Leasehold Reform: Where Things Stand
A great deal has been legislated for. Comparatively little is in force. This page sets out the position as it currently stands, and what it means if you hold a freehold interest.
In short
Has leasehold been abolished?
No. Leasehold remains the tenure for most flats in England and Wales. The Leasehold and Freehold Reform Act 2024 reforms the system rather than abolishing it, and most of its provisions are not yet in force.
Has marriage value been abolished?
Not yet. The 2024 Act provides for the removal of marriage value from enfranchisement valuations, but that provision has not been commenced and no date has been set.
Can freeholders still recover their costs?
In part. Under the current law the leaseholder is liable for the freeholder’s reasonable costs of investigating title, of the valuation prepared for the claim, and of the conveyancing — but not the cost of negotiating the premium, and not tribunal costs, where each side bears its own. The 2024 Act provides for removal of the recoverable element, but that provision is not yet in force.
What is the position on ground rents?
The Leasehold Reform (Ground Rent) Act 2022 restricts ground rents on most new long residential leases to a peppercorn. Existing leases are unaffected. Proposals to cap ground rents in existing leases remain under consultation.
The legislative journey
Leasehold reform has been incremental rather than sudden. Understanding where the current proposals sit requires understanding what came before.
The Leasehold Reform Act 1967 gave leaseholders of houses the right to buy the freehold or extend the lease.
The Leasehold Reform, Housing and Urban Development Act 1993 extended comparable rights to flats: an individual right to a 90-year lease extension at a peppercorn ground rent, and a collective right to acquire the freehold. This remains the framework within which most claims are brought.
The Commonhold and Leasehold Reform Act 2002 introduced commonhold as an alternative tenure, created the Right to Manage, and removed the residence requirement for enfranchisement claims. Commonhold saw almost no take-up.
The Leasehold Reform (Ground Rent) Act 2022 restricted ground rents on most new long residential leases to a peppercorn. Existing leases were not affected.
The Leasehold and Freehold Reform Act 2024 received Royal Assent in May 2024. It is the most significant reform in three decades — but the majority of its provisions require secondary legislation before they take effect.
What has changed, and what has not
In force now
- The two-year ownership requirement for individual lease extension claims has been removed, so a leaseholder can claim immediately on acquisition. It never applied to collective enfranchisement.
- Ground rents on most new long residential leases are limited to a peppercorn under the 2022 Act.
- Rights to Manage have been extended to buildings with up to 50 per cent non-residential floor space.
- Freeholders remain entitled to recover their reasonable valuation and legal costs on statutory claims.
- Marriage value remains payable where the unexpired term is below 80 years.
Legislated but not yet in force
- Abolition of marriage value in enfranchisement valuations.
- A standard 990-year lease extension term in place of 90 years.
- Removal of the leaseholder’s liability for the freeholder’s costs, so each party would bear its own.
- A prescribed valuation methodology with rates set by the Secretary of State.
- Changes to the treatment of qualifying buildings with commercial content.
The legal challenge to the 2024 Act
The claim
A group of freehold owners, including substantial estate and institutional landlords, brought judicial review proceedings challenging the compensation provisions of the Leasehold and Freehold Reform Act 2024. The challenge did not seek to overturn the Act as a whole, but targeted the valuation changes — principally the removal of marriage value and the prescribing of rates by the Secretary of State.
The grounds
The central argument rested on Article 1 of Protocol 1 to the European Convention on Human Rights, which protects the peaceful enjoyment of possessions. The claimants contended that requiring freeholders to transfer interests at less than market value, without adequate compensation, was a disproportionate interference with their property rights.
Why it did not succeed
The High Court dismissed the claim in October 2025. In broad terms, the court accepted that the measures interfered with property rights but held that Parliament enjoys a wide margin of judgement in matters of social and economic policy. Article 1 of Protocol 1 does not guarantee compensation at full market value, and the balance struck between leaseholder and freeholder interests was not one the court would disturb.
The appeal
Permission to appeal was granted and the matter is before the Court of Appeal. Government has indicated that it is unlikely to commence the affected valuation provisions while the challenge remains live, which is a principal reason the substantive changes are not yet in force.
What it means in practice
Until the appeal is resolved and the provisions commenced, claims continue to be determined on the current basis: marriage value payable below 80 years, and freeholders’ reasonable costs recoverable in part. The outcome will affect the value of reversionary interests, and freeholders with significant holdings may wish to keep the position under review.
Costs: what is recoverable and what is not
Recoverable
Where a valid notice is served, the leaseholder is liable under the current law for the freeholder’s reasonable costs of investigating title and the leaseholder’s entitlement, of the valuation prepared for the purposes of the claim, and of the conveyancing on completion.
Not recoverable
The cost of negotiating the premium is not recoverable. That is borne by the freeholder, whatever the outcome. It is a point frequently misunderstood, and one reason a freeholder should be alive to how much negotiation a given position is likely to require.
At tribunal
Where either party refers the matter to the First-tier Tribunal for determination, each side bears its own representational costs. There is no general rule that the losing party pays. This applies equally to leaseholder and freeholder.
The incentive this creates
Because tribunal costs are irrecoverable on both sides, both parties have a financial reason to settle. In the great majority of matters that is what happens, and it is usually the better commercial outcome even where a party feels strongly about the figure.
Our approach
We encourage settlement and do our utmost to facilitate it. Where expectations on the other side are unreasonable, however, a referral becomes inevitable — and we will say so, set out the likely cost and range of outcomes, and advise on the course that produces the best commercial result rather than the most combative one.
Where we are now
Courts
A group of freehold owners brought judicial review proceedings challenging the compensation provisions of the 2024 Act, principally on the basis that removing marriage value and altering the valuation basis interferes with property rights. The claim was dismissed at first instance in October 2025. Permission to appeal was granted and the matter is before the Court of Appeal. Government has indicated it is unlikely to commence the affected valuation provisions while that challenge remains live.
Commonhold
A draft Commonhold and Leasehold Reform Bill was published in January 2026, setting out a framework to make commonhold the default tenure for new flats and to enable conversion of existing buildings. It remains a draft and is subject to pre-legislative scrutiny.
Ground rents
Government has consulted on capping ground rents in existing leases, with options ranging from a peppercorn to a percentage of capital value. The question of whether and how freeholders would be compensated remains open, and a further consultation on the point is running.
Timing
Commencement of the substantive valuation provisions is not expected before 2028, and possibly later. No date has been announced.
What this means if you hold a freehold
The practical position is that claims served today are determined under the law as it currently stands. Marriage value is payable where the term is below 80 years, your reasonable costs remain recoverable, and the existing valuation basis applies.
That will not remain the case indefinitely. Whether it is better to settle claims now, to negotiate variations while the present basis applies, or to take a longer view on a portfolio depends on the composition of your interests, your intentions for the asset and your appetite for risk. There is no single correct answer, and anyone who offers one has not understood the question.
What we can do is set out the position accurately, model the outcomes under the current and proposed bases, and let you make an informed commercial decision.
How we advise on reform
At the forefront of practice
Our surveyors and solicitors follow the legislation, the consultations and the case law as they develop, not once they are settled. Where a matter warrants it we instruct leading counsel, and we do so early rather than as a last resort.
Clients kept properly informed
We tell clients what has changed, what has not, and what is merely proposed — so that decisions are taken on the current law rather than on headlines. Reform is widely misreported, and acting on a misunderstanding is expensive.
Risk assessed, not assumed
Every reform proposal carries a range of possible outcomes and timescales. We set out that range, with the likelihood attaching to each, rather than presenting one scenario as certain.
Commercial advice, not just technical
Advice is shaped around your objectives and your appetite for risk. A charity holding a single reversion, a resident freehold company and a corporate portfolio owner face the same legislation and quite different decisions.
Considering your position ahead of reform?
Whether you hold a single reversion or a portfolio, we can model your exposure under the current and proposed valuation bases and set out the options — before a claim arrives rather than after.
This page is a general summary of the legislative position and is not legal advice. Reform is moving, and the position stated here may change. For advice on a specific interest or claim, please contact us.
Make an enquiry
Reform will affect different interests in different ways. If you would like your own position assessed against the current law and the proposals, tell us about the property.
Valuation
Blakes Surveyors Ltd
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Arcadia Law Ltd
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