Ministers want leaseholders to gain control. So why has collective enfranchisement collapsed?

Collective enfranchisement claims have collapsed 75% between 2016 and 2024.

The last government’s ill-conceived two-storey permitted development give-away to freeholders made enfranchisement far more expensive

Leaseholders are also holding back until enfranchisement – including freeholders’ development claims – are reformed

Meanwhile, RTM claims have risen

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By Alexander Hamilton

 Dr Alexander Hamilton  is an economic adviser and development economist at the UK’s FCDO, where he specialises in the economies of the Middle East and North Africa. He writes on the economics of leasehold in a private capacity. The views in this article are his own, and do not necessarily reflect those of the FCDO or the UK government. His scholarly work can be found here: Alexander Hamilton – Google Scholar‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬.

Key Points

• Using novel data, kindly provided by the Land Registry, we document what appears to be the collapse of collective enfranchisement claims in recent years. As far as we are aware, this is the first published analysis of these data.
  
• The serving of s13 notices (which is a proxy for the number of collective enfranchisement claims) reached a high of 894 in 2016, but by 2024 this had collapsed to approximately 232 (possibly up to 274) claims, the lowest on record since at least 2012, representing a decline of almost 75%.
  
• While the decline in collective enfranchisement claims is due to a variety of factors, the timing of the accelerated decline, its persistence after Covid restrictions ended, and the contrasting rise in RTM formations are consistent with development value — amplified by the rapid increase in permitted development — becoming a more important practical barrier to collective enfranchisement.
  
• If policymakers want to revive collective enfranchisement, they should incorporate the Law Commission’s recommendation on development value into the Commonhold and Leasehold Reform Bill, as recommended by the Housing Select Committee. Commencing the relevant provisions of LAFRA is also important, but where development value exists, it is likely to dwarf those savings and remain the main barrier to enfranchisement.

Introduction

If commonhold is to become the default tenure for flats, existing leaseholders need a practical route out of leasehold. For most blocks, that route is collective enfranchisement: leaseholders come together, buy the freehold, and then have the ability to convert to commonhold.

However, using unpublished data, kindly provided to us by the Land Registry (see bottom of the article), we find that this route is not merely under-used. It appears to have gone into steep decline just when leasehold reform was supposed to be widening the path to ownership and control.

Measuring Collective Enfranchisement

There is no central database of completed collective enfranchisements. However, the Land Registry does collect data on the intention to collectively enfranchise in England and Wales.

Specifically, as part of the process for collective enfranchisement, leaseholders can register their s13 notice — the notice served on the freeholder to start the statutory process of collective enfranchisement — with the Land Registry. Registered s13 notices are not the same as completed enfranchisements. They are best understood as a proxy for formal attempts to begin the statutory collective enfranchisement process.

Because registration is not mandatory, they may undercount total claims. Because not every claim completes, they may overcount successful enfranchisements. The analysis therefore treats registered s13 notices as an indicator of enfranchisement activity, not as a measure of completed acquisitions.

These data were used in the Leasehold and Freehold Reform Act (2024) Impact Assessment (p.75) to assess the impact that the Act would have on collective enfranchisement. Specifically, the Impact Assessment used data from 2012 to 2021 of registered s13 notices. For the first time, and with many thanks to the Land Registry for providing the data (see bottom of the article for details), we extend this dataset to include the years 2022, 2023, and 2024 (the last full year for which data was available).

The Land Registry confirmed that the data provided were comparable to those used in the Impact Assessment.

However, for 2022–2024, they provided two sets of figures: confirmed s13 notices and a wider set of registrations that could be either s13 or s42 notices. As we do not know how the Impact Assessment dealt with ambiguous registrations, we present two estimates for 2022–2024: confirmed s13 notices and an upper-bound estimate, which includes all potential s13 notices. This upper-bound estimate is likely to overstate the number of s13 notices, as some of these additional registrations are likely to be s42 notices.

Finally, unfortunately data on enfranchising houses is exceedingly difficult to collate, so this is not considered further. Thus, our analysis is about collective enfranchisement of flats rather than enfranchisement of houses.

Results

Figure 1 shows a striking collapse in collective enfranchisement notices registered by year. s13 notices rose strongly in the early part of the period, reaching almost 900 in 2016. But from 2017 onwards they fell almost continuously, reaching just over 300 by 2023 and around 230 by 2024, almost a 75% decline since 2016.

Even allowing for the upper-bound estimate in the later years, the fall is substantial and persistent. Annual totals in the diagrams are plotted at the end of each calendar year.

Figure 1 also shows why the addition of the most recent years to the analysis (2022-2024) is crucial. While the data in the Impact Assessment already tracked the decline in collective enfranchisement from 2017 and the acceleration of this decline in 2020 and 2021, it was not apparent that this decline would continue. In fact, quite plausibly, the Impact Assessment attributes the sharp decline in s13 registrations in 2020 to the Covid-19 lockdowns (Impact Assessment, p.75):

‘This data shows notices of intention were broadly stable from 2014 to 2019, hovering between 800-900 a year. The reduced figures in 2020 may be unusually low due to Covid lockdowns. We have used an average from 2015-2019 of 790 in the baseline in order to exclude this impact’.

This assessment appears to be entirely reasonable if we only had data up to 2021. However, if the Covid-19 lockdowns caused a temporary suppression in s13 notices, we would expect this ‘pent-up demand’ to show in an increase in s13 notices in subsequent years. Yet, what we see is a continued decline in s13 notices, with the rate of decrease accelerating in 2024. Thus, while the Covid-19 lockdowns may explain part of the 2020 fall, they are unlikely to explain the continued decline through 2024.

If Covid-19 was not solely responsible for the continued decline in collective enfranchisement between 2020 and December 2024, what else might explain it? There have been no legislative changes to the collective enfranchisement process in this period. The only possible reform that would have made the process slightly easier and cheaper was the abolition of the 2-year qualifying rule before a leaseholder can seek to enfranchise, but this happened in January 2025- so after our time period.

While no leasehold-specific changes occurred in this period, a regulation was commenced on 31 August 2020, that did have a profound effect on leaseholders seeking to enfranchise. This was The Town and Country Planning (General Permitted Development) (England) (Amendment) Regulations 2020. As the Explanatory Memorandum to the regulation explained, the reform allowed, subject to specific exceptions:

‘The right allows the construction of 2 additional storeys of new homes on the topmost residential storey of existing, detached, purpose-built blocks of flats of 3 storeys or more above ground level.’

It was reported by LKP here:

Has Jenrick just handed £1bn each to Astor, Tchenguiz and Wallace Estates with two-storey planning gift?

The potential impact of this regulation on the ability of leaseholders to collectively enfranchise was understood at the time.

Essentially, the regulation would result in many more buildings having development value that would make enfranchisement financially impossible as leaseholders would not only have to compensate the freeholder for the reversion value of their properties and ground rents, but also the full market value of any development potential attached to the building.

The Secretary of State at the time assured the House of Commons that this would be dealt with because the upcoming Leasehold and Freehold Reform Act (2024) would incorporate the Law Commission’s recommendations that leaseholders should not have to pay development value when collectively enfranchising.

As the said Secretary of State, who introduced the regulation in August 2020, noted in a written statement to the House of Commons in January 2021:

The Government will reform the process of enfranchisement valuation leaseholds must follow to calculate the cost of extending their lease or buying their freehold…Leaseholders will also be able to voluntarily agree to a restriction on future development of their property to avoid paying ‘development value.’

However, while the vast majority of the Law Commission’s recommendations on enfranchisement made it into Leasehold and Freehold Reform Act 2024, this was not the case for its recommendation on development value.

As we have documented before (see: here and here), where it exists, development value is likely to make enfranchisement financially crippling and is many multiples bigger than any of the expected cost savings from implementing all the other Law Commission recommendations to make enfranchisement cheaper.

An illustrative example of this was actually made during the passage of LAFRA in the House of Lords, by a peer [Baroness Andrews, Labour] who explained its impact on her own enfranchisement process:

“I declare an interest as a leaseholder in a block of flats that has been under threat of an upward extension for not two years but five years. The consequent blight and anxiety have been considerable. Asking for compensation for not extending upward is now an accessible and popular option for freeholders looking for more profit, especially when it falls under the relaxed requirements of permitted development…Given that upward extension can be authorised in wider circumstances than the normal planning rule, it is estimated that there are about 2.2 million custom-built private sector leasehold flats in blocks where development value—for example, for upward extension—could be an issue, and therefore where leaseholders might face this additional obstacle to enfranchisement…To give a graphic illustration, in our own situation in my block of flats, when faced with a development we were not consulted on and did not want, we sought to enfranchise ourselves. The cost was originally estimated at £750,000 for 103 flats. Now the development value has been added, that has shot up to £1.75 million. We can no longer raise the funds, and we cannot buy the freehold….What has shocked me most as I have pursued the Government on this point is that the impact assessment on upward extension of permitted development shows that the Government actually knew that this would happen. They anticipated that upward extensions would generate freeholder profits to the tune of £530 million in land value uplift, even without any actual development. Moreover, the impact statement recognised that this may make it more expensive for leaseholders to enfranchise…to their credit, the Government realised that there was something wrong, especially since it would contradict the policy intentions of this Bill to make enfranchisement cheaper. So, they referred it to the Law Commission, which reported in 2020 on options to make enfranchisement cheaper and easier.

As Figure 2 below shows, while the fall in s13 notices starts before the formal commencement of the 2020 permitted development rights, the decline accelerates after the permitted development regime was introduced.

The shaded area marks the period after the commencement of the relevant permitted development rights (31 August 2020), and the dotted trend line shows the 2016–2019 s13 trend projected to the end of 2024. This shows that actual s13 notices fall materially below the pre-2020 trend after the introduction of permitted development.

While this legislative change provides a plausible explanation for the accelerated decline in collective enfranchisement claims, non-legislative factors may also have contributed.

Perhaps leaseholders are increasingly satisfied with their third-party landlords or consider it too difficult to organise collectively.

Figure 3 provides an important check on the story by plotting the number of new Right to Manage (RTM) companies in England for every year since 2012 (Source: Companies House). RTM company formation is also an imperfect measure: not every company will proceed to acquire management rights.

But as a broad indicator of collective leaseholder mobilisation, it is useful because it captures whether leaseholders are still organising around control of their buildings.

If the fall in collective enfranchisement were simply a collapse in leaseholder appetite for control, then we might expect right-to-manage activity to fall as well. But the opposite appears to be happening. RTM formations in England were broadly stable at around 390–490 per year between 2012 and 2018. After that, despite a dip in 2023, they rose to 670 in 2024 and 781 in 2025, while s13 notices continued to decline.

The RTM data also help test another possible explanation for the fall in collective enfranchisement: that leaseholders were postponing claims while waiting for LAFRA reforms to make the process cheaper and easier.

RTM is useful in this respect because, unlike most collective enfranchisement reforms, the relevant RTM provisions have now been commenced.

These provisions, passed as part of LAFRA in May 2024, widened eligibility for RTM by increasing the permitted non-residential floorspace threshold from 25% to 50%, and reduced costs by removing, in ordinary cases, the requirement for leaseholders to pay the freeholder’s legal costs.

They came into force on 3 March 2025. Yet Figure 3 shows that RTM formations had already begun rising sharply from 2023, before those provisions were commenced. There is therefore little evidence that the increase in RTM formations was simply a response to commencement of the LAFRA reforms. The reforms may nevertheless help explain why RTM activity continued to rise in 2025, reaching 781 formations — the highest annual total since 2012.

This divergence is revealing. Right to Manage gives leaseholders control over management without requiring them to buy the freehold. Collective enfranchisement requires leaseholders to buy the freehold, including whatever value is attached to the freeholder’s ground rents, reversionary interest, and development potential.

If RTM is rising while collective enfranchisement is falling, that points away from a simple story of apathy and towards a price or feasibility problem. Leaseholders still appear to want control; what they may no longer be able to afford is the freehold.

Other factors may also have contributed, including higher borrowing costs, wider housing-market uncertainty, legal costs, and the possibility that some leaseholders deferred claims while awaiting reform. But these explanations do not easily account for the simultaneous rise in RTM formations, nor for the specific affordability shock created where development value is priced into the freehold.

Past and present government reform programmes recognise that enfranchisement and right to manage are essential leaseholder rights.

In its 2023 response to the Law Commission consultation, the then government accepted reforms intended to broaden access to enfranchisement and right to manage, including raising the non-residential limit from 25% to 50% and introducing mandatory leasebacks in collective enfranchisement.

The Leasehold and Freehold Reform Act 2024 includes provisions on eligibility, collective enfranchisement, leasebacks, longer lease extensions and a new method for calculating enfranchisement prices, although some provisions require commencement and secondary legislation. The current government’s Commonhold and Leasehold Reform Bill seeks to cap ground rents at £250 and eventually abolish them.

But those reforms will not solve the problem if development value remains an upfront barrier. The data suggest that the problem is not merely procedural complexity. It is that the economic bargain has shifted. Once additional development potential is priced into the freehold, the right to enfranchise may exist in law but be unaffordable in practice. That is the worst possible outcome: a formal right that becomes too expensive to exercise.

This also matters for commonhold.

The stated direction of travel is towards replacing leasehold with a fairer, more democratic commonhold system. The 2026 Leasehold Toolkit describes the reform programme as moving away from an “out of date, exploitative and unproductive leasehold model” towards commonhold. But commonhold cannot become a meaningful route for existing leaseholders unless collective enfranchisement is made viable. Otherwise commonhold becomes a new-build solution, while existing leasehold blocks are left behind.

The policy lesson is straightforward. If policymakers want leaseholders to own and control their buildings, they must deal directly with development value.

The freeholder should not be able to hold leaseholders hostage to speculative rooftop or airspace value, particularly where leaseholders have no intention of building upwards.

The Law Commission’s overage approach remains the obvious solution: defer compensation for development value until development actually occurs. This was recognised in the Housing Committee’s Report on the pre-legislative scrutiny of the Commonhold and Leasehold Reform Bill which recommended that the proposal be incorporated into the final version of the Bill (p.46):

“Recommendation: The government must enact the remaining Law Commission recommendations on leasehold enfranchisement following the approach set out in the Appendix of this report. In particular, the government must enact measures to ensure leaseholders can avoid paying development value upfront by voluntarily agreeing to a restriction on future development of their property.”

In fact, in the Appendix of the report, Professor Nicholas Hopkins, the lead commissioner for the Law Commission’s residential leasehold and commonhold project, recommends that dealing with development value should be one of the priorities of the Commonhold and Leasehold Reform Bill (ibid, p.145-146):

“In the event that some, but not all, remaining recommendations are able to be included in the final Bill, a prioritisation of which should be included is provided…. Based on the criteria set out above, my suggested prioritisation is as follows: a. Development restrictions[emphasis added].

There is a broader fairness point too. Much of the value in a block of flats has already been paid for by leaseholders. They bought the flats, pay the service charges, fund the maintenance, insure the building through charges, and bear the day-to-day risks of living there. Yet the freeholder can retain a financial claim over development possibilities above, around or within the building — and then charge leaseholders for that claim when leaseholders try to acquire democratic control.

Conclusion: Who killed collective enfranchisement?

So, who killed collective enfranchisement?

The data do not prove a single cause, nor do they prove that permitted development and development value caused the collapse in collective enfranchisement.

However, they do show that the decline in collective enfranchisement continued well after Covid restrictions ended, that the fall widened after the introduction of the 2020 permitted development regime, and that leaseholders continued to organise through RTM companies over the same period.

Furthermore, past modelling exercises show that, for a typical leasehold block, development value would make collective enfranchisement financially crippling. Taken together, this points to affordability and feasibility — not apathy — as the central problem. Development value is therefore not a technical valuation issue. It is a central barrier to any realistic transition from leasehold to commonhold.

If policymakers want a commonhold future for current as well as future homeowners, they must confront development value directly. Unless it is tackled, existing leaseholders may find themselves trapped in the leasehold past rather than becoming part of the commonhold future.