Overview of Leasehold Reform Legislation

Leasehold law in England and Wales is undergoing its most significant reforms in decades, driven primarily by the Leasehold and Freehold Reform Act 2024 and the forthcoming Leasehold and Commonhold Reform Bill expected in late 2025. These reforms aim to make leasehold ownership fairer, simpler, and more transparent for leaseholders, while also affecting landlords and property owners.

Key Changes Introduced by the Leasehold and Freehold Reform Act 2024

The 2024 Act introduces several major reforms, including:

• Lease extensions up to 990 years
• Zero ground rent on new leases (peppercorn rent)
• Simplified routes for leaseholders to buy their freehold
• Stricter transparency requirements on service charges and insurance fees
• Removal of the landlord’s legal costs for leaseholders challenging lease terms
• Restrictions on the creation of new leasehold houses

While some provisions are already in force, many require further consultation and secondary legislation, with full implementation expected over 2025 and 2026.

Understanding Ground Rent and Peppercorn Rent

Ground rent is a regular payment made by leaseholders to freeholders for the use of land. Since 30 June 2022, all new leases must have ground rent set at a nominal “peppercorn” rate, effectively abolishing traditional ground rent charges on new leases. The peppercorn rent is a token amount, often £1 per year or less, intended to keep leases legally valid without financial burden.

The 2024 Act includes measures to modernise ground rent for existing leases, but these changes will be phased in gradually following further government consultation.

Recent and Upcoming Changes Affecting Leaseholders

Recent updates include:

• Insurance fee transparency: A government consultation closed on 24 February 2025 to improve clarity on building insurance fees charged to leaseholders.
• “Two-year rule” implementation: From 31 January 2025, leaseholders can extend leases or buy freeholds immediately after purchase, without waiting two years.
• Right to manage reforms: From 3 March 2025, leaseholders can more easily take control of property management, with reduced qualification criteria and no obligation to pay freeholder legal fees.

Further consultations planned for 2025 will address:

• Service charges and legal costs transparency
• Enfranchisement premium pricing for freehold purchases
• “Fleecehold” estate management charges and freeholder protections

New Rights for Leaseholders and Implications for Landlords

The Act grants leaseholders enhanced rights, including:

• Cheaper and easier lease extensions and freehold purchases, with the removal of “marriage value” charges
• Longer lease extensions up to 990 years with ground rent reduced to peppercorn
• Expanded eligibility for lease extensions, freehold purchases, and management takeovers
• Ban on most new leasehold houses
• Greater transparency on service charges, administration fees, and building insurance commissions
• Leaseholders no longer required to pay landlords’ legal costs when challenging lease terms
• Improved access to dispute resolution and timely sales information

For landlords, these changes mean adapting to more transparent charging practices, potentially lower income from ground rents, and increased leaseholder involvement in management decisions.

Implementation Timeline of the Leasehold and Freehold Reform Act

1. 27 November 2023: First Reading in the House of Commons
2. 11 December 2023: Second Reading and debate in the House of Commons
3. 16 January 2024: Committee Stage with expert testimonies and detailed analysis
4. 27 February 2024: Report Stage in the House of Commons
5. 28 February 2024: First Reading in the House of Lords
6. 27 March 2024: Second Reading in the House of Lords
7. 24 May 2024: Royal Assent granted by King Charles
8. 2025–2026: Phased implementation of the Act’s provisions as appointed by the Secretary of State

The Leasehold and Commonhold Reform Bill

Expected in the second half of 2025, this Bill will build on the 2024 Act by:

• Strengthening leaseholders’ rights to extend leases, buy freeholds, and manage buildings
• Reviving and modernising the commonhold system to allow flat owners to own freehold
• Introducing more controls on ground rents for existing leases
• Ending forfeiture as a method to enforce lease terms
• Enhancing rights for freehold homeowners on private and mixed-tenure estates

The government also plans to consult on improved regulation of property managing agents in 2025.

What This Means for UK Landlords

Landlords should prepare for a changing leasehold landscape that demands greater transparency and fairness. The abolition of ground rents on new leases and the removal of marriage value charges will affect lease extension and freehold purchase valuations. Additionally, landlords will need to adjust to increased leaseholder rights to manage properties and challenge charges without bearing legal costs.

Staying informed of ongoing consultations and legislative updates will be essential for effective property management and compliance.

Suggested internal link anchors

• leasehold reform 2026
• lease extensions
• ground rent abolition
• leaseholder rights
• service charge transparency
• right to manage
• enfranchisement premium
• commonhold system
• leasehold and freehold reform act 2024
• leasehold disputes
• property management regulation

TLA update

TLA is launching a new Trusted Partners Hub in Q1 2026, featuring verified and approved service providers selected to support landlords, tenants, and property management businesses. We are inviting legal, trades, insurance, financial, mortgage, tenant screening, and other service providers to register their interest here: https://landlordassociation.org.uk/become-a-tla-service-partner/