Residential Leasehold Reforms Update to May 2026

Leasehold ownership is undergoing its biggest shake-up in decades. For the millions of residential leaseholders in England and Wales recent and proposed reforms will change the relationship between freeholders and leaseholders. From dramatically longer lease extensions to a potential end of new leasehold flats, change is on the horizon. It’s an important time for freeholders and leaseholders to understand what’s happening and how it may affect them. Whether you are leaseholder wanting to extend your lease or purchase your freehold or a freeholder being asked about lease extensions, being aware of the latest developments can help you plan wisely – and avoid costly surprises – in this evolving area of property law. The proposed reforms also include provisions relating to service charges, but this article concentrates on the ways the reforms affect lease extensions and collective enfranchisement.

The Leasehold and Freehold Reform Act 2024

This Act, which became law in May 2024, introduces major improvements for leaseholders – particularly around lease extensions and collective enfranchisement (when the leaseholders buy the freehold of their property). Once fully implemented, leaseholders will have the right to a much longer lease extension – 990 years instead of the current 90 – at a “peppercorn” ground rent (£nil). Crucially, the Act abolishes the controversial ‘marriage value’ (the additional premium payable for leases under 80 years) in calculating extension prices.

The Act further broadens who can collectively buy their building’s freehold or take over management – increasing the allowable non-residential space from 25% to 50% for both collective enfranchisement and exercising the Right to Manage. Additionally, each party will bear their own legal costs in lease extension and enfranchisement claims under the Act’s new rules, replacing the old system where leaseholders typically paid the landlord’s costs.  

Draft Commonhold and Leasehold Reform Bill 2026

Published in January 2026 and included in the King’s Speech on 13th May 2026. This draft Bill will be introduced to Parliament once the Housing, Communities and Local Government Committee have completed their pre-legislative scrutiny on it and the Government have considered the Committee’s recommendations. This draft legislation goes even further, aiming to abolish the leasehold system by making commonhold the default for new flats. Commonhold is a form of ownership akin to a condominium system, where flat owners hold the freehold of their unit and collectively manage the building, with no external landlord.

The draft Bill proposes to ban new residential leases of flats (with limited exceptions) so that most new-build flats would be sold as commonhold once the strengthened commonhold regime is in place. It also contains an array of measures which will apply to existing leases, for example, ground rents on existing leases would be capped at £250 per year, then phased out entirely after 40 years.

The Bill would abolish the current forfeiture system – which currently allows a landlord to repossess a property for breaches of the lease – replacing it with a more proportionate, court‑based enforcement process.

It also reforms commonhold law to encourage uptake, including new rules to ensure it works for mixed-use buildings, introducing mandatory reserve funds and governance improvements for commonhold associations.

These proposals build on the 2024 Act’s foundation – in some cases extending it further (for instance, the 2024 Act already bans new leasehold houses; the draft Bill seeks to complete the picture by banning new leasehold flats as well). However, it’s important to note that as of now, the draft Bill is still in draft form and with much consultation to come and much amendment expected.

Practical Implications for Leaseholders – Opportunities and Caution

These reforms promise significant opportunities for leaseholders but also come with limitations and uncertainties in practice. If and when implemented, the changes should make extending leases or buying freeholds much cheaper and easier. For example, the planned 990-year extensions at zero ground rent would remove the expense of periodic renewals, and abolishing marriage value could save tens of thousands of pounds for those with shorter leases.

However, leaseholders should approach timing carefully. Most major changes are not yet in effect and won’t be immediate. Only some 2024 Act reforms have already commenced (for instance, the two-year ownership rule was scrapped from 31 January 2025, and new Right to Manage rules came in from March 2025). The headline measures like 990-year extensions, new pricing formulae, and ground rent caps remain on hold until further government action.

In a ministerial statement April 2026, Housing Minister Matthew Pennycook outlined a phased, multi-year implementation. He indicated that a complete ban on new leasehold properties (i.e. making all new flats commonhold) is unlikely to take effect before the next general election and may even only materialise in the 2030s. He stressed the need to sequence reforms carefully to avoid legal challenges and market disruption. Importantly, he confirmed the government’s commitment to ultimately “dismantle” the leasehold system by the end of the current Parliament (around 2029) but warned of technical issues in the 2024 Act that must be fixed first, and proposed doing this in the draft Bill, so the major provisions of both pieces of legislation could be brought into force at around the same time.

These proposed amendments to the 2024 Act are not in the draft Bill, but the King’s Speech confirmed that the draft Bill will amend the 2024 Act to “make it cheaper and easier for leaseholders to extend their lease or buy their freehold”.  At the moment we don’t know what these amendments look like, but what we do know is that they may not be law for a considerable time.  Had the provisions of the 2024 Act been implemented by secondary legislation, this would have been a much faster process.

The consultation on valuation rates and pricing that was due to take place in Summer 2025,  was expected to take place this Summer, but is likely to be pushed back further, so we won’t know what the valuation rates and pricing will look like for at least another 12 to 18 months.

For leaseholders, this means a balancing act: delaying action to wait for new law could yield big benefits – but the timeline is uncertain, and waiting too long could be risky. For example, if your lease is approaching 80 years remaining, holding off might expose you to rising costs if reforms are delayed; each case needs careful consideration.

Navigating leasehold reforms can be complex. The changes discussed above are intended to benefit leaseholders, but until they fully take effect, the current law still applies. Deciding whether to proceed under existing rules or wait for new provisions is a strategic choice that depends on your circumstances.

For tailored advice on extending your lease or purchasing your freehold – including whether to act now or hold off – contact our specialist Leasehold Enfranchisement team at Howes Percival LLP. We have the expertise to guide you through these reforms and help protect your interests, ensuring you make informed decisions in this rapidly changing landscape.

The information on this site about legal matters is provided as a general guide only. Although we try to ensure that all of the information on this site is accurate and up to date, this cannot be guaranteed. The information on this site should not be relied upon or construed as constituting legal advice and Howes Percival LLP disclaims liability in relation to its use. You should seek appropriate legal advice before taking or refraining from taking any action.