Leasehold Reform in 2024

Linz Darlington | February 2024

Many leaseholders are waiting for leasehold reform, with the hope that it will improve their situation in relation to their lease.

This is a very detailed article which will tell you all you need to know about leasehold reform. We keep it up to date with every major change. Please bookmark the article.

A short summary of the article is as follows:

The good news is that in the King's Speech on 7 November 2023 the government promised to introduce a Leasehold and Freehold Reform Bill.

"My Ministers will bring forward a bill to reform the housing market by making it cheaper and easier for leaseholders to purchase their freehold and tackling the exploitation of millions of homeowners through punitive service charges."

On 27 November, a draft bill was introduced into the legislative process and most recently passed it's Third Reading Stages on 27 February 2024. It includes lots of changes that would benefit some leaseholders.

Two notable changes are as follows: (1) it removes the concept of marriage value, which should make it cheaper for some people with fewer than 80-years to extend their leases and (2) in some cases it caps ground rent at 0.1% of the value of the property when calculating the lease extension price.

This article explains each of the potential changes relating to lease extensions and freehold purchases in detail. At the end we muse on how to make the decision to extend now or wait for reform.

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 draft legislation 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.

This creates a nightmare situation where we don't know whether the cost of lease extensions will go up or down for some leaseholders.

If these rates are set at higher levels than are currently agreed between valuers, then lease extension premiums will go down. If they're set at lower levels, then the price will go up.

The government will want to try and appease both leaseholders and freeholders. It is anticipated the sector will push for lower rates to offset the loss of marriage value and capped ground rent. Particularly for people with longer leases and low ground rents, it could mean lease extensions premiums go up.

Professor Hopkins, who led the Law Commissions work on leasehold reform, was queried on this at Committee Stage (see Question 105) and stated "I cannot sit here and say that every leaseholder will pay less."

And the ugly truth is that these changes are not yet law, and there is no guarantee they will make it through the legislative process by the next general election - particularly if that happens in May 2024.

We feel it is so important to make this last point because leaseholders have been waiting for reform since 2017.

While the government has now introduced a draft bill, we caution that we may well still have a long journey ahead before the bill hits the statute books.

During that time, the government's promises may be changed or watered down. You can read more about the timelines for reform in this article.

Even once the Leasehold and Freehold Reform Bill is passed, it is likely it will take even longer for the changes to actually be implemented because these will require regulations to be created too. The Impact Assessment (see para 82) suggests that while some changes will be in place by 2025 or 2026, others wont be until at least 2028.

Please Note: this article has been written with input from our valuation team at Homehold and the lease extension solicitors from our legal subsidiary. It shouldn't be treated as legal advice. If you're a journalist who would like to contact our team for expert comment, please email your requirements to press@homehold.org.

What can we expect from a Leasehold Reform Act?

For many leaseholders, the hope for new leasehold law is related to reducing the cost of extending their lease or purchasing their freehold and that is what this article covers.

However, there are also other potential benefits from a new Leasehold Reform Act – including granting the right to buy the freehold to leaseholders currently unable to do so and introducing the regulation of leasehold and estate management.

Our team of lease extension solicitors and surveyors constantly keep an ear to the ground on the very latest news on changes to leasehold law and the new Leasehold and Freehold Reform Bill. This article considers the latest leasehold reform news as of February 2024 and provides an update on:

For each we provide an overview of which leaseholders could benefit, and which could lose out.

And we summarise with the key question so many people are asking: should I extend my lease under the current regime or wait?

The Changes

Because we now have a draft bill, we have a clear idea of what we're likely to see in this piece of legislation when it finally makes it onto the statute books.

There are three major caveats to this:

Some things are explicitly "to be decided": The bill has a number of absolutely critical areas which explicitly say they will be decided later by the government - like the rates that effect the cost of lease extensions.

Some things will be added: The bill will now make it through the windy legislative process and members of both houses of parliament will want to put their stamp on it.

Some things will be removed: Just because something has been included in the draft bill, doesn't mean it won't be amended out later. Some of the changes are very contentious.

Change 1: Standard Valuation Method & 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 draft legislation doesn't say what these rates will be, but will allow them to be set by the government, rather than negotiated between professionals.

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 £200,000 with 80 years left on the lease. If you put £4,000 in the bank today at a 5% interest rate and left it there for 80 years, it would grow to be about £200,000. 

For this reason, it is considered that £200,000 in 80 years is worth the same as £4,000 today. £4,000 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.

The higher the rate, the lower the amount you would have to deposit in the bank today for it to be worth £200,000 in 80 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.

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 cost.

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 80 years remaining on a £200,000 flat would decrease from about £4,000 to about £2,000.

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. The freeholders' argument has been eroded somewhat by increasing interest rates in very recent history, but this doesn't meant that the government wouldn't reflect it partially when setting the "market rate".

If the Deferment Rate was decreased from 5% to 4%, the cost of extending the lease on a £200,000 flat with 80 years left would go from about £4,000 to about £8,500.

An example of the type of leaseholders who could be affected negatively by this change 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 below).

Labour are clearly also concerned about this rate being set at a lower level than it currently is. They requested at both Committee Stage and Third Reading that a clause is added into the legislation which requires the government to set this rate at a level which is not punitive to leaseholders. On both occasions, this was voted down by the Tories.

Change 2: 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. This hypothetical profit that the leaseholder makes is called “Marriage Value”. If your lease is below 80 years, you must split the Marriage Value with your freeholder. We've written an article on why marriage value unfair.

The draft bill means marriage value is no longer shared with your freeholder.

It is worth noting that this decision, while positive for leaseholders, is hideously contentious and it is likely that the freehold sector will lobby against it. They may well argue (in court) that their human rights have been infringed. 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".

Who could benefit?

Anyone who with a lease below 80 years (assuming they qualify)!

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.

If Marriage Value was abolished completely, it would probably reduce the price to between a third and two-thirds of this cost, depending on some other factors.

Who could lose out?

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

We think that they might benefit leaseholders by removing Marriage Value and reducing lease extension premiums. We then 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 3: 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 sort of compound discount on future payments because money pad 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 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 draft legislation caps ground rent at 0.1% of the value of the property - in most cases.

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". Clearly this is an argument the freeholder will be seeking to evidence in every case they can, and it will be hard to argue against.

Who would 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 would lose out?

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

The government could cap the ground rent at 0.1% of the value of the property, but 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 before.

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.

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 draft bill will extend 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.

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. There are still many cases where new leasehold houses can be sold, including those on retirement complexes.

Who could benefit?

This is 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 6: 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, our fees for completing all of the legal and valuation work associated with a lease extension for leaseholders are £2,325+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, with a few exceptions.

It is worth noting that this this is something that it likely to be heavily opposed by the freehold community. 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.

Who would benefit?

Leaseholders extending leases or purchasing their freeholds - their professional fees could drop considerably.

Who would lose out?

We don't think any leaseholders could lose out from this promise.

Change 7: 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 would 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 about the Ground Rent Consultation?

In addition to the draft bill outlined above, the government have launched a 36-question consultation into whether they should cap ground rents on existing leases. It was originally due to run until 21 December 2023, but the deadline was extended to 17 January 2024. We are now waiting for consideration of the results and on 27 February 2024, the Housing Minister said "we will say more shortly".

A cap would reduce outgoings for leaseholders paying ground rent above the cap, and most likely resolve issues with selling and mortgaging properties due to onerous ground rents.

There are five different potential options including:

  • Abolishing ground rent entirely
  • Capping it at a fixed fee (of which £250 has been widely discussed)
  • Capping it at a percentage of property value (of which 0.1% has been discussed)
  • Re-setting it to the initial ground rent in the lease
  • Freezing it at the current ground rent

Homehold only work for leaseholders, and would prefer that freeholder's couldn't collect ground rent and in theory support Option 1.

However, we do recognise that if scrapping ground rent entirely was attempted, it would be heavily contested by freeholders (see below). As a result, it is unlikely to be successful and may delay any changes at all being passed by parliament. From an opinion piece for the i newspaper written by Sebastian O'Kelly, CEO of the Leasehold Knowledge Partnership charity, it is clear that while they also advocate for a peppercorn ground rent they too recognise such an outright ban would be unworkable.

Capping it at a fixed level at or below £250 would resolve many issues. Unlike linking ground rent to market value, it also wouldn't require periodic revaluation of properties.

Why could freeholders try to argue their human rights have been violated?

Freeholders will argue that removing or reducing their ground rent incomes will be an infringement of their human rights. A taste of this can be found in the comment from the Residential Freehold Association on this subject and they have also suggested that the Government could be liable for £31bn in compensation if they capped all ground rent at £0.

In 2019 the Law Commission were asked to consider the options for reducing the price payable for lease extensions, and they were sufficiently concerned during this process that certain options would be considered a violation of freeholders’ human rights they sought the advice of leading barrister Catherine Callaghan KC on the options they were to present.

Her opinion (see paragraph 87) was that capping the ground rent at 0.1% of the value of freehold would be a violation of the freeholder’s human rights if the price the leaseholder originally paid for the leasehold property was reduced to reflect the high ground rent provisions. The government know this because much the same advice was discussed in their own research briefing note (page 41) on this subject.

It could be concluded from Catherine Callaghan KC's advice that any legislation that capped ground rent on existing leases would probably also be a violation of the freeholder’s human rights if the amount initially paid for the lease or a lease extension was reduced to reflect the level of ground rent in the lease.

Freeholders will invariably argue that they sold all leasehold properties at a lower price than they would have sold one with a freehold title, to take into account the value of the income stream from the ground rent.

While this will clearly not be true in all cases, the water will be muddied by the fact the freehold community will be able to demonstrate they have discounted the cost of leases in some cases to take into account the ground rent provisions. For example, with lease extensions, freeholders will often accompany a statutory offer (with no ground rent) with an informal offer of a lower premium if the leaseholder continues to pay a ground rent.

Will the government abolish leasehold?

The short answer is "No" it won't be abolished in the near future - but it might be polished!

On the Sophy Ridge show in late January 2023, Michael Gove, Secretary of State at the Department for Levelling Up, Housing and Communities said at that point he wanted to “abolish” leasehold.

Whilst very exciting and positive, it was an odd statement. The government had been setting out proposals to reform leasehold, not scrap it entirely. Equally, there are millions of leasehold contracts that could not (easily) be abolished and replaced.

Reporting on "Government Sources" from the mainstream press in May 2023 confirmed that the government wouldn't be abolishing leasehold after all. This interpretation is confirmed by the current briefing note on the government website which outlines the planned reforms of leasehold, not abolition.

Equally, outright abolition was not mentioned in the King's Speech or draft legislation.

What are the timelines for leasehold reform?

The (recent) history of leasehold reform:

Before we start talking about future changes to leasehold law, it is important to recap on recent history. This long journey illustrates that we might have a way to go yet.

The government has been (seriously) thinking about reforming the leasehold tenure since 2017, when they ran a consultation title “Tackling unfair practices in the leasehold market”.

For the last five years, leasehold reform has felt like it could be just around the corner – but we never seem to get to the destination!

For example, both Labour and the Conservatives pledged commitment to leasehold reform in their manifestos in 2019, and the Law Commission published detailed proposals for reform in 2020.

In addition, in 2019 the Competition and Markets Authority launched an investigation into whether ground rent clauses which doubled frequently breached consumer protection law. Subsequently several large freeholders have agreed to revise ground rent terms in existing leases to prevent them doubling more frequently than every 20 years.

An optimistic point in the leasehold reform journey was in January 2021 when the then Housing Secretary Robert Jenrick promised that the government would launch two separate pieces of legislation to reform leasehold.

The government promptly passed the first part. This was the Leasehold Reform (Ground Rent) Act 2022. In brief, this legislation banned ground rents in nearly all new leases.

The second part of the promised legislation will benefit existing leaseholders. A low point came in May 2022, when it was clear that this legislation would not be introduced and passed in the 2022/2023 Parliamentary session.

However, as of Spring 2024, things are looking up again!

So what's the next step in leasehold reform?

The government have promised a Leasehold Reform Bill in the King's Speech and introduced it into the House of Commons.

The bill has a maximum of about a year to get through the legislative process before the next general election.

What's the legislative process?

The legislative process is long and windy. In short:

A bill has been promised in the King’s Speech, which was the State Opening of Parliament. It has been introduced and the bill has now had it's first, second and third readings in the House of Commons.

The next step is for it to go to the House of Lords and be debated there too.

The House of Commons and House of Lords will invariably disagree on some things, so the bill will "ping pong" between the two while they iron their differences out. This bill is both complex and contentious, and it is likely to take time to agree it.

Once it is agreed then there will need to be secondary legislation to decide the key rates to use in the calculations for the lease extension and freehold purchase criteria and it is likely that the government will want to launch a consultation into what these should be. See Impact Assessment, para 80.

Finally, there is likely to be an implementation period after the bill is passed before it comes into force. The Impact Assessment estimates that implementation should happen during 2025 or 2026, and be completed by 2028 - although it does acknowledge these timings could change.

The fact the government has launched a consultation on ground rent has the potential to cause further delay too.

Is it possible that the bill will not not make it through?

This time frame is technically possible, but possibly a little optimistic on the basis that it took over a year for the first Leasehold Reform Bill to go through - and because it only affected new leases, it was a lot simpler and less contentious.

Certainly, just because a bill has been announced in the King's Speech and is in the legislative process doesn't necessarily mean that that the government are prioritising it or that it will become law before the next general election.

Equally, while there are many people who will be lobbying to water down the leasehold reform bill, there are also MPs who reportedly want to toughen it up. While this is a good thing, it will slow things down.

Lord Greenhalgh, a member of the House of Lords who has been very involved in leasehold reform, said in an interview with the Leasehold Knowledge Partnership in April 2023 that he thought that a bill might be introduced for scrutiny but not passed before the next election.

If sufficient parliamentary time is given over the next few months, we'll know the government is serious about this.

So it is far from guaranteed, but we might see a Leasehold Reform Act 2024. Who knows!

What happens if a general election is called before leasehold reform happens?

An election must happen no later than January 2025, but Sunak has promised it will be during 2024 and indicated it will be in the second half. The Evening Standard (amongst others) think it will be in May or October this year.

It seems optimistic, but not impossible, for a Leasehold Reform bill to make its way through the Commons and the Lords in a year.

However, Andrew Marr writing for the New Statesman has suggested that an election is more likely in Spring 2024 than the Autumn, and if this is the case it is highly unlikely that the bill will be passed before the election.

If an election is called before the bill passes, then anything could happen. Any new Government will have their own housing agenda and leasehold reform may or may not be the priority. Realistically, if the bill is not passed before the general election it is likely it will be delayed by at least another year.

Conservative Leasehold Reform

Presumably a future Conservative government will continue on the work on leasehold reform, but considering there is likely to be a significant cabinet reshuffle, this isn't guaranteed. Certainly any bill won't be automatically carried over into the new session of parliament.

Labour Leasehold Reform

In their 2019 manifesto, Labour said that “Labour will end the scandal of leasehold for the millions who have bought their home but don’t feel like they own it” in May 2023 they held an opposition day where they held a vote to urge the Conservatives to make good on their promises on leasehold reform.

Following this Lisa Nandy, Shadow Levelling Up Secretary, told Sky News that if they were to get into power they would abolish leasehold within the first 100 days.

“We’ve said exactly what Michael Gove was proposing in January: end leasehold for new builds, end leasehold on homes, and for where you’ve got flats with lots of people who need to hold the lease in common, you introduce a form of commonhold so they can take over the lease of their own building together,”

Labour’s stance is excellent news and suggest that if Labour were to get into power at the next election they would intend to continue to carry the leasehold reform baton. Certainly Angela Rayner, shadow housing secretary, was reported to confirm in October 2023 that if Conservatives don't reform leasehold, Labour will do so if they get into power and this was also reconfirmed by Angela Rayner in the Commons on 11 December.

However, when politician promises to do something in “100 days” it sounds like more a sound bite rather than a robust plan. If Labour want to embark on more comprehensive reform that the Tories, they might promise it in their first King's Speech, but the Office of Parliamentary Counsel will need a reasonable time period (many months or more, not many weeks) to draft the extensive legislation. Equally, a new Labour government will have a lot of priorities if they get into power after nearly 15 years, and we don't know if leasehold reform will be at the top of the list.

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 impact of the changes, or whether they will definitely happen.

The first thing to talk about is timelines. It's highly unlikely that the bill will be passed and the changes in effect until 2025 at the very earliest. You then need to budget a year for your lease extension to go through - so if you need this done before late 2025, 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.

When leasehold reform finally makes it onto the statute books there will be some people who have already extended and will be disappointed they didn’t wait. Equally there will probably be some people who waited and wish they hadn’t. As the saying goes: hindsight is 20/20!

The below gives our two pennies on what you might choose to do, depending on your situation. As always, the choice can only be yours.

Lease is 80 to 82 years – Almost certainly extend. It is highly unlikely that the reforms will be through before your lease drops below the “80-year mark” at which marriage value makes it more expensive under the current legislation and future legislation is unlikely to make it cheaper than it is for you now

Want to move or re-mortgage (and can’t with current lease): Probably extend. Don’t put your life on hold.

Lease is above 82 years – It’s a toss up. It might be made cheaper by the reforms, but it might also made more expensive by the prescribed market rates.

Ground rent is high: Consider waiting. It might be made cheaper for you in the future by the cap on ground rent.

Lease below 80 years: Consider waiting. It might be made cheaper for you in the future by the abolition of marriage value.

Decided to go ahead with your lease extension?

Could the new legislation make things worse, before it gets better?

Finally... when considering to do a lease extension now or wait for reform there is one last question to ask. Do you want to be a pioneer of new legislation, or would you prefer to follow a well-trodden path?

The current legislation is well understood and the many grey areas that it once contained have been largely clarified by over thirty years of expensive court and tribunal cases.

On the other hand, with the new legislation we can already see question marks that will take years to be tested.

An example of the types of issues we might find in a new leasehold reform act can be illustrated by the significant flaws in the Building Safety Act 2022.

When the new Leasehold Reform Act comes in there will be a barrage of people waiting to be pioneers, but in some (but not all cases) we expect the new legislation to create uncertainty, frustration, delay and additional expense.

It only makes sense to be a pioneer if the benefit of the new legislation to you will be great. Everyone else may want to consider if it makes more sense to follow the well-trodden path.

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Linz is the CEO and co-founder of Homehold. He’s always looking at how we can improve our service and better support you through the lease extension process. If you have any questions about your lease he’d be delighted to help.

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