Leasehold Reform: Navigating the Changing Landscape for Leaseholders and Freeholders

The leasehold sector is in the midst of significant change. Responding to years of discontent from leaseholders – citing onerous ground rents, restrictive conditions and often costly and complex processes – the outgoing Conservative Government introduced the Leasehold and Freehold Reform Act 2024 (LAFRA 2024).

LAFRA 2024 was fast-tracked in the final weeks of that Government, following recommendations from the Law Commission aimed at simplifying and reducing the cost of lease extensions and enfranchisement. While the Act signalled a major shift in approach, many of its key reforms are yet to take effect, leaving both leaseholders and freeholders in an environment of uncertainty and insecurity.

What LAFRA 2024 Promised

The Act laid the groundwork for significant reform through secondary legislation, including proposals to:

• Remove marriage value from the calculation of lease extension premiums.
• Increase the term of statutory lease extensions from +90 years to +990 years.
• Introduce caps on ground rents.
• Prescribe standard rates for calculating premiums, making the process more consistent and transparent.
• Increase the sharing of professional fees between landlords and leaseholders.
• Remove the two-year ownership requirement before leaseholders can exercise their right to extend.

Of these, only one reform has been implemented so far. As of 31 January 2025, leaseholders no longer need to wait two years before starting the statutory lease extension process.

Legal Challenges and Delays

Progress on the remaining reforms has stalled. Although the new Labour government has committed to further consultation, a judicial review, brought by a group of major freeholders who were concerned about the financial impact of the reforms, has delayed further implementation.

The judicial review hearing concluded on 18 July 2025, but regardless of the outcome, further appeals are widely expected. This means there is still no clear timeline for when, or in what exact form, the remaining LAFRA reforms will come into effect.

What Does This Mean for Leaseholders and Freeholders?

For now, the established statutory processes for lease extensions and collective enfranchisement remain in place. Leaseholders can still extend their leases or, alongside neighbours, collectively purchase the freehold to secure or enhance the value and control of their homes.

However, the uncertainty around reform has created hesitation. Many leaseholders with leases approaching or below the critical 80-year threshold are delaying action, hoping future changes will make extensions cheaper. While this is understandable, it carries risk: there is no guarantee when reforms will arrive, how they will be implemented, or whether property values could be impacted in the meantime.

For freeholders, the key concern is the potential downward pressure on premiums that reforms might bring. Responses vary with some taking a firm negotiating stance under the current rules, while others are softening their approach in recognition of the possible shift in bargaining power.

Expert Guidance Through Uncertainty

The reality is that the leasehold reform landscape is complex and fluid. Decisions about whether to proceed with a lease extension or enfranchisement now, or wait for reforms later down the line, need to be made on a case-by-case basis, considering a personal circumstances, financial implications, and market dynamics.

At SRVO, our Lease Advisory and Valuation team helps clients navigate these choppy waters. We act for both leaseholders and freeholders, ensuring our clients are well-informed, strategically advised, and supported at every stage of the process.

Our goal is simple: to help you make the right decision for your situation, backed by clear, expert advice.

What’s next?

SRVO, along with the wider industry, await the outcome of the judicial review and any subsequent appeals. In parallel, Government’s proposed Leasehold and Commonhold Reform Bill — which aims to encourage a move away from leasehold tenure towards commonhold — signals even more far-reaching changes on the horizon.

Given that the timetable and format of the reforms are still unclear, it is recommended that freeholders and leaseholders alike proactively seek professional advice in advance, to have clarity on the potential options ahead.

Whatever the outcome, one thing is clear – these reforms will have a profound impact on both leaseholders’ and freeholders’ rights for years to come.

Need expert advice on lease extensions or enfranchisement?
SRVO’s Lease Advisory and Valuation specialists are here to help you navigate the uncertainty and protect the value of your property assets. Find out more about our services.