UK Property Market: New Leasehold Reform Law Changes Rights for Millions

The Leasehold and Freehold Reform Act, which received Royal Assent in 2024 and whose provisions have been coming into effect progressively, has materially improved the legal position of the approximately five million leasehold property owners in England and Wales, addressing some of the most egregious features of a system that property law reformers had been criticising for decades. The reforms affect millions of people who own flats or houses on long leases and had faced a range of structural disadvantages relative to freehold property owners.

The most significant changes include a reduction in the cost of extending a lease — a process that most leaseholders must eventually undertake to maintain the saleability and mortgageability of their property — by removing the marriage value calculation that had added substantially to extension premiums for shorter leases. The Act also extended the standard length of extended leases to 990 years, effectively making the resulting tenure perpetual in practical terms.

Service charge reforms included in the Act give leaseholders improved rights to challenge unreasonable charges and to obtain accounts and information from freeholders and managing agents. The problem of excessive and opaque service charges had been one of the most persistent grievances in the leasehold sector, with some leaseholders facing demands for thousands of pounds for maintenance work of questionable necessity or value.

The Act also banned the creation of new residential leasehold houses — a particular abuse where houses had been sold on leasehold terms primarily to preserve freeholders’ income from ground rents and extension fees rather than for any legitimate legal reason. Existing leasehold houses retain their tenure but new-build houses must in future be sold on freehold terms.