Collective enfranchisement - what is it? If you live in a flat and pay a mortgage on that property, unless you have been specifically been told otherwise, you are more than likely to be a leaseholder. Leaseholding is a peculiarity of United Kingdom housing law that dates back to the Middle Ages - simply put, when you buy the lease to a flat, you aren't technically buying the flat, merely the right to live there for the duration of the lease. Once that lease runs out, the ownership of the property goes back to the owner of the building - the freeholder - and if you want to carry on living there, you will probably then have to pay rent to the freeholder.
So what precisely are the differences between being a leaseholder and a freeholder? One big difference, as suggested above, relates to the ownership of the property. Leases are available for flats which are normally contained in blocks, they are also available on residential homes where two or more are situated in the same building, if you were a freeholder however you would own the whole building. When taking out a mortgage on a house you are normally a freeholder, however when it comes to a flat this can be different.
Collective enfranchisement is the process of a freeholder purchase by a group of tenants whom live in flats and want to own the building itself. This can help you sell your property in the future as it simplifies things - one very important thing to remember is that it can be extremely difficult to get a mortgage if there are 50 years or less to run on the lease. Leases can run up to 999 years, if you get one on a flat then it is normally for 99 to 125 years maximum.
Buying the freehold is one way of a group of leaseholders to control their property and have the security that they wont get chucked out of their flats when the lease expires. It also gives them more rights over what happens to the leases once they have purchased the freehold. The Leasehold Reform, Housing and Urban Development Act (1993) introduced the process of collective enfranchisement, this involved tenants giving the freeholder a premium amount in order to buy him/her out.