Lease extension and leasehold reforms

It is worth noting that reform remains some time off and changes to the lease extension process may not come into force until more new legislation is passed.

If you are a leaseholder considering whether to extend your lease or purchase your freehold now or to wait, you need to consider the following questions.

If your lease has 80 years or less remaining, or if you have a ground rent above 0.1% of the freehold value of your property, it will likely be cheaper.

That’s because the reforms were designed to help people who have short leases at or below 80 years, by removing the requirement to pay marriage value.

They will also help people with high or increasing ground rents, by capping the treatment of ground rent in the lease extension valuation calculation, although the cap will not apply in all cases.

Under the reforms, you and your landlord (freeholder) will be required to pay your own legal and valuation costs (with certain limited exceptions). You will no longer have to pay your landlord’s costs, which can be hundreds of pounds.

The reforms will also increase the terms granted for lease extensions for both houses and flats to 990 years, up from 50 years for houses and 90 years for flats.

The aim of the legislation is to make it easier and cheaper for leaseholders to extend their lease or collectively buy the freehold of their building. The removal of the requirement to pay marriage value and to pay the freeholder’s costs will make the process cheaper for many. However, we cannot say for certain yet that every leaseholder will be better off as leases vary significantly.

The Act also does not specify the rates that will be used to determine lease extension and freehold purchase prices. The government will set these “deferment and capitalisation rates” later, after consultation.

Until those rates are set, we will not know whether the cost of lease extensions will come down for all leaseholders.

Given the above, it is hard to give a definitive answer on whether you should extend your lease now. You should seek advice from a leasehold practitioner via the Law Society or ALEP.

If your lease is already 80 years or less, or you have a high ground rent, you may be better off waiting for the law to change before extending. The removal of the requirement to pay marriage value and the cap on ground rent used to calculate the cost of a lease extension will be of benefit.

Practitioners believe that for some leaseholders it is prudent to consider extending a lease now and not wait for the reforms. This is particularly the case if you need to sell in the next year or so, or if you have just over 80 to 82 years left on your lease.

What you might choose to do will depend on factors like your lease length and your circumstances. We advise getting professional advice on your specific circumstances, but you might want to consider the following scenarios:

• If your lease length is just over 80 to 82 years: it’s almost certainly advisable to extend your lease, as otherwise you may find it difficult to sell or remortgage. It’s not yet known whether the reforms to make lease extension cheaper will happen before your lease drops to the “80-year mark”, at which point marriage value currently kicks in. There is no guarantee that it will be cheaper in the future than it is for you now and so you may be better off extending before your lease drops to 80 years.
• If you want to move or remortgage and the current lease is an issue: it’s probably best to extend if your lease is just over 80 years, but it’s worth testing the market. You might want to consider accepting a lower offer to cover the cost of the new owner having to extend the lease.
• If your lease is more than 82 years: it’s up to you. Extending your lease is likely be made cheaper by the reforms, but this is not guaranteed. If you’re comfortably over the threshold, say 100 years, you could wait to see what reforms come.
• If your ground rent is above 0.1% of your property value (or rises to that level in the future): if you have a longer lease, say 100 years, you could consider waiting for the reforms, because it may be cheaper for you in the future if the 0.1% cap applies to your lease extension calculation. The government also announced in January 2026 that it will cap ground rents for existing leases at £250 a year before changing to a peppercorn (zero) ground rent after 40 years. However this change is not yet law and needs to be approved by Parliament.
• If your lease is already 80 years or less: you could consider waiting as it might be cheaper for you in the future once the requirement to pay marriage value is removed.