If you’re reading this article, you are clearly interested in understanding the very latest news on Leasehold Reform and how it will impact your lease extension. This article is up-to-date as of 29 September 2026, following the promise by Prime Minister Andy Burnham that the Commonhold and Leasehold Reform Bill will be introduced into the parliamentary process by Christmas 2026 and then the announcement of the extension of the deadline for the valuation rate consultation.

This article is detailed and will tell you all you need to do know. It covers:

• Summary (Read this if you want a quick view!)
• Will the reform make a lease extension cheaper?
• Could the reform make a lease extension more expensive?
• Timelines: can I wait for the reform to take effect?
• Conclusion: should I extend my lease?

Summary:

Confusingly, we’re waiting on two separate pieces of legislation to come into force:

Legislation 1: Leasehold and Freehold Reform Act 2024

This Act was passed by the outgoing Conservative Government in May 2024 - but it is largely not yet in force.

It is this piece of legislation that most people wanting to extend their leases are waiting for.

Once it is in force it should make it cheaper for people with leases below 80 years or with a high ground rent to extend their leases, and allow longer extensions of 990-years.

There is no guarantee that it will make lease extensions cheaper for people with leases above 80 years who don’t have a high ground rent. For these people, it is possible it will make it more expensive.

Matthew Pennycook said in speech in April 2026 that the "2024 Act contains a small number of specific flaws, but it is our intention to rectify these through the substantive Commonhold and Leasehold Bill". While he didn't provide full detail on these flaws, this will effectively "couple" the two pieces of legislation together. This means that the bits of the 2024 Act which relate to lease extensions won't be implemented until the new Bill is passed.

The Labour Government confirmed in November 2024 that they intend to consult on the rates used to set lease extension prices. This consultation was originally planned for Summer 2025, but delayed to Summer 2026, and runs until 21 October.

Six groups of freeholders have launched legal proceedings against the Government to challenge several provisions of this legislation. The High Court dismissed these claims on 24 October 2025, but it has been confirmed that permission to appeal to the Court of Appeal has been granted.

Because this piece of legislation is now dependent on the passing of the Commonhold and Leasehold Reform Bill (see below) it seems unlikely these changes will be in effect until late 2028 at the very earliest.

Legislation 2: Commonhold and Leasehold Reform Bill

A second Bill has been announced by the current Government. On September 29 2026 Andy Burnham promised this would be introduced to parliament by Christmas 2026.

This Bill is much more far reaching and includes many of the changes that didn't make it into the previous legislation. It includes:

• Banning new leasehold flats - although not on existing leasehold blocks.
• Reinvigorating Commonhold tenure - although this does not mean existing leasehold blocks will be automatically converted
• Capping ground rents at £250 per annum on existing leases
• Ending forfeiture – where leaseholders can lose their flats for debts as low as £350

You can read the documents related to this bill, which sets out the plan of action.

It is worth noting that this bill will not involve implementing the Law Commission's recommendations on lease extensions, freehold purchases and Right to Manage - Matthew Pennycook confirmed in April 2026 that these will need a third bill!

This Bill has only just started its parliamentary journey. In theory it is possible it could be passed by Spring 2027, but considering how complex and contentious it will be - it could be much later than that.

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It is very unclear when the combined legislation will take effect and accordingly we're encouraging people to ask three questions:

Question 1: Will the reform make a lease extension cheaper for me?

If your lease is below 80 years, or if you have a ground rent above 0.1% of the value of your property, in most cases it will likely be cheaper under the new legislation.

We explain why here.

Question 2: Could the reform make a lease extension more expensive?

If your lease is above 80 years or you have a low ground rent, the reforms could end up making a lease extension more expensive.

We explain why here.

Question 3: Can I wait for the reform to take effect?

The 2024 act is largely not in effect. It was originally promised it would be during "2025 to 2026". However, it has now been confirmed that the Leasehold and Freehold Reform Act 2024 can't be implemented until the Commonhold and Leasehold Bill has been passed - and this is only right at the beginning of its journey through the House of Commons and House of Lords.

There will also need to be further consultation, on things like the valuation rates used to set lease extension and freehold purchase premiums. Generally the word "consultation" is synonymous with "delay" - it took two years for a response from the last consultation that closed on 17 January 2024.

We explain why in more detail here.

Please note: Homehold are not advising people whether to extend their leases now or wait - because we don't have definitive answers to the three questions above. However, our thoughts on the options are here.

Will leasehold reform make a lease extension cheaper for me?

The Leasehold and Freehold Reform Act 2024 had a key aim to make it cheaper for people to extend their leases.

However, the 2024 Act is predominately designed to help people who have short leases below 80 years, by abolishing marriage value. It also helps people with high ground rents, by capping ground rents in the lease extension calculation - although this doesn't apply for all leases.

This is explained below.

Change 1: Abolish Marriage Value

Unsurprisingly, flats with short leases sell for less than flats with long leases.

Whatever a flat with a short lease is worth, it will jump up in value as soon as the lease is extended. The hypothetical profit that the leaseholder makes is called “Marriage Value”. If your lease is below 80 years, you must split the Marriage Value equally with your freeholder. We've written an article on why marriage value is unfair.

Once the legislation comes into force, marriage value will no longer be shared with your freeholder.

It is worth noting that this decision, while positive for leaseholders, is hideously contentious and the freehold community have launched legal proceedings to challenge this in the courts.

When consulting on options for leasehold reform, the Law Commission sought the opinion of Catherine Callaghan KC to ascertain whether abolishing marriage value would infringe freeholder rights. Her response (see para [98]) was that this was "finely balanced".

More recently, Stephen Jourdan KC, took a more opinionated position in a Falcon Chambers Podcast about the extent to which landlords will successfully challenge this provision:

There is no doubt in my mind that landlords will claim compensation in the Strasbourg Court… in my view providing the cases are properly prepared and presented then they are likely to succeed

It is worth noting that the freeholder's argument was rejected by the High Court, but they've now been granted permission to appeal to the Court of Appeal.

Who could benefit?

Anyone with a lease below 80 years.

For example, if you have a flat with a 79-year lease which is worth £200,000, you will probably have to pay between £12,000 and £15,000 to extend the lease at the moment.

With the new legislation it might reduce the price to between a third and two-thirds of this cost, depending on some other factors.

Who could lose out?

The Government need to try and balance the needs of both leaseholders and freeholders.

They will benefit leaseholders by removing Marriage Value and reducing lease extension premiums. However we think they might appease freeholders by decreasing the Deferment Rate (see here), which would increase the price that people would pay.

A reduction in the Deferment Rate - to offset marriage value - would particularly disadvantage people who have leases above 80 years. They don’t pay Marriage Value, so won’t benefit from it being abolished. They will, however, be disadvantaged by any reduction in the Deferment Rate.

Change 2: Cap ground rents (but only when extending your lease)

When you do a lease extension your ground rent is currently reduced to a peppercorn, or £0.

You must make a payment to compensate the freeholder for each of the missed ground rent payments.

You get a compound discount on future payments because money paid in a lump sum upfront is worth more than it being paid out over the term of the lease.

The discount is expressed as a percentage rate. A common rate agreed between valuers (although we think it is too low) is 6%.

Imagine you have a flat worth £200,000 with a ground rent fixed at £300 for the rest of the 80-year lease. The sum total of the ground rent payments over the next 80 years would be £24,000, but because you get a discount the cost of "buying out" the ground rent as part of a lease extension with a Discount Rate of 6% would be about £5,000.

The legislation caps ground rent at 0.1% of the value of the property - in most cases*.

So, in the example above the ground rent of £300 would be capped at £200 - i.e. £200,000 x 0.1%.

*The exception to this is that if the freeholder can argue that when they granted the lease in the first place "the premium was lower, and the rent was higher, than each would otherwise have been".

A good example of where this exception would be applicable is if the leaseholder previously did an informal lease extension with a ground rent, and this was priced lower than a statutory lease extension without a ground rent would have been. Clearly this is an argument the freeholder will be seeking to evidence in every case they can, and it might take a trip to tribunal to settle the dispute.

Who could benefit?

Anyone whose ground rent is more than 0.1% of the value of the property, or that will rise to more than 0.1% of the value of the property throughout the term of their lease.

Who could lose out?

Again, the Government will need to appease both leaseholders and freeholders.

The Government have capped the ground rent at 0.1% of the value of the property, but they could now set the Discount Rate at a lower figure. This would push the price to buy the ground rent back up.

For example, returning to the example above, if they capped the ground rent at 0.1% of the value of the property but set the Discount Rate at 4%, rather than 6%, it would put the price back up nearly as much as it would be if it hadn't been capped.

Again, this might mean that those people who don't have high ground rent (and don't benefit from the 0.1% cap) might find themselves in a worse position than they currently are in.

Could the reforms make it more expensive for me?

The bad news is that the legislation might not benefit all leaseholders, and for some it could even make lease extensions more expensive.

To our concern, the legislation that has passed does not specify certain rates that are used to determine lease extension and freehold purchase prices. These rates, known as the deferment and capitalisation rates, will be set at a later date by the Government through secondary legislation.

In order to ensure they don't fall foul of a legal challenge on human rights grounds, the Government has to set these at whatever is determined to be market value.

This creates a nightmare situation where the Leasehold and Freehold Reform Act 2024 has passed, but we don't know whether the cost of lease extensions will go up or down for some leaseholders.

This is explained in detail below.

Change 3: Standard Valuation Method & Prescribe Market Rates

When you extend your lease, your valuer and your freeholder’s valuer are likely to spend time arguing about various parts of the calculation, including certain rates or percentages to be used.

The 2024 legislation doesn't say what these rates will be, but will allow them to be set by the Government, rather than negotiated between professionals.

As of Summer 2026, the Government are now consulting on these rates.

An example of one of the rates is the Deferment Rate. This is explained as follows:

When your lease ends your freeholder (or their descendants) will receive your valuable flat back – this is called reversion. When you extend the lease, they will forgo this benefit and you must compensate them for this.

Imagine you own a flat worth £250,000 with 100 years left on the lease. If you put £1,900 in the bank today at a 5% interest rate and left it there for 100 years, it would grow to be about £250,000. 

For this reason, it is considered that £250,000 in 100 years is worth the same as £1,900 today. £1,900 is what you would pay now to compensate your freeholder for the additional years on your lease and the loss to them of the flat in the future. Obviously, if you have a shorter lease or a higher value flat - then it is far more expensive to extend.

The higher the rate, the lower the amount you would have to deposit in the bank today for it to be worth £250,000 in 100 years’ time.

Due to a tribunal decision in 2007 known as Sportelli, the figure of 5% is nearly always used for flats – and this 5% rate is the Deferment Rate.

Another example is the rate used to value future income from ground rent, which is called the Capitalisation or Discount Rate. This is explained in this article.

The issue is that the Government are consulting on whether this rate should go down as well as up - the table below is hidden deep in their Impact Assessment.

Who could benefit?

In the first instance it seems like everyone could benefit by setting the rates – because it will mean there is less negotiation between professionals. This will save time and money.

If the Government sets these in a way which is favourable to leaseholders compared with the rates commonly agreed between valuers, this would benefit leaseholders too.

For example, if the Deferment Rate was increased from 5% to 6%, the cost of extending a lease with 100 years remaining on a £250,000 flat would decrease from about £1,900 to about £740.

A 1% increase in rate equates to an reduction in premium of about 60%.

Who could lose out?

If the rates used in the lease extension calculations are decreased, then it would disadvantage leaseholders.

For example, many freeholders argue that the Deferment Rate (explained above) should be reduced from 5%, because interest rates in recent years have been much lower than they were before the rate was set by Sportelli in 2007. In the most recent Upper Tribunal Case on this matter the tribunal threw the freeholder’s case out largely because lack of evidence – leaving the door open to have the argument again the future.

While the freeholder's argument in the above case has been eroded somewhat by increasing interest rates in recent years, the Government does have to ensure that they're reflecting "market value" when setting the rate - because otherwise they could be vulnerable to a legal challenge. While the Labour Government might be expected to be more sympathetic to leaseholders than the Tory one who passed the legislation, when setting this rate, the "market value" requirement still applies.

If the Deferment Rate was decreased from 5% to 4%, the cost of extending the lease on a £240,000 flat with 100 years left would go from about £1,900 to about £5,000. A decrease in rate by even 1% would significantly increase the cost.

An example of the type of leaseholders who could be affected negatively by a reduced rate are those who own ex-Local Authority flats, many of which currently have leases above 80 years on £10 per year ground rents. They would be disadvantaged by this change, but won't benefit from the abolition of marriage value or capping of ground rent (see above).

What are the other changes?

In addition to the changes listed above, the following other amendments were made in the new legislation.

• Allow longer extensions
• Abolish the two-year ownership condition
• Abolish leasehold houses
• Share lease extension / freehold purchase professional fees
• Allow the buy out of the ground rent without having to extend the lease term

Change 4: Allow an extension of 990 years

Existing legislation (the Leasehold Reform Housing and Urban Development Act 1993) entitles leaseholders of flats to extend their leases by an additional 90 years. If you currently have 85 years on your lease, you will have a very long lease of 175 years after the extension.

The legislation extends this period to 990-year lease extensions. This means if you have 85 years now, you would have 1075 years after the extension.

If the cost of a 990-year extension was the same as a 90-year extension, this seems like a generous concession to leaseholders.

However, this isn't as valuable as it seems. The difference in value between a flat with 175 years left on the lease and 1075 years remaining should be less than £100. That’s not a typo.

Put it this way, if you took a £200,000 flat with 175 years left on the lease and no ground rent and you extended it for a further 900 years (by doing ten back-to-back lease extensions under the current legislation) the sum total of the premiums payable would be less than £100. This is because extending really long leases is very inexpensive.

Could 990-year extensions be more expensive than 90-year extension?

They shouldn't be, but we are concerned that the Government could hike up the cost of some lease extensions by reducing the Deferment rate (see here), but then justify the increased cost by arguing that the value of the lease extension is higher than it would have been for a 90-year extension. This simply wouldn’t be true.

If I do / have done a lease extension under the existing legislation can I extend it again under the new legislation?

You probably won't need need to: so long as you've got more than 150 years left on your lease, this is still going to be considered very long and there won't be a meaningful differential in value between your flat and one with a longer lease. 999-year leases already exist and this minor difference in flat prices is also shown by research by Savills.

If you really wanted to, there would be nothing stopping you from doing another lease extension under the new legislation.

Assuming you still have a long lease, the cost of doing another extension should be very minimal, for the reasons mentioned above.

Who could benefit?

If the cost of a 990-year extension is much the same as a 90-year extension, anyone extending the lease would see a benefit – although as mentioned above it is not as much as you might think.

Who could lose out?

If the cost of a 990-year extension is more than a few hundred pounds greater than a 90-year extension, then any leaseholder who is doing one.

Change 5: Abolish the two-year ownership condition

Currently leaseholders have to wait two years before they can extend your lease (or buy the freehold to their house). The exception to this is that you can already start a lease extension and "assign" it to a buyer, so doing this is very uncontentious. It just makes the legal process easier for conveyancers.

This condition has been removed in the legislation and came into force at the end of January 2025.

Who will benefit?

Anyone buying or selling a property with a short lease. It will make it easier to extend.

Who will lose out?

No one.

Change 6: Abolish Leasehold Houses

According to the Government's own statistics, the percentage of new houses sold as leasehold has dropped from 15% in 2016 to less than one percent in 2022. On the basis that there is rarely a good reason to sell a house as leasehold, this is good news.

The wording was originally left out of the draft bill, but has now been included in the final version. There are still many cases where new leasehold houses can be sold, including those on retirement complexes.

Who could benefit?

This was an easy win for the Government. They've been promising it since 2017 and hardly any houses are sold as leasehold anyway, so it's a bit of a non-promise.

However, it could still benefit anyone buying a new-build house, which could have previously been sold as a leasehold.

Who could lose out?

No one.

Change 7: Share Lease Extension / Freehold Purchase professional fees

Under current legislation, the leaseholder is required to cover the freeholder's legal and valuation costs associated with their lease extension.

In theory this is because the leaseholder is essentially completing a "compulsory purchase" of the freeholder's asset.

To put this in context, Homehold's fees for completing all of the legal and valuation work associated with a lease extension for leaseholders are £2,580+VAT, but the freeholder's fees (that the leaseholder also pays) will be this amount or likely a bit more.

The legislation makes it so each side has to pay their own costs - although this is unlikely to apply to claims where the lease extension price is below a certain sum.

In 2019 the Law Commission were concerned that requiring a freeholder to pay their own costs - while at the same time forcing them to extend a lease - could potentially infringe upon their human rights. They instructed a leading KC to write an opinion on this.

She concluded that it in some cases it would be legally sound to require both parties to cover their costs, and in others it might not be.

It is worth noting that this this is something that is being heavily opposed by the freehold community, including via litigation. Their argument was rejected by the High Court, but they've now been granted permission to appeal to the Court of Appeal.

Who would benefit?

This change could make it cheaper for some leaseholders extending their leases or purchasing their freeholds - although we expect leaseholders paying low premiums will still have to contribute to the freeholder's costs.

Who would lose out?

This change should make lease extensions cheaper for most leaseholders. This is clearly a good thing.

However, it might also make the lease extension process harder. This is not a good thing!

Our experience dealing with hundreds of lease extension claims each year is the only thing worse than a freeholder who is really well represented, is one who is badly represented or not represented at all.

We anticipate that if freeholders are required to cover their own costs, some won't bother get represented and others will cut corners - we expect this could delay both the negotiation and legal processes, and increase the need for litigation during lease extension claims.

Change 8: Buy out the ground rent without having to extend the lease term

Doing a lease extension if your lease is still long, is much cheaper than if your lease is short. For example, the cost of a lease extension on a £200,000 flat with no ground rent with 80 years left the is about £4,000. If you've got 150 years left, the cost is about £135. If you have 250 years left, the extension will cost about £1.

The legislation allows those leaseholders who already have long leases simply to buy out the Ground Rent - if they have over 150 years remaining. 

But because the cost of adding years to an already long lease is so low anyway, this inclusion is an odd one. It essentially complicates things by creating two separate statutory schemes, even when there is limited financial benefit to leaseholders to do so.

Who could benefit?

There may be people who save a few hundred pounds (max!) by avoiding extending the term at the time as removing their ground rent.

Who could lose out?

Anyone who takes up this option could lose out in the future. For example, imagine your lease currently has 150 years remaining. You pay to remove your ground rent and the associated legal costs of doing so.

If you have a 150 year lease you could save a few hundred pounds by not increasing the length of the lease at the same time.

In about 50 years, the lease won’t be considered long anymore. Whoever owns the flat at this stage will have to do a lease extension, paying another premium and another set of legal fees.

What additional changes can we expect in the future?

Labour's plans for their new Commonhold and Leasehold Reform Bill are set out in the introduction to this article.

When will the changes happen?

Just because the Leasehold and Freehold Reform Act 2024 has achieved Royal Assent doesn't mean it is actually in effect.

The first thing to note is that the implementation of this bits of this Act that make (some) lease extensions cheaper has essentially been "coupled" with the new Commonhold and Leasehold Bill - which was only announced in the King's Speech in May 2026.

It is likely that it will take at least a year (but could be much longer!) for this to make its journey through the House of Commons and House of Lords. This Bill is expected to be about 260 sections long and it is both contentious and complex.

Six groups of freeholders have launched legal proceedings against the Government to argue their human rights have been infringed by the legislation. While they lost at the High Court in 2025, they have now been granted permission to appeal in the Court of Appeal. Potentially this case could also go to the Supreme Court.

Equally, because additional legislation is required before the 2024 Act can be implemented, it seems like the passing of this could provide a fresh opportunity for yet more legal challenge.

Leaseholders have been waiting for reform since (at least) 2017 and it isn't necessarily going to happen straight away.

Conclusion: Should I extend my lease?

It is very difficult to advise our clients about whether to extend their leases – we can only lay out everything we know and let them make their own decision.

It is particularly difficult because we don’t know the full impact of the changes and when they will come into force.

The first thing to talk about is timelines. It's highly unlikely that the additional legislation required to make the act work will be passed and the changes in effect until 2028 at the very earliest - but it could be much later. You then need to budget a year for your lease extension to go through - so if you need this done before late 2028, you should crack on.

Generally, we find that large investors sometimes wait but homeowners or small landlords decide to press ahead with their lease extensions because they don’t want to put their lives on hold or risk the uncertainty of the new process. Certainly, cracking on has been a good call to date – over the last five years leasehold reform has been illusive but Upper Tribunal decisions have made it more expensive for people to extend. Anyone who has waited has been disappointed so far.

We've written a specific article on how to answer the question "Should I extend lease now or wait for reform?", depending on your specific circumstances.

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