Enfranchisement vs RTM vs Commonhold: Decision Guide

Buying a leasehold property in the UK can be complex, especially when you start exploring ways to gain more control. Whether you’re considering collective enfranchisement, the Right to Manage (RTM), or switching to commonhold, each option offers a different route to ownership, management, and long-term value.

If you’re aiming for a share of the freehold (or simply better control over how your building is run) choosing the right path can have a significant impact on both costs and property value. This guide breaks down how each option works and which one is likely to suit your situation.

Understanding Each Ownership Structure

Collective Enfranchisement (Buying the Freehold)

Buying the freehold through collective enfranchisement is when leaseholders join forces to buy the freehold interest in their building under the Leasehold Reform, Housing, and Urban Development Act 1993, which governs the legal right for flat owners to take full ownership of their property.

To qualify, at least half of the building’s leaseholders need to be on board, and the property needs to tick boxes like being a block of flats with at least two flats. Enfranchisement has plenty of benefits, like having control over how the place is managed, being able to set ground rent and potentially see your flat’s value boost.

Overall, it’s a complex process that can be costly and might even involve some freehold valuation disputes. You might need to get some specialist advice from leasehold enfranchisement experts to help navigate the minefield. 

Even so, if you are ready to take the plunge and own your property outright, especially if you have been there for a long time, then this might be the way to go.

Right to Manage (RTM)

Unlike collective enfranchisement, the Right to Manage (introduced by the Commonhold and Leasehold Reform Act 2002) grants leaseholders the statutory right to manage their building without actually owning the freehold. So, if full, shared ownership of the building isn’t your preference, but managing it is, RTM might be the best choice, especially if you’re already dealing with poor management issues.

When residents start looking at RTM, they form a company and most of the leaseholders have to be on board before you go. The big plus is that you get to call the shots on maintenance and services for a lower price tag. The landlord still gets the ground rent and there are all sorts of hoops to jump through. 

The landlord can also still insist that any management decisions stick to what’s laid out in the lease, which is bound to throw up a few obstacles along the way.

Commonhold

Commonhold isn’t just a buzzword; it’s an alternative to traditional freehold, crafted to replace the leasehold model for flats. In a commonhold, individual owners hold their property “units” while a commonhold association oversees shared areas.

The standout advantage of commonhold is perpetual ownership—imagine no lease expiry or ground rent. Yet, despite its appeal, commonhold faces challenges such as limited uptake and the conversion difficulties it poses. Freeholder cooperation isn’t needed, but that’s a double-edged sword because it can slow down the process, particularly in mixed use buildings. The leasehold reform bill may address these challenges, making commonhold more accessible.

Commonhold might appeal to new developments or groups inclined toward overhauling the existing system for something more progressive and long-term.

Leaseholder Services and Gaining Control

Getting a handle on how much control and ownership you’ve got with each option is a good comparison point to help you make the right choice:

• Enfranchisement gives you the keys to the kingdom – full ownership and control. You get to make the rules, handle day-to-day management of the property, and benefit from any increases in the property’s value. Having a share of freehold can make that even more rewarding.
• RTM lets you be in charge of managing the building, but you don’t actually own the freehold. It’s a bit like being a supervisor – you’ve got a say in what happens, but the ultimate decision makers are elsewhere.
• Commonhold gives you some middle ground. You own your unit outright, but you also have a say in how the building is run through the commonhold association.

Property Ownership Models & Costs

When you’re looking at the different property ownership models, the costs can make a big difference – especially when it comes to freehold ownership.

• Enfranchisement is generally going to cost you the most upfront, especially when you factor in legal costs and getting a valuation done.
• RTM, while it’s not exactly cheap, is a more affordable option. Your costs are mainly going to be setup and ongoing management costs.
• Commonhold is a bit harder to pin down – it could be a real hassle to convert existing buildings to Commonhold, but it might be more straightforward if you’re starting from scratch with a new build.

Aspect	Enfranchisement	RTM	Commonhold
Maintenance	Owner-driven	Leaseholder-managed	Commonhold association-managed
Resale Value	Potentially higher due to full ownership	Moderate increase due to better management	Stable due to perpetual ownership
Community Governance	Allows for customised governance	Structured management under RTM company	Consistent, shared governance through the commonhold association

Factors Affecting Lease Enfranchisement Options

Deciding between these options isn’t like picking out your favourite ice cream. You’ll need to consider several factors with a customer focus:

• Number of participating leaseholders: Getting a solid group on board is crucial.
• Building age and condition: Older or poorly maintained buildings might require more proactive management.
• Budget and appetite for legal processes: Assess your financial capacity and tolerance for complex procedures.
• Desired level of control: Do you want day-to-day control or just better management?

A decision flowchart or checklist can help crystallise your thoughts—in fact, professional guidance is highly recommended. Consulting with solicitors, valuers, or managing agents can clarify the steps needed and help prevent costly errors. For example, if your main goal is better building management without taking on full ownership costs, RTM could be the perfect fit.

Step-by-Step Overviews: Enfranchisement vs RTM vs Commonhold

Taking the plunge into any of these options involves specific steps. Here’s a closer look:

Collective Enfranchisement Process

The collective enfranchisement Process involves:

1. Initial meeting with leaseholders to discuss feasibility and involvement of qualifying tenants
2. Conduct a freehold valuation
3. Serve a legal notice to the freeholder
4. Enter negotiation and potentially engage in dispute resolution
5. Complete the transaction to buy the freehold of your flat

RTM Process

1. Form an RTM company with participating leaseholders, particularly those in mixed use buildings
2. Serve formal notice to the landlord
3. Experience the transition as you take over management duties including section 20 consultation

Commonhold Conversion

1. Secure collective agreement among qualifying leaseholders
2. Register the commonhold association
3. Transfer property titles to the new structure ensuring section 5 right of first refusal is considered

Visual timelines or infographics can make these processes easier to understand and implement.

Legislative Outlook for 2026 and Beyond

Some big Leasehold Reform changes are coming down the track. They include ideas to make the commonhold route more appealing and essentially scrap ground rents altogether. The leasehold reform bill is a key part of all this – think about whether it might be better to get in early rather than waiting to see what happens next. Every decision you make has long-term consequences, so getting your head around both the current and future state of the law will help you make the smartest choice – especially if you’re an existing leaseholder looking for some stability. The law commission and the competition and markets authority are the key players in all this.

Summary and Key Takeaways

Navigating the maze of leasehold options can feel daunting. Yet, it’s essential to grasp the main differences, so here’s a quick rundown to cement the critical insights:

• Enfranchisement offers complete property ownership with the potential to customize management and financial benefits but requires significant financial and process commitment.
• RTM provides management control without the need for ownership, making it a cost-effective way to improve property management and services while considering ground rent and service charges.
• Commonhold allows for perpetual unit ownership and shared governance but may face hurdles in adoption and implementation, especially in existing buildings.

When you’re trying to decide which path to take:

• How many of your fellow leaseholders are on board will be a big factor in whether any of these options work for you.
• Take a good hard look at the state of your building and its needs – weigh up the long-term benefits against any immediate costs, including upkeep costs, you might face.
• Choose something that fits your budget and you’re happy to commit to – especially with a lease extension that can come with a hefty price tag at 90 years.
• Make sure you get the right professional advice to avoid any nasty surprises – especially if you’re dealing with housing associations or commercial buildings.

Each of these options is going to give you a different level of control and financial outlay, so make sure you pick the one that really fits your goals and circumstances. Do your due diligence and get some expert help, and you’ll be more likely to end up happy with the choice you make.

The leasehold knowledge partnership is a great resource for helping you make an informed decision – especially if you’re dealing with a unique situation, say in a leasehold house or a mixed-use building in prime central London.