Leasehold and Freehold Reform Act reforms introduced

The government introduced a suite of leasehold reforms in May 2024 under the Leasehold and Freehold Reform Act¹. The changes cover how leaseholders extend their leases, buy their freehold and receive information about service charges¹.

Under the Act, leaseholders will no longer need to have lived in a property for two years before they can extend their lease or buy the freehold¹. Previously, a two-year residency requirement applied¹. The standard lease extension term will rise to 990 years, from 50 years for houses and 90 years for flats¹. The Act also requires freeholders and managing agents to issue bills in a standardised format, giving leaseholders greater transparency about service charges¹. It will be made easier for leaseholders to challenge unreasonable charges at a tribunal, and easier and cheaper for them to take over the management of their building¹.

Not all aspects of the Act are currently enforced, as some require the government to pass secondary legislation¹. This has been delayed by legal challenges from freeholders¹.

A ground rent cap was mooted as part of the Leasehold and Freehold Reform Bill, but was not included when it passed into law in May 2024¹. Ground rent was banned on new leases in 2022, meaning buyers will never pay ground rent on either a brand-new leasehold property or an existing one where a new lease is taking effect¹. Existing leaseholders are still paying ground rent, though if a lease extension is done, ground rent is reduced to zero, or a peppercorn rent¹.

Why it matters for households

Leasehold ownership applies to most flats in England, Northern Ireland and Wales, while houses are normally sold as freehold; in Scotland, very few properties are sold as leaseholds¹. A leaseholder has the right to live in the home for a set number of years but does not own the land it stands on, and once the lease runs out ownership reverts to the freeholder¹. Leaseholders must get permission from the freeholder for certain alterations, and often pay an annual fee to a managing agent¹.

Lease length affects both value and the cost of extending: a lease with fewer than 80 years remaining can seriously affect a property's value and extension cost, and many mortgage providers will refuse to lend on a property with fewer than 80 years left¹. When first drawn up, residential leases usually last up to 125 years, though up to 999 years is possible¹.

Service charges are a separate ongoing cost. Leasehold flat owners usually pay a service charge to the landlord or management company to maintain common areas¹. Most newer agreements include variable service charges, which allow the freeholder to estimate the cost each year and raise fees to finance major one-off expenses such as refurbishing a lift or updating a fire alarm system¹.

Because some provisions need secondary legislation and have been delayed by legal challenges from freeholders, the timing of when individual measures take effect has not been reported¹.

What happens next

The government plans further changes through the Leasehold and Commonhold Reform Bill, a draft of which was published in January 2026¹. In its current form, the Bill would ban the use of leasehold for most new flats to make commonhold the default tenure, and cap ground rents at £250 a year, changing to a peppercorn after 40 years¹. The government has also consulted on measures to improve the regulation of management agents in England, and is reviewing responses from its consultation that took place in 2025¹.

For background on how these tenures differ, see freehold vs leasehold and buying a leasehold property. Lease length and ground rent also affect borrowing on a leasehold home.