Leasehold Reform Explained

Why the System Needs Reform

The case for reform has been built up over decades. Long leasehold flats took off in the Victorian era, when the system was designed to give freeholders a continuing interest in the land while letting them grant long leases on flats inside the same building. The system has endured, but it has produced a list of recurring problems that successive governments have wanted to fix.

Short leases and marriage value

A flat on a short lease loses value quickly as the term drops, especially below 80 years. The legal route to extending the lease exists, but on a lease at or below 80 years the leaseholder also has to pay marriage value: an extra slice of the premium that compensates the freeholder for the value uplift created by the extension. Marriage value can add tens of thousands of pounds to the cost of a single lease extension, and it has been one of the biggest single grievances driving reform.

Escalating ground rents

For many years, freeholders sold new leases with ground rents that doubled every ten or fifteen years, or were linked to the value of the flat. Over a long lease those clauses produced ground rents that became unaffordable and made the flats unsaleable. The 2022 Act stopped the practice for new leases, but it has not yet undone the existing leases that contain those clauses.

Freeholder power over the building

Even where the ground rent is small, the freeholder controls the management of the building, the insurance, the appointment of the managing agent and the service charge budget. Leaseholders have rights to challenge bad practice (consultation on big works, reasonableness of charges, redress through the tribunal), but the day-to-day balance of power is heavily in the freeholder's favour. The reform programme has been chipping away at this with Right to Manage and collective enfranchisement, both of which have been made easier in turn.

The cost and slowness of collective routes

Right to Manage and collective enfranchisement give leaseholders genuine power, but they have historically been expensive, slow and procedurally fiddly. The reforms have aimed at making them simpler and cheaper, with mixed success: the 2024 Act took useful steps on participation and costs, but the deeper valuation changes that would cut the price are still not in force.

What Is Promised but Not Yet in Force

This is the part that catches most leaseholders out. Several headline reforms have been passed by Parliament, but Parliament passing a law and the law coming into force are two different things. The big-ticket parts of the 2024 Act are still on the shelf.

Abolition of marriage value

The 2024 Act was drafted to abolish marriage value, which currently applies to lease extensions and collective enfranchisement on leases at or below 80 years and adds significantly to the premium. The abolition was the single most popular leaseholder-side reform in the Act. It is still not in force. Anyone extending a lease or enfranchising today is paying marriage value as they would have done before the Act was passed.

The 990-year statutory lease extension

The 2024 Act proposes to replace the current statutory 90-year extension with a single 990-year extension at peppercorn ground rent. This is also not in force. Statutory extensions today still run on the 1993 Act formula: 90 years added to the unexpired term, ground rent reduced to a peppercorn. That said, a block that buys its freehold by collective enfranchisement can still produce a similar outcome today, because the leaseholders' company can grant new 999-year leases once it owns the freehold.

The wider valuation reforms

Around marriage value, the 2024 Act includes a wider set of valuation reforms covering the capitalisation rates used for ground rent, the deferment rates used for the reversion, the abolition of hope value on non-participating flats in an enfranchisement and a few other technical changes. None of these have commenced. Valuation in 2026 still works under the rules that applied before the 2024 Act was passed.

The freeholders' judicial review

A group of freeholders brought a judicial review challenge to the 2024 Act's valuation reforms, arguing that the changes would interfere with their property rights. The High Court dismissed the challenge on 24 October 2025, and at least one of the claimants is seeking permission to appeal, so the litigation is not finally concluded. Either way, the government still has to commence the relevant sections, and as of 2026 it has not done so. There is no confirmed timetable.

A cap on existing-lease ground rents

A separate strand of reform would cap the ground rent payable under existing leases (not just new ones). The draft Commonhold and Leasehold Reform Bill published in January 2026 proposes capping these ground rents at £250 a year, falling to a peppercorn 40 years after the cap commences. It is not yet law and has no confirmed commencement date, so existing leases continue on the ground rent terms they were granted with, including doublers and RPI (Retail Prices Index)-linked clauses.

Commonhold

Commonhold is the long-term direction. A draft Commonhold and Leasehold Reform Bill was published in January 2026, building on the Law Commission's detailed proposals, but no legislation has yet been passed. For now, almost every flat sold in England and Wales is still a leasehold flat.

Relevant Legislation

The reform programme spans several Acts, none of which alone does the whole job.

The Leasehold Reform, Housing and Urban Development Act 1993 is the backbone of the modern system. It gives long-leaseholders the statutory right to extend their leases and gives blocks the statutory right to collective enfranchisement. It is the Act under which lease extensions and enfranchisement claims still proceed today.

The Commonhold and Leasehold Reform Act 2002 introduced Right to Manage, brought in commonhold as a form of tenure (little used in practice) and made several procedural reforms. Right to Manage in particular has been a useful route for blocks that want control of the management without buying the freehold.

The Leasehold Reform (Ground Rent) Act 2022 capped ground rent on most new long leases of residential premises granted on or after 30 June 2022 at a peppercorn. It applies only to new leases granted from that date; existing leases continue on their original terms.

The Leasehold and Freehold Reform Act 2024 is the big reform Act. It has been brought into force in stages: building-safety provisions in July 2024, the abolition of the two-year ownership requirement on 31 January 2025 and the Right to Manage changes on 3 March 2025. The marriage value abolition, the 990-year extension, the wider valuation reforms and several other parts are not yet in force. There is no confirmed commencement date.

The Renters' Rights Act 2025 is primarily about the rented sector but closed a specific trap that had been catching long-leaseholders whose ground rent crossed a threshold. The relevant provision (section 31) came into force on 27 December 2025.

A draft Commonhold and Leasehold Reform Bill was published in January 2026, supported by the Law Commission's detailed proposals. It would make commonhold the default for new flats and cap ground rents on most existing leases at £250 a year, falling to a peppercorn 40 years after the cap commences. It is not yet law and there is no confirmed timetable.

1. 30 June 2022Peppercorn ground rent on most new long leases (Leasehold Reform (Ground Rent) Act 2022).
2. July 2024First parts of the 2024 Act commence: the building-safety provisions.
3. 31 January 2025The two-year ownership rule is abolished for statutory lease extensions.
4. 3 March 2025Right to Manage reforms: the 50 percent non-residential limit and the costs changes.
5. 27 December 2025The ground rent assured-tenancy trap on long leases is closed (Renters' Rights Act 2025).
6. January 2026The draft Commonhold and Leasehold Reform Bill is published.
7. No date setMarriage value abolition, the 990-year extension and the wider valuation reforms still await commencement.