Leasehold and Freehold Reform: What Is Actually Changing?

Published: 29 July 2026

Leasehold reform has produced many headlines about 990-year lease extensions, lower extension prices, a £250 ground-rent cap and stronger service-charge rights. The difficulty for buyers and leaseholders is knowing which changes are already operating and which still require legislation, regulations or a future commencement date.

This guide explains the current position for leasehold reform in 2026, including lease extensions, ground rent, service charges, Right to Manage and buying the freehold.

The position in July 2026

Do not make a property decision based only on a reform announcement. The two-year ownership requirement has been removed, and important Right to Manage changes are operational. However, the planned 990-year statutory lease extension, new valuation method, removal of marriage value and £250 ground-rent cap are not all available under the current system.

What is the Leasehold and Freehold Reform Act 2024?

The Leasehold and Freehold Reform Act 2024 created a framework for major changes to leasehold ownership in England and Wales.

The Act includes provisions intended to:

  • Make statutory lease extensions 990 years for qualifying houses and flats.
  • Remove marriage value from the future statutory valuation calculation.
  • Change how lease-extension and freehold-purchase prices are calculated.
  • Improve transparency around service charges and building insurance.
  • Expand access to Right to Manage and collective freehold ownership.
  • Reduce circumstances in which leaseholders pay their landlord’s professional costs.

Passing an Act does not mean every section operates immediately. Many provisions require commencement regulations, supporting rules or technical amendments before they can be used.

Which leasehold reforms are already in force?

The two-year ownership rule has been removed

Since 31 January 2025, qualifying leaseholders in England and Wales no longer need to own their property for two years before starting a statutory lease-extension claim. Qualifying leaseholders of houses can also begin a statutory freehold-purchase claim without waiting two years.

This can help someone buying a short-lease property because they may no longer need the seller to start a claim and transfer its benefit. However, the property and leaseholder must still meet the other statutory eligibility requirements.

Important Right to Manage changes are operating

Changes introduced on 3 March 2025 widened access to the Right to Manage. A qualifying building can now contain up to 50% non-residential floor space, compared with the previous 25% limit.

Leaseholders making a Right to Manage claim are also no longer normally responsible for the landlord’s legal costs connected with the claim. They must still budget for their own legal, company, professional and future building-management expenses.

Are 990-year lease extensions available now?

Not yet under the fully reformed statutory system.

As of July 2026, the existing statutory rules generally allow a qualifying flat leaseholder to add 90 years to the remaining lease term. The existing process for qualifying leasehold houses generally provides a 50-year extension under different rules.

The 2024 Act provides for future statutory extensions of 990 years at a peppercorn ground rent. However, the government has confirmed that the revised enfranchisement system requires technical corrections, valuation regulations and further implementation work.

A leaseholder can also ask the freeholder for an informal lease extension. This is negotiated outside the statutory process. An informal offer may appear cheaper initially but can include:

  • A shorter extension than the statutory entitlement.
  • Continuing or increasing ground rent.
  • New administration or permission fees.
  • Altered restrictions or obligations.
  • Deadlines that place pressure on the leaseholder.

Have the complete proposed lease reviewed rather than comparing only the premium.

Marriage value has not simply disappeared

Marriage value is an additional element in the current statutory valuation of some leases with 80 years or fewer remaining. The 2024 Act provides for its removal under the future valuation system.

Important: The new valuation method was not fully operational in July 2026. A leaseholder starting a claim under the existing system should not assume that marriage value or the current valuation rules no longer apply.

The government opened a consultation in July 2026 on the deferment and capitalisation rates needed for the new valuation method. Until the revised rules commence, obtain a valuation based on the law applying to the proposed claim.

What is happening to ground rent?

Most newer leases already have peppercorn ground rent

Under the Leasehold Reform (Ground Rent) Act 2022, most qualifying long residential leases granted on or after 30 June 2022 cannot charge more than a peppercorn ground rent, which has no financial value. A later commencement date applied to qualifying retirement-home leases.

This change did not automatically remove ground rent from older leases. If you buy an existing lease originally granted before the relevant date, its ground-rent clause can continue to apply even if you purchase the property now.

The £250 cap remains a proposal

In January 2026, the government published proposals to cap ground rent in qualifying older residential leases at £250 a year, changing to a peppercorn after 40 years.

As of July 2026, this measure remained part of the draft Commonhold and Leasehold Reform Bill. It had not reduced existing ground-rent bills. The government indicated that the cap could come into force in late 2028, subject to parliamentary timings and the final legislation.

Buyers should therefore budget using the ground rent written in the current lease, including any review formula, rather than assuming the proposed cap already applies.

What is changing with service charges?

Service charges can cover building insurance, management, cleaning, repairs, lifts, communal heating, grounds maintenance and contributions to a reserve or sinking fund. The lease determines what can be charged and how each property contributes.

Under current rights, a leaseholder paying a variable service charge can normally:

  • Request a written summary of relevant expenditure.
  • Inspect supporting accounts, receipts and other documents.
  • Challenge whether a charge is payable or reasonably incurred.
  • Challenge whether the relevant work or service is of a reasonable standard.
  • Receive consultation on qualifying works or long-term contracts above statutory thresholds.

A Section 20 consultation is normally required where planned works cost an individual leaseholder more than £250 or a qualifying agreement lasting over 12 months costs more than £100 per leaseholder in an accounting year.

In July 2026, the government confirmed plans for standardised service-charge demands, annual building reports, clearer accounts, improved insurance information and greater transparency over administration charges. The consultation response applies to England, and further commencement and implementation steps are required.

Do not simply stop paying a disputed service charge. Raise the issue in writing, request the supporting records and obtain advice about challenging the charge through the appropriate tribunal.

What is Right to Manage?

Right to Manage allows qualifying flat owners to take over certain management responsibilities from the landlord without buying the freehold and without proving that the building has been badly managed.

The leaseholders create a Right to Manage company, which can manage the building directly or appoint a managing agent. Its responsibilities can include collecting service charges, arranging insurance, organising repairs and dealing with contractors.

Typical qualifying conditions include:

  • The building must contain flats.
  • At least two-thirds of the flats must be held on qualifying long leases.
  • The non-residential area must not exceed 50% of the building’s relevant floor space.
  • At least half of the flats must be represented in the Right to Manage company before management transfers.

Taking control also creates responsibility. Leaseholders need directors, appropriate insurance, reliable accounts, contractor management, legal compliance and a workable plan for collecting money from neighbours.

Right to Manage or buying the freehold?

Point Right to Manage Buying the freehold
Ownership The existing freeholder keeps the freehold. Participating leaseholders collectively acquire the freehold.
Main purpose Transfer control of building management. Acquire ownership and long-term control of the freehold.
Purchase premium No freehold purchase price. A negotiated or legally determined premium is payable.
Existing leases Leases continue unchanged. Flat leases still continue and may need extending.
Ongoing costs Residents still fund insurance, repairs and management. Co-freeholders still fund insurance, repairs and management.
Best suited to Leaseholders seeking management control without purchasing the freehold. Leaseholders seeking ownership as well as management control.

What does buying the freehold mean?

A qualifying leaseholder of a house may have an individual statutory right to purchase the freehold. Flat owners normally need to act collectively to buy the freehold of their building, a process known as collective enfranchisement.

Buying a share of freehold does not turn an individual flat into a freehold flat. Each flat normally remains leasehold, while the flat owners collectively own the building’s freehold through personal names or a company.

Before proceeding, participating leaseholders should agree:

  • How the purchase price and professional costs will be divided.
  • Who will own shares or membership rights in the freehold company.
  • How decisions and voting will work.
  • What happens if one participant withdraws.
  • How non-participating flats will be managed.
  • Whether leases will be extended after completion.
  • Who will handle accounts, insurance and future repairs.

The current eligibility rules for buying the freehold are not identical to Right to Manage. Do not assume that a building qualifying under the newer 50% Right to Manage commercial-space limit automatically qualifies for a current collective freehold claim.

Practical example: buying a flat during the reform period

A buyer is considering a flat with 78 years left on the lease, ground rent of £350 a year and a service charge of £2,400. The agent says leasehold reform will make the extension cheaper and cap the ground rent.

The buyer should not calculate affordability using future reforms. At 78 years, the current lease-extension price may still be affected by marriage value. The proposed £250 ground-rent cap is not yet operating, and the service charge can still increase according to the lease and actual building expenditure.

Before exchange, the buyer should obtain a specialist lease-extension valuation, review the ground-rent formula, check recent service-charge accounts and ask about planned major works.

Leasehold checks to complete before buying

  1. Confirm the exact unexpired lease term. Calculate it from the original commencement date rather than relying only on the estate-agent listing.
  2. Read the ground-rent review clause. Check the current amount, next review date and calculation method.
  3. Review recent service-charge records. Compare budgets, final accounts, arrears and any unexplained increases.
  4. Check the reserve fund. A low service charge may hide an underfunded building facing expensive future work.
  5. Request major-works information. Look for Section 20 notices, estimates, planned projects and known building defects.
  6. Understand building management. Identify the freeholder, managing agent, residents’ company or Right to Manage company.
  7. Check restrictions. Review rules covering pets, subletting, alterations, short-term letting, flooring and business use.
  8. Do not rely on future legislation. Ask your conveyancer to explain the law and lease terms applying to the transaction now.

Further preparation is available in our leasehold legal risks guide and conveyancing guide.

Regional differences across the UK

The Leasehold and Freehold Reform Act 2024 primarily concerns England and Wales, although commencement and supporting rules may differ between the two nations. The July 2026 service-charge consultation response specifically concerns implementation in England.

Scotland has a different property ownership and title system. Flat owners commonly share responsibility for common areas under their title deeds and may use a registered property factor.

Northern Ireland also has separate property law. Qualifying owners of some houses can apply through Land Registry to redeem ground rent, while owners of flats and apartments cannot use that particular redemption process.

Frequently asked questions

Are 990-year statutory lease extensions available now?

Not under the fully reformed system as of July 2026. Existing statutory rules generally continue while the government completes technical amendments, valuation regulations and commencement arrangements.

Has ground rent already been capped at £250?

No. The £250 annual cap for qualifying older leases is part of proposed legislation. Continue checking and budgeting for the ground rent currently required by the lease.

Can I extend my lease immediately after buying?

Qualifying leaseholders in England and Wales no longer need to wait two years before starting a statutory claim. Other eligibility rules still apply, so have the lease checked before proceeding.

Is Right to Manage the same as buying the freehold?

No. Right to Manage transfers management functions while the landlord retains the freehold. Collective enfranchisement allows qualifying leaseholders to purchase the building’s freehold.

Can I challenge an unreasonable service charge?

Variable service charges may be challenged if they are not payable under the lease, were not reasonably incurred or relate to work of an unreasonable standard. Raise the issue formally and obtain advice before withholding payment.

Does share of freehold mean there is no lease or service charge?

No. Flats with a share of freehold normally remain subject to individual leases. Owners must still pay towards insurance, repairs, management and communal services, even when they control the freehold.

Final point

Leasehold reform is moving forward, but implementation is happening in stages. Some valuable rights are already available, while several headline changes remain dependent on further legislation and regulations.

When buying, selling or extending a lease, base your decision on the current lease, current law and current professional valuation. Treat future reforms as possible improvements rather than guaranteed savings available today.

Sources and further reading