what individual lease extensions would cost - but there are savings because you avoid paying marriage value individually and the freeholder cannot charge for the same element twice. In a block of 6 flats, the total might be £80,000-£150,000 split between participating owners.
On top of the purchase price, budget for:
- Your solicitor's fees: £3,000-£6,000 (shared between participants)
- Your surveyor's valuation: £1,500-£3,000 (shared)
- The freeholder's reasonable costs (legal and surveyor): £3,000-£8,000 (shared)
- Company formation and administration: £500-£1,000
Side-by-side comparison
| Lease extension | Buying the freehold | |
|---|---|---|
| Can you do it alone? | Yes | No - need 50% of qualifying tenants |
| Lease length added | 90 years | Up to 999 years |
| Ground rent | Reduced to zero | Reduced to zero |
| Typical timeline | 6-12 months | 12-18 months |
| Building control | Remains with freeholder | Transfers to flat owners |
| Minimum ownership | None (since Jan 2025) | No minimum (for the claim - individual owners must qualify) |
The Leasehold and Freehold Reform Act 2024
The Leasehold and Freehold Reform Act 2024 received Royal Assent in May 2024. The removal of the two-year ownership requirement came into force on 31 January 2025, meaning you can now serve a Section 42 notice immediately after purchasing. However, the bigger changes - including abolishing marriage value and introducing a standard valuation method - are not yet in force and are expected late 2026 at the earliest. For now, the 1993 Act still governs both processes in most respects. See our guide to the 2024 Act for the latest position.
Which should you choose?
Choose a lease extension if:
- You want to act quickly and independently
- Your neighbours are uncooperative or uninterested
- You are planning to sell within the next year or two and just need a mortgageable lease
- You are happy with the current building management
Choose collective enfranchisement if:
- You and your neighbours are willing to work together
- You plan to stay long-term and want control over management and costs
- You have issues with your current freeholder
- You want the maximum possible lease length (999 years rather than the current term plus 90)
Consider selling to us if: Neither option works for your situation - perhaps you cannot afford the upfront costs, cannot get your neighbours on board, or simply need to move on quickly. We buy short lease flats as they are and handle the lease issues ourselves after purchase. There is no need to extend first. Get a free, no-obligation valuation or call us on 020 7183 3022 to discuss your options.