The introduction of the Leasehold and Freehold Reform Act 2024 (LAFRA) has the potential to significantly improve the circumstances of property owners. Having received Royal Assent on 24 May 2024, the Act is expected to come into force between 2025 and 2028.
Leasehold Law is undergoing major reform, you may want to keep up to date with developments via this page: Leasehold Reform Latest Updates
Leasehold and Freehold Reform Act 2024
The introduction of the Leasehold and Freehold Reform Act 2024 (LAFRA) is set to bring significant changes for leaseholders and property owners across England and Wales. The Act increases the statutory lease extension term from 90 years to 990 years, abolishes marriage value, and ensures that all extended leases carry only a peppercorn (£0) ground rent. In addition, the Government has proposed introducing a £250 per annum cap on ground rent for existing leases. This cap is intended to protect leaseholders who still pay ground rent under historic leases that predate the Leasehold Reform (Ground Rent) Act 2022.
The proposal has not yet come into force, but once implemented, it will apply only to existing leases that continue to attract ground rent, ensuring no leaseholder pays more than £250 annually. New or extended leases will continue to be restricted to a peppercorn (£0) ground rent. Once the Act comes into force, it is expected to impact the overall cost of extending a lease, potentially making the process more affordable for many leaseholders.
The reforms
The reforms that have been introduced are ones that aim to strengthen the consumer rights of property owners. Some of the key reforms that have been introduced include changes in regard to:
- 990-year lease extension: The Act includes provisions intended to increase the standard statutory lease extension term to 990 years for houses and flats (from the current statutory positions of 50 years for houses and 90 years for flats), but these changes are subject to commencement and are not yet fully in force. For more about lease extension and how much it could cost you, use our free online Lease Extension Calculator.
- Ground rent reforms (new vs existing leases): For most new “regulated” long residential leases, the Leasehold Reform (Ground Rent) Act 2022 already restricts ground rent to a peppercorn (effectively £0). Existing leases granted before that Act generally continue on their contractual ground rent unless varied by agreement (such as a Deed of Variation) or, for flats, replaced through a statutory lease extension (which sets the rent to peppercorn for the extended term). Government has also proposed capping ground rent in existing leases, but as at February 2026 no general cap is in force; any change would only take effect once enacted and commenced.
- Transparency over service charges: Giving leaseholders greater transparency over their service charges by making freeholders or managing agents issue bills in a standardised format, allowing it to be scrutinised and challenged
- Appointment of managing agent: Allowing leaseholders the ability to appoint their own managing agent, making it easier and cheaper for them to manage their building
- Redress Scheme: Requiring freeholders, who manage their building directly, to belong to a redress scheme so that leaseholders can challenge them if needed. This extends access to the redress schemes for leaseholders to challenge poor practice
- Enfranchisement Rights: Making it cheaper for leaseholders to exercise their enfranchisement rights by no longer requiring them to pay their freeholder’s costs when making a claim
- Abolition of marriage value: This will reduce the premium payable significantly for leases of less than 80 years.
What are the practical implications of the Act?
These new reforms and proposed changes sound all well and good, but what does this actually mean for you? Well, this depends on what sort of title you hold in regard to a property.
If you own a leasehold property and are affected by any of the reforms mentioned above, it is best to review your lease and consider whether you want to extend the terms, buy out your ground rent, or perhaps you would like to acquire the freehold.
On the other hand, if you are a landlord or a developer that deals with leaseholds regularly, it may be wise to review your standard form lease and the terms on which your leases are usually granted.
Our team of experienced leasehold solicitors and share of freehold solicitors specialise in both leasehold and share of freehold matters, providing comprehensive legal services tailored to your needs..
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What is not in the Leasehold and Freehold Reform Act?
Despite all these extensive reforms, there was still no change in regard to the proposed cap on ground rents. Due to the last minute rush to get the Act through parliament before the dissolution, the proposed cap on ground rents did not make it into the Bill in time.
Similarly, there are some other reforms that were not included in the act for various reasons. This includes: The end to the forfeiture as well as the reforms to ensure freeholders who currently pay estate charge not only get the same access to redress, but also receive the exact same protections as leaseholders (in particular, the Right to Manage)
How the act benefits leaseholders
As we have seen, most of these new reforms are intended to have a big impact on the circumstances of leaseholders. They are among the primary intended beneficiaries of these reforms. This act also further benefits the leaseholders by:
- Banning opaque and excessive buildings insurance commissions for freeholders and managing agents – This would be replaced with fair and transparent handling fees to ensure that there are no hidden costs
- Banning the sale of new leasehold houses – This would ensure that, in most circumstances, every new house in England and Wales will be freehold from the outset
- Removing the requirement of owning the property for 2 years before extending their lease – Arguably the most important reform, the requirement that a new leaseholder had to have owned the property for 2 years before they can extend their lease or buy their freehold has now been removed. This is crucial as it removes more barriers and allows more and more leaseholders to extend their lease with less restrictions.
Should I extend my lease?
It is difficult to say for certain whether you should extend your lease or not. The number of years left on your lease should indicate to you whether you need to extend your lease or not:
- Lease is 82 years or above – In this situation it really depends. LAFRA might make it cheaper to extend but it might also be more expensive by the prescribed market rates.
- Lease is between 80 and 82 years – In this case, it may be best to extend. The reforms will most likely not go through below the 80 year mark where the marriage value makes it more expensive under the current legislation. Future legislation is unlikely to make it cheaper than it is for you right now.
- Lease is below 80 years – If you lease is below 80 years then it is probably best to wait. LAFRA might make it cheaper for you in the future by abolishing marriage value.
- Want to move or remortgage – It is probably best to extend your lease. You do not want to be in a situation where you find it difficult to move or remortgage because of the low number of years left on your lease.
- Ground rent is high – the best course of action will depend on your specific circumstances. For tailored advice, consider contacting one of our Lease Extension Solicitors. They can advise on potential solutions such as a Deed of Variation to amend the existing lease, a Deed of Surrender and Regrant to create a new lease with reduced or peppercorn ground rent, or a statutory lease extension to eliminate ground rent altogether.
For an explanation of the costs for a lease extension, please visit our lease extension calculator page.
It is important to remember that everyone’s circumstances are different and the best course of action may vary depending on your situation. It is for this reason why it is probably best to get expert legal advice in order to understand what you should do.
Our residential property solicitors have vast experience in handling various lease extension matters and pride ourselves in offering an efficient and reliable service. To get in touch with one of our solicitors, please visit: Lease Extension Solicitors
FAQs
- Have the reforms been implemented?
The reforms have not yet been enforced. It seems as if we will have to wait until 2025 to 2026 for the reforms to be implemented.
- Will the reform have an impact on the price of a lease extension?
This really depends on the length of your lease and your ground rent.
If your lease is below 80 years or the ground rent is above 0.1% of the value of the property, then it is likely that a lease extension will be cheaper
If your lease if above 80 years or the ground rent is lower than 0.1% of the value of the property, then it is likely that the reforms could make a lease extension more expensive for you.
- Do I benefit from these reforms?
Anyone with a lease below 80 years who wants to extend their lease are likely to benefit from these reforms. With this new legislation, the price of your lease extension could be reduced to 1/3 or 2/3 of the cost, depending on certain factors.
With regards to who does not benefit, well that would mainly be people with leases above 80 years or potentially freeholders due to the removing of the Marriage Value as well as the reduction in lease extension premiums
- Will the sale of leasehold houses be banned? What about abolishing leasehold for all new flats?
The sale of new leasehold houses has indeed been banned under this act, meaning that all new houses in England and Wales will be freehold.
However, unfortunately the government has not gone as far as to abolish new leaseholds on flats. Despite the outdated leasehold system, the government appears to be content with new flats being bought and sold as leasehold.
- What is the ‘wash-up’ period?
The ‘wash-up’ period refers to the final days of a parliamentary session before it dissolves for a general election. During this time, outstanding bills, such as Leasehold and Freehold Reform Act, are expedited through the remaining legislative stages. This meant that the Leasehold and Freehold Reform Act was essentially ‘fast-tracked’ through the legislative process, by-passing many parliamentary stages.
- Why change the existing leasehold enfranchisement legislation?
Since the King’s Speech last year, there has been a widespread desire and support for reform in this area. The longstanding issues that the Government have had with leases extensions and enfranchisements was a primary reason for these reforms. The aim was to make it easier and cheaper for leaseholders to buy their freeholds and extend their leases.
- What happens if I want to extend my lease now?
If you want to extend your lease now, the current rules will still apply until further notice. In order to get a better understanding of the situation you face, get in touch with one of our Lease Extension Solicitors
Get in Touch
Contact Starck Uberoi Solicitors today for expert advice on your leasehold or freehold. Please call us on 020 8840 6640 or email solicitor@starckuberoi.co.uk. With offices in Ealing, Brentford, Richmond, London Belgravia, and Canterbury we can help with your leasehold or freehold problems, no matter where you are in the country.
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