Individual leasehold enfranchisement under the Leasehold Reform Act 1967 is one of the oldest and most litigated areas of landlord and tenant law. The Act was a radical intervention in the property rights of ground landlords, giving residential leaseholders the right to purchase their landlord's freehold interest at a price determined by statute — rather than by the market. The valuation regime under the 1967 Act has been reformed repeatedly (most recently by the Housing Act 1996, the Leasehold Reform Act 2002 amendments, and now the LFRRA 2024), and the price calculation for houses with more than 80 years remaining on the lease differs significantly from the calculation for shorter leases where marriage value is payable. This guide sets out the qualifying conditions, the price calculation, and the significant LFRRA 2024 reforms.
Qualifying Conditions — Who Can Enfranchise Under LRA 1967?
The qualifying conditions for individual enfranchisement of a house under the Leasehold Reform Act 1967 (as amended) are: (a) Long tenancy: the lease must be a 'long tenancy' — defined as a lease originally granted for a term exceeding 21 years; a lease originally granted for 21 years is not a long tenancy; a lease originally granted for 99 or 125 years qualifies; a periodic tenancy does not qualify; (b) The property must be a house: the Act applies to houses, not flats; a house is generally a structure that is divided horizontally rather than vertically — a flat above a shop may or may not qualify depending on whether the structure is a house (Tandon v Trustees of Spurgeons Homes [1982]); whether a structure is a house is a question of fact; (c) Tenant's occupation: the 1967 Act originally required the tenant to have occupied the house as their main or only residence for at least 3 years before serving notice; the Housing Act 1996 relaxed this to 2 years; under the LFRRA 2024, the occupation test is retained but the duration is reduced to 2 years; (d) Long lease at a low rent (historic test — now abolished for most purposes): the original 1967 Act included a 'low rent' test (rent below two-thirds of the letting value); this test was abolished for the majority of leases by the Commonhold and Leasehold Reform Act 2002; the LFRRA 2024 removes the low rent test entirely for all cases; (e) Rateable value limit (historic): the 1967 Act originally included rateable value limits; these were also progressively relaxed and the LFRRA 2024 removes any remaining rateable value limitations; (f) 2-year ownership before notice: the tenant must have held the lease for at least 2 years before serving notice of desire to enfranchise; (g) Sub-leasing: where the house has been sublet, the immediate tenant (the 'competent landlord' for the sub-tenant) can still enfranchise; the Act looks to the registered proprietor of the head leasehold interest.
- Long tenancy: lease originally granted for more than 21 years; periodic tenancies and shorter fixed-term tenancies are excluded
- House not flat: Act applies to houses; whether a structure is a house is a question of fact (Tandon [1982]); flats use the collective enfranchisement route (LRHUDA 1993)
- 2-year occupation: tenant must have occupied the house as their main or only residence for at least 2 years immediately before the notice
- 2-year ownership: tenant must have held the lease for at least 2 years; calculated from the date of the lease or the date of acquisition
- Low rent test and rateable value: abolished by LFRRA 2024; no longer a qualifying condition
The Price — Marriage Value, Hope Value, and the LFRRA 2024 Reforms
The price payable by the tenant for the freehold is calculated under LRA 1967 s.9 (as amended). The calculation methodology depends on the remaining term of the lease: (a) Original 1967 Act methodology (s.9(1) — low value leases): for leases falling within the original 1967 Act (rateable value not exceeding the original limits), the price is based on the site value of the house, being the amount by which the freehold value of the site (assuming the house was not there) exceeds the existing use value; this is the 'original method' and produces a low price; (b) The s.9(1C) 'modern' methodology (Housing Act 1996): for 'modern-method' leases (rateable value above the original limits, or new leases granted after 1990), the price is calculated as: (i) the diminution in value of the landlord's interest — the difference between the market value of the landlord's existing reversion (i.e. receiving ground rent and getting the property back at expiry) and the value of the landlord's interest after the tenant has the freehold; (ii) plus marriage value (if the unexpired term is less than 80 years) — the difference between the aggregate of the unencumbered freehold value and the leasehold value of the property, and the aggregate of the freehold reversion value and the leasehold value; marriage value is split 50/50 between landlord and tenant; (iii) plus compensation for loss to the reversioner (severance loss; injurious affection); (c) Marriage value — the contentious element: marriage value arises where the lease has less than 80 years unexpired; as the lease becomes shorter, the leasehold value falls (because any prospective buyer of the leasehold has to take into account the wasting asset and the eventual return of the property to the landlord); the aggregate of the freehold and leasehold interests (separately valued) is less than the unencumbered freehold value; the 'marriage value' is this difference; LFRRA 2024 abolishes marriage value for all lease extension and collective enfranchisement claims; (d) Hope value: in Dano Ltd v Earl Cadogan [2023], the Supreme Court confirmed that hope value (the additional value that a prospective buyer would pay for the freehold in anticipation of being able to develop or redevelop the site) can form part of the compensation payable to the landlord; hope value is relevant where the site has development potential — e.g. where planning permission might be obtained for additional dwellings or where the landlord's reversionary interest has value over and above the rental stream; (e) LFRRA 2024 reforms to the price: the LFRRA 2024 (when fully commenced) makes significant changes to the price calculation: (i) marriage value is abolished for house enfranchisement — the 50% share of marriage value payable to the landlord is removed; (ii) a new government-prescribed valuation rate replaces the existing negotiation on the discount rate applied to future ground rents and reversion; (iii) the reforms are designed to reduce the price payable and make enfranchisement more affordable; commencement of the valuation reform provisions is by secondary legislation.
- Modern method price: diminution in landlord's reversion + marriage value (if lease below 80 years, split 50:50) + compensation for loss
- Marriage value: additional value created by merging the freehold and leasehold interests; payable only where lease has under 80 years unexpired
- LFRRA 2024 abolishes marriage value: for all house enfranchisement and lease extension claims; commencement by secondary legislation
- Hope value (Dano v Earl Cadogan [2023]): Supreme Court confirmed hope value can be payable where the site has development potential
- Prescribed valuation rates (LFRRA 2024): government-prescribed rates will replace negotiated rates for the capitalisation of ground rents and term reversion
The Enfranchisement Process — Serving Notice and Completing the Purchase
The process for a leaseholder to exercise their right to acquire the freehold under the LRA 1967: (a) Tenant's notice of desire to enfranchise: the tenant serves a written notice on the landlord (the 'competent landlord') under LRA 1967 s.5 claiming the right to enfranchise; the notice must: (i) be in the prescribed form; (ii) identify the property; (iii) state that the tenant claims the right to enfranchise; (iv) give the tenant's name and address; the notice is protected by registration as a land charge (Class C(iv)) or by notice on the title register; (b) Landlord's counter-notice: within 2 months of service of the tenant's notice, the landlord must serve a counter-notice either admitting or denying the tenant's right; if the landlord admits the right, the counter-notice may make an offer of price — which the tenant can accept or dispute; if the landlord denies the right, the tenant must apply to the County Court to establish the right within 2 months; (c) Price agreement: if the price cannot be agreed by negotiation, either party can apply to the First-tier Tribunal (Property Chamber) (FTT) to determine the price; the FTT applies the statutory valuation methodology; (d) Completion: once the price is agreed or determined, the parties enter into a contract for the sale of the freehold on the terms of the Act; completion typically occurs 2-4 months after the price is agreed; (e) Landlord's right to defeat the claim — redevelopment: a landlord can apply to the court to defeat an enfranchisement claim where the landlord proposes to redevelop the premises within the next 5 years and requires vacant possession to do so; the landlord must demonstrate a genuine intention to redevelop; (f) Costs: the tenant bears the landlord's reasonable legal costs of the enfranchisement (including the preparation of the transfer deed and the landlord's surveyors' fees for the valuation); the tenant also bears their own legal and surveying costs.
- Tenant's s.5 notice: served on the competent landlord; prescribed form; must identify the property and state the enfranchisement claim; registered as a land charge
- Landlord's counter-notice: within 2 months; admit or deny the right; make a price offer; denial requires tenant to apply to County Court within 2 months
- FTT price determination: if price not agreed, either party can apply to the First-tier Tribunal (Property Chamber) for statutory valuation
- Landlord's redevelopment right: landlord can defeat the claim if they intend to redevelop within 5 years and require vacant possession — genuine intention required
- Tenant pays landlord's costs: the tenant is liable for the landlord's reasonable legal and surveying costs of the enfranchisement
LFRRA 2024 — Key Reforms and Commencement
The Leasehold and Freehold Reform Act 2024 received Royal Assent on 24 May 2024. Its key provisions affecting house enfranchisement are: (a) Abolition of marriage value: the 50% share of marriage value payable to the landlord in any enfranchisement or lease extension where the lease has under 80 years unexpired is abolished; this is the single most significant financial change for leaseholders with short leases — it can reduce the enfranchisement price by tens of thousands of pounds; (b) Prescribed valuation rates: the government will set by secondary legislation the 'prescribed rates' to be used in the statutory valuation formula for capitalising ground rents and discounting the reversion; the prescribed rates are designed to reduce variability in valuation disputes; (c) Abolition of the low rent test: the remaining cases where the low rent test still applied (under the original s.9(1) methodology) are resolved — the LFRRA 2024 removes the low rent test entirely; (d) Non-residential floorspace limit relaxed: for collective enfranchisement (flats, not houses), the limit on non-residential floorspace in a building is increased from 25% to 50% — broadening the right to collectively enfranchise; (e) Right to manage threshold: the LFRRA 2024 also relaxes the RTM qualifying conditions; (f) Commencement: many LFRRA 2024 provisions (including the marriage value abolition and prescribed rates) require commencement orders; as of June 2026, the commencement timeline for the valuation provisions is awaited; the Act is not yet fully in force; leaseholders should take advice on the current law at the time of any proposed enfranchisement; (g) Historical context: the 1967 Act has been litigated extensively; key cases include: Boswell v Crucible Steel Co of America [1925] (on the structure of the price); Manson v Duke of Westminster [1981] (on what constitutes a house); Malekshad v Howard de Walden Estates Ltd [2002] (part of building that can be a house); James v UK [1986] ECHR (compatibility with Article 1 Protocol 1 property rights).
- Marriage value abolished (LFRRA 2024): the 50% landlord share of marriage value is removed for all enfranchisement and lease extension claims; commencement by secondary legislation
- Prescribed valuation rates: government-set rates replace negotiated rates for capitalising ground rents and discounting reversion — reduces valuation disputes
- Low rent test fully abolished: no leaseholder is now excluded from the right to enfranchise on the basis of the rent they pay
- Non-residential floorspace (collective): limit increased from 25% to 50% for collective enfranchisement of mixed-use buildings
- Commencement: key LFRRA 2024 valuation provisions are not yet commenced as of June 2026; current law still applies until commencement orders are made
Frequently asked questions
Who has the right to buy the freehold of a house under the Leasehold Reform Act 1967?+
Any tenant who holds a long lease (originally granted for more than 21 years) of a house, has occupied the property as their main or only residence for at least 2 years, and has held the lease for at least 2 years has the right to enfranchise under the LRA 1967. The low rent test and rateable value limits — which historically excluded some leaseholders — have been progressively abolished and are now fully removed by the LFRRA 2024 (commencement pending).
What is marriage value and does it still apply to house enfranchisement?+
Marriage value is the additional value created by merging the freehold and leasehold interests in a property. It arises when the lease has fewer than 80 years unexpired — as the lease shortens, the leasehold value falls below the freehold value, creating a 'marriage gain' when the two are combined. Historically, 50% of the marriage value was payable to the landlord in house enfranchisement. The Leasehold and Freehold Reform Act 2024 abolishes marriage value for all enfranchisement claims. The commencement date for this provision is awaited.
How is the enfranchisement price calculated?+
The price under the modern method (LRA 1967 s.9(1C)) is: (1) the diminution in value of the landlord's freehold reversion (the difference between the landlord's interest before and after the enfranchisement); plus (2) 50% of the marriage value (where the lease has under 80 years to run); plus (3) compensation for any other loss to the landlord (severance; injurious affection). The price is typically determined by a RICS-registered valuer using the leasehold reform valuation tables, and disputed prices are resolved by the First-tier Tribunal (Property Chamber).
What does the Leasehold and Freehold Reform Act 2024 change for house enfranchisement?+
The LFRRA 2024 makes several important changes: (1) abolishes marriage value — the 50% landlord share of marriage value is removed for all enfranchisement and lease extension claims; (2) introduces prescribed valuation rates to reduce variability in the statutory valuation; (3) fully removes the low rent test. Many of these provisions require commencement orders and are not yet in force as of June 2026. Leaseholders should take current legal advice before serving a notice of desire to enfranchise.
Can a landlord refuse a house enfranchisement claim?+
A landlord can deny the tenant's right to enfranchise in the counter-notice (within 2 months of the tenant's notice). If the landlord denies the right, the tenant must apply to the County Court within 2 months to establish the right. A landlord can also apply to defeat the claim if they genuinely intend to redevelop the premises within 5 years and need vacant possession — the landlord must demonstrate genuine intention and obtain court approval. The landlord cannot simply refuse to sell — the right to enfranchise is a statutory right that the landlord cannot waive or exclude.