Leasehold Reform Update: What Landlords Need to Know
Why This Matters. Leasehold reform has long been a political talking point — but now, it’s finally happening.
The Leasehold and Freehold Reform Bill is set to overhaul how leasehold property works across England and Wales, with major implications for landlords, investors, and developers.
The reforms aim to make ownership “simpler, fairer, and more secure.” But if you own flats, short leases, or semi-commercial stock — or are considering new investments — the fine print matters.
⚖️ What’s in the Leasehold and Freehold Reform Bill?
The Bill, introduced in 2023 and expected to receive Royal Assent in early 2026, includes:
- ✅ 990-year lease extensions (up from 90 years today)
- ✅ Ground rent reduced to £0 for all future leases
- ✅ Ban on leasehold houses (except in special cases)
- ✅ Greater transparency on service charges and estate fees
- ✅ Easier right to manage and collective freehold purchase
- ✅ Abolition of “marriage value” for leases under 80 years
- ✅ Removal of the two-year ownership rule before extension
🔗 Official Bill Summary – GOV.UK
🔗 Leasehold and Freehold Reform Bill Tracker – UK Parliament
Where the Reforms Apply — and Don’t
|
Country
|
Coverage
|
Notes
|
|---|---|---|
|
England
|
✅ Yes
|
Full application
|
|
Wales
|
✅ Yes
|
With Welsh Government discretion for local enforcement
|
|
Scotland
|
❌ No
|
Leasehold abolished in 2004 under separate law (Scottish Government)
|
|
Northern Ireland
|
❌ No
|
Leasehold operates under separate law; this Bill does not apply
|
Grey Areas & What’s Excluded
Some types of property fall outside the scope of reform, or only partially qualify:
|
Property Type
|
Included in Reform?
|
Notes
|
|---|---|---|
|
🏢 Leasehold Flats
|
✅ Yes
|
Core focus of the Bill
|
|
🏠 Leasehold Houses
|
✅ Yes
|
Ban on new ones; existing houses benefit from reforms
|
|
🏫 PBSA (Student Accommodation)
|
❌ No
|
Typically held under commercial or licence terms, not qualifying leases (NRLA Guide)
|
|
🏪 Flat Above a Shop
|
⚠️ Depends
|
Must have <25% of floor space as commercial to qualify for enfranchisement (Lease Advice)
|
|
🏘️ Shared Ownership
|
⚠️ Partial
|
Reforms apply once 100% of equity is owned
|
|
🧓 Retirement Housing
|
⚠️ Delayed
|
Government says ground rent reform may be deferred for retirement scheme (Gov UK News)
|
🔗 Eligibility Guide – Leasehold Advisory Service
What Landlords Need to Know
1. Ground Rent Is Ending
You’ll no longer be able to charge ground rent on new long leases. While existing leases remain valid, freehold value may decrease over time — especially where ground rents escalate.
2. Lease Extensions Will Get Cheaper (Eventually)
The removal of “marriage value” will reduce costs, particularly for leases under 80 years. But this isn’t law yet, and implementation may not be immediate.
3. Some Assets Are Excluded
- If you own PBSA, semi-commercial units, or anything held under a corporate headlease, you may not benefit from the reforms.
- Flats above shops only qualify if the non-residential part is under 25% of the total building.
- Mixed-use investments will require case-by-case assessment.
⚠️ Mitigation Strategies to Consider Now
If you hold leasehold flats, especially with short leases, you may wish to:
✔️ Review Lease Lengths
- For leases under 80 years, you currently pay “marriage value” when extending.
- If the Bill passes as proposed, this cost will be abolished — saving you money if you wait.
- But for sellers or those needing finance, extending now may protect marketability.
✔️ Audit Your Portfolio
- Identify which leases include escalating ground rents or lack clear service charge breakdowns.
- These properties may face valuation pressure once buyers expect post-reform standards.
✔️ Hold Fire on Complex Cases
- For semi-commercial units or PBSA-style stock, reforms won’t help you much.
- Treat these assets as commercial, and focus on cashflow and exit value — not regulatory upside.
🧠 RIUK View: Long-Term Win, Short-Term Uncertainty
This reform is ultimately positive — it will:
- Simplify ownership structures
- Protect long-term value for leaseholders
- Increase confidence in new-build flats
But landlords and developers should:
- Expect valuation friction until reforms settle
- Adjust their deal underwriting to reflect reduced ground rent upside
- Be wary of incomplete or confusing lease structures in mixed-use schemes
We actively assess leasehold structures on all projects we promote. If you’re unsure whether your flat or block is affected, get in touch.
📩 Next Steps for Landlords
- 🔍 Review lease terms now — especially anything under 85 years
- 📝 Plan lease extensions strategically — don’t rush, but don’t delay blindly
- 🏘 Check if new investments are leasehold — and what terms apply
- 💬 Get legal input on complex or mixed-use titles
- 📥 Contact RIUK for help reviewing new deals or existing stock
🔗 Explore investor-ready listings: residenceindexuk.com
🔗 Learn more from LEASE: lease-advice.org
